Low inventory drives hot Thunder Bay real estate market
Offers consistently above asking price, real estate agent says
A low inventory is driving a hot real estate market in Thunder Bay, Ont., during the COVID-19 pandemic, the vice-president of the Thunder Bay Real Estate Board said.
Karen Hill, who's also a real estate agent in the city, said this tends to be a very busy time of year for home buyers and sellers. However, this year, there's relatively-few homes on the market, and prices are rising as a result.
"As soon as we get a new house ... into the system, right away we're booking showings," she said.
COVID-19 may be having an effect on the low number of homes being put on the market, Hill said, with people reluctant to list their homes due to safety concerns.
"We have to show them, like good realtors will show them, how we can do it safely during this time," Hill said. "That is definitely driving it."
The price of homes is also having an effect, with Hill saying offers are consistently coming in higher than asking prices. Homeowners then realize they can get a good price for their own home, but they'll have to pay more for a new one.
"They hear that, yes, they could get a really good dollar for their house, but where are they going to go?" Hill said.
Another factor, Hill said, is low interest rates.
"We are finding that people that had been in rentals for, say, 10 years, now with the interest rates as low as they are, can take advantage of the ability to purchase rather than rent," she said.
Hill said it's important, however, for potential buyers to talk to their bank to determine exactly how much they can afford to spend.
"You never want to get into competition for a house that you can't afford," she said. "It's always a great idea to get a buyer's agent. Agents will work specifically with a buyer. That way they know your budget, they know where you're pre-approved and they can better direct you when it's a good offer."
"They won't let you overpay for the house," Hill said.
How long the market stays hot, however, remains to be seen.
"We don't have a crystal ball on how long this is going to last," she said. "But we do know, just talking to economists and everything, that the government has no interest in raising the interest rates any time soon."
"What the banks have been doing, to make sure that these people that are buying now at the low interest rates, they are actually tightening up the regulations on the stress test," Hill said. "So right now, you have to qualify for an interest rate of 4.79. And they're looking at making the qualifying rate quite a bit higher."
"They're just making it more difficult to qualify for the mortgage, just to make sure that four years from now, if the interest rates are back to normal, then they can still afford their homes."