The newest Housing Market Insight HMI released by Canada Mortgage and Housing Corporation (CMHC) reported that over half of buyers encountered bidding wars in the country’s housing markets.
According to the study, fully 55% of buyers experienced a bidding war in Toronto and Vancouver, far higher than the 17% ratio seen Montreal.
These heated contests are also making themselves felt in the final sale prices of homes in these markets: Buyers who fought for single-detached houses via bidding wars paid an additional $125,000 in Toronto and $55,000 in Montreal on top of the asking prices of their properties.
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However, the situation was remarkably different in Vancouver, as buyers who experienced bidding wars actually spent $200,000 less for single-detached home purchases.
Apartment condos were the most highly contested property type in Canada’s hottest markets.
Bidding wars also play a role in buyers’ eventual market expectations, the CMHC report stated.
“Homebuyers who experienced a bidding war in Montreal and Vancouver are more likely to report that future price growth is very important,” CMHC wrote in the study. “Having more optimistic short-term price expectations goes in hand with valuing price growth… This would suggest buyers rationalize their purchase because of expected future growth.”