A market on fire and unbalanced

“The surge in prices and the phenomenon of multiple offers, which had begun to be felt in the real estate world at the end of 2019, have accelerated in 2020. And the madness continues,” says Marie-Catherine Jetté, who runs the Triomphe real estate agency on the South Shore, an independent and autonomous franchise under the Royal LePage banner. “We thought that the insecurity linked to Covid-19 would make buyers more cautious, but the surveys clearly show that the intention to buy is on the rise.” The continued growth in demand combined with the weakness of supply is completely unbalancing the market.

The Quebec Professional Association of Real Estate Brokers (QPAREB) highlighted the historic records of 2020: "an increase of 19% compared to 2019". This year promises to be similar. A new record for the number of real estate sales in the country in January 2021 (35% more than at the same time last year) has just been published by the Canadian Real Estate Association (CREA).

For the province, that's already 23% more sales ( table on the left ). "The continued increase in sales is announced by many: at least 5% to 7% more than in 2020 according to some experts , and up to 20% according to Desjardins," rejoices Ms. Jetté. She also confirms that "the factors that would allow us to say that we are in the presence of a temporary bubble are not present."

Solutions to adapt to the market

The real estate market is currently benefiting sellers. But to give potential buyers a chance, brokers have been condensing visits to half hours since the reopening at the end of May, and even to fifteen minutes, over a period of a weekend or a few days. They then present all the offers at the same time to the seller (this is the principle of multiple offers).

“The brokerage rules are not adapted to this situation,” says Ms. Jetté. “What brokers are doing right now, almost universally, is tolerated. They are giving more clients the chance to visit and make an offer. A greater number of buyers can enter the competition.” The curfew has added an additional challenge and some have shown themselves to be smart: “in Montreal, there are brokers who pay for hotel rooms for their clients during weekend visits!” shares Ms. Jetté.

Motivating your troops to manage the stress of hypergrowth

The multiple offer market, which naturally leads to the phenomenon of overbidding, is anxiety-provoking for all the players involved. "You can consider yourself lucky to get a viewing time slot for your client and they will only have 20 minutes to assess the property. In the current conditions, there is no longer a price ceiling, so how can you judiciously advise your client so that their offer is accepted, knowing that there are several at the same time and that they are unknown? It is not easy to manage," confides the one who manages and trains 130 brokers. "I have Zoom meetings, six to seven per day, to guide and motivate them. My training courses, which used to reach around fifteen brokers, are now filled with an audience of up to forty people. I also let them talk more among themselves, I feel that they need to share, relieve stress, find solutions and encourage each other."

Machine that rolls and collects foam

On the Triomphe agency side, the wheel is turning! "The offices are closed and my employees, working remotely, are doing more without being constantly disturbed. The external call center is certainly not blushing!" says the owner. The businesswoman, whose agency has just been named agency of the year by her banner, for its leadership, growth and recruitment, proudly announced: "I have hired more brokers. Usually, in the first quarter, I recruit eight or nine. In just a month and a half, I already have 20!" A nice nod to the success of the current market.

Factors of imbalance

Marie-Catherine Jetté explains the factors that lead to an imbalance in the current market:

• A trigger intrinsically linked to the pandemic, 100% teleworking empties city centers and stimulates the purchase of properties in the suburbs, and even more so in the regions. This is the hope of a larger and greener playing field.

• Increase in savings, from 5 to 25% according to Statistics Canada . Significant disposable income for a nice down payment.

• Mortgage rates at historically low levels.

• Potential customers who were planning to move in the next few years (often growing families) are deciding to buy now before the market for larger homes becomes unattainable. They also see the rising prices of nearby homes as an opportunity to sell their property at a profit.

• The new crowd of renters who no longer want to be left looking for a place to live because their landlord is selling the building that has suddenly increased in value. Or who want to get in the market before it’s too late. However, as new buyers, it’s hard for them to match offers from landlords who are making significant gains on the equity in their current property.

• The significant number of seniors choosing to keep their homes (for fear of residences and health risks of visits), further reducing the inventory of properties, a notable consideration in a context of aging population.

• Those who try to buy before selling, so as not to end up high and dry, also unbalance the market.