The Quad Market Update April 2021
Yes, I think it’s safe to say that we as a country have a housing problem but will a new capital gains tax fix the housing crisis? The unprecedented levels of sales so far in 2021 and soaring price increases have put owning a home even farther out of reach for many Canadians. Even those who can afford to purchase a home are faced with competing offers on virtually every property that hits the market and the prospect of paying hundreds of thousands, in some cases, over asking price to have their offer accepted. But government intervention via regulations and taxes are not the answer. There have been many unintended consequences of previous government interventions that have made our current situation even worse.
The market is driven by supply and demand so the only way to cool the market is to increase the supply. There has been some discussion recently of making the sale of your principal residence subject to a Capital Gains Tax. This would simply be a cash grab by the government and would only exacerbate the problem as potential sellers would be hesitant to sell, causing fewer homes to hit the market.
Long-term industry-wide changes to improving housing affordability and making the real estate market more transparent are needed. Increasing our national housing supply is a good place to start. Making the offer process more transparent so that buyers are aware of what competing buyers are bidding would help to keep prices under control. All offers should be conditional on financing to reduce financial overextension of buyers. Changes in tax and/or mortgage policies, like those that have been deployed unsuccessfully in the recent past, are only band-aid solutions, as they do not address the root causes. This is not rocket science. We are dealing with two market forces. Supply and demand. Creating balance between those forces is the only long-term solution.
Market Update
Sales really picked up for March in the Quad cities (KW, Cambridge & Guelph) with 1650 sales. The average sale price was $757,500 or $461/square foot and an average time on market of just 10 days. The list/sell price ratio was 115% so homes on average sold at 115% of their list price. Needless to say, there were a lot of happy sellers last month.
The key indicator as we move forward into April is the number of active listings (697). That represents less than 2 weeks worth of home inventory so we’re still looking at an extreme seller’s market going into April. I don’t expect the market to slow down as a result of the lockdown because during the previous lockdown the market was red hot.
Are you thinking of selling this year? Call/text/email/DM me for a free market evaluation (in person or online). Put RE/MAX, real estate’s premier brand and my 20+ years of experience to work for you!
Dean Manton Broker
RE/MAX Real Estate Centre Inc
519-716-4663
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