The policy won’t solve the housing shortage, but it will provide transparency for buyers
UNDATED – The British Columbia Real Estate Association says a cooling off period the province is considering introducing will not alleviate tight market conditions.
The bill is expected to be introduced this spring and will provide homebuyers with a window to opt out of a property with no or reduced legal consequences.
But the association, which represents 24,000 British Columbia estate agents, said on Monday that an analysis it conducted of similar cooling-off periods in other global jurisdictions showed the policy was “at best ineffective”.
“Although attractive on the face of it, in a market characterized by low supply, such as ours, we believe that a cooling-off period will cause more problems than it solves,” said the chief executive of the company. association, Darlene Hyde, during a press conference.
“We are concerned that insufficient attention has been given to possible unintended consequences, such as uncertainty for sellers who may be involved in another transaction, deterioration in affordability, an increase in frivolous offers and numerous other factors.”
She added that the cooling policy had been proposed without broad industry and consumer consultation and called on the government to take a ‘less prescriptive approach’.
In an email to The Canadian Press, Finance Minister Selina Robinson said she still intends to pass chilling legislation because she wants to make sure “buyers have time to get the information they need to make a sound decision that’s right for them.”
She pointed out that the commission-based nature of the real estate industry means the association has a vested interest in keeping the market warm.
The remarks came as BCREA released a white paper with 30 recommendations for dealing with bidding wars, scarcity of supply and soaring prices. According to Hyde, this created an “untenable situation”.
Earlier this month, the Real Estate Board of Greater Vancouver said a lack of supply slowed January home sales from a record pace last year, pushing the benchmark price higher nonetheless. 18.5% from last January to approximately $1.2 million.
Hyde estimates the province is 25,000 enrollments short of what is needed for a balanced market and said the lack of supply could be further exacerbated by the 70,000 to 80,000 immigrants BC expects This year.
The association wants the province to tackle these conditions by introducing a mandatory “pre-offer period” that will prevent offers from being made for at least five working days after a property is first listed, so that buyers potential have enough time to look for a house.
Anne Hermary, property adviser at Royal LePage Westside, says the idea would be a “brilliant” way to cope with frenetic conditions.
“A lot of buyers walk in without all the information on the listing, frantically trying to make a competitive offer and ending up buying something unprepared,” she said.
But Robinson is not sold. “Pre-offer periods are unlikely to address concerns about risk to buyers, may encourage multiple offer situations and have an unknown effect on house prices,” she said.
BCREA also wants the province to bring more transparency to the home buying process, so people can make more informed decisions when caught in multiple offer scenarios.
BCREA envisions this working like Ontario’s Strengthening Consumer Protection Act, which prevents listing brokers from indicating they have an offer unless they receive a form stating that an offer has been signed.
The law requires brokerages to keep copies of all written offers to the seller and counter-offers, and allows buyers who have made offers to ask a regulator to validate the number of offers presented.
BCREA likes these processes instead of restricting blind bidding, a process where potential buyers don’t see the details contained in competing offers for the homes they are bidding on.
The federal government plans to ban blind auctions and British Columbia is also considering the process.
However, critics doubt this will alleviate supply constraints and high prices due to what they have seen in other markets.
BCREA, for example, points out that Sweden does not allow blind auctions, but has seen even faster house price growth during the pandemic than Canada, and comparable house price growth over the course of the pandemic. of the past 20 years.
New Zealand has not banned blind auctions, but uses open auctions, where all parties know each other’s bids, and has seen the fastest house price growth in the world in the past 20 years. years, BCREA said.
The association also wants the province to give more information to people considering moving to condominiums, where people buy part of a property rather than the whole building. More than 1.5 million British Columbians live in condominiums.
BCREA thinks the documents — condo bylaws, amortization reports, contingency reserve fund information, and copies of insurance documents — should be made available with the listings.
Although Hermary appreciates BCREA’s suggestions, she thinks supply is the way to go.
“Until we really deal with the fact that we’re not building enough and we don’t really have a conversation about how to create more land…we’re not really able to come up with solutions that will work at long term .”
This report from The Canadian Press was first published on February 28, 2022.