In early April, Garry Chalmers, 71, sold his home in Kelowna, B.C. for $875,000 — roughly $370,000 more than what he paid for the property six years ago.
But that’s the happy ending of a much longer saga. Chalmers, a local business owner, says he and his wife started looking for properties in the early days of the pandemic, but as housing prices started soaring, Chalmers felt he was always one step behind.
“Every time we got serious about something, we missed it,” he says recalling countless lost bidding wars.
Eventually, he figured he had to get creative. Instead of buying a new house, as initially planned, Chalmers says he purchased two apartments with the intention of renting one and moving into the other while continuing the search for the perfect home on a more relaxed schedule.
The couple had been yearning to move to a newer house after losing their appetite for more upgrades on their old home following a bathroom renovation that went far over budget.
While selling the old home was easy, the couple spent nine months looking for another place to move to, according to Chalmers.
“The pandemic just kind of swept the prices away.”
They finally landed a newly-built house on the other side of town that will be ready to move into in about eight months. After that, Chalmers says he plans to sell one of the apartments and continue to rent the other.
Chalmers’ experience isn’t unique. As more homeowners decide to put their properties up for sale in Canada’s overheated housing market, some are having to rethink their plans or resort to unusual strategies to find a new place to call home.
More sellers are pulling the trigger
While the summer of 2020 saw an onslaught of mostly young homebuyers rushing to purchase their first home, more and more homeowners are now joining the fray, according to Royal LePage CEO Phil Soper.
“We’re starting to see more and more homeowners — older people, say, gen-Xers and baby boomers — who intended to sell their homes back at the beginning of 2020 before the pandemic,” he says.
The motivation for prospective sellers to act now is simple, says Romana King, director of content for Zolo.ca, an online real estate marketplace.
“You’re just going to get top dollar. We’re seeing some crazy, astronomical over-ask prices that are happening across Canada,” she says.
There is a fear of missing out on the opportunity to sell at the top of the market, with some homeowners convinced the market will cool when interest rates start to creep up, King adds.
The increased activity from existing homeowners is bringing a welcome boost to the stock of properties available for sale, Soper adds.
In major cities across Canada, the spring market has brought out home sellers. Metro Vancouver, for example, saw 8,287 homes newly listed for sale in March, the highest volume ever recorded in the region, before dipping slightly in April. In Toronto and Calgary, new listings shot up more than 50 per cent between February and March and held roughly at the same level in April.
The increase in listings has relieved a bit of pressure in the market, where troves of eager prospective buyers had been scouring precious few listings in January and February, according to Soper. But the uptick in the number of homes for sale continues to fall far short of demand, Soper adds.
“We’re entering just a strong real estate market as opposed to an illogical one,” he says.
And as buyers continue to gobble up the available supply of homes, prices continue to soar in many parts of the country, with the pandemic housing boom now finally reaching Alberta as well.
“Things are quite bustling in Calgary and Edmonton and in cities like Jasper, Medicine Hat and Red Deer,” Soper says.
Between March and April alone, property values climbed 2.6 per cent in Vancouver, 2 per cent in Calgary and a whopping 7 per cent in Edmonton, according to data from regional real estate boards.
In Toronto, prices held fairly steady at levels roughly 9 per cent above where property values were a year ago. (It should be noted, though, that the city’s overall year-over-year price increase is heavily skewed by the small price increase for condominium apartments, which saw a drop in demand in the earlier phase of the pandemic. The prices of detached homes in Toronto were up more than 18 per cent in April compared to the same month last year.)
But high prices are a challenge for sellers, too
While growing confidence about vaccinations and a foreseeable end of the pandemic likely prompted more homeowners to jump off the fence and put their properties on the market, high home prices are proving a challenge for sellers, too, Soper says.
Some retirees who’d planned to sell their big-city homes and move to the suburbs or the countryside are now finding they won’t be able to cash out as much as expected, says David Semerak, a wealth advisor at Meridian Credit Union in the Hamilton, Ont., area.
“Your mortgage payments might be more expensive or the proceeds from the sale of your initial house might not go as far because the house that you’ve now purchased further north is more expensive,” Semerak says speaking about homeowners moving from southern Ontario.
Many in this situation may have to rejig their financial plan or rethink what retirement looks like, he says.
Some are opting to rent for a while after selling in hopes that an eventual rise in interest rates will, in fact, “normalize” home prices, he adds.
“They are selling and they’re going to park their funds on the sidelines,” he says.
Most of Canada’s real estate is firmly in a seller’s market, but that’s only good news for homeowners up to a point, Soper says.
Unless you “magically” don’t have to live anywhere after selling, “you have to turn around (and) become a buyer.”