Despite the pandemic, the Canadian housing market has remained stronger than anyone could have expected. In April, the average price of a home was $696,000 — an increase of 41.9% from the previous year.
There are several reasons why the demand for single-family homes has surged over the past year. First, condos began to feel painfully small for some couples and families who had to work and learn from home once stay-at-home orders were issued. Second, some buyers were already planning to move within the next few years, but the pandemic accelerated their plans.
Pair the demand for backyard and office space with record-low mortgage rates and the ability to work from anywhere, and you’ve got a white-hot real estate market.
The Race for More Space
Buyers suddenly had more options. They could move further from large cities to a remote town or an entirely new province in rarer cases. This pattern has forced sale prices way up in virtually every area and has created a fiercely competitive buying market in places that once had minimal activity.
With peak sales and a continual stream of buyers looking for more space, it’s clear that the desire for homes is still here to stay. But, as we head into a slower buying season, will buyers still be looking for their dream home? And if so, will they be looking to make a quick sale and offer sight unseen?
Millennials Are Turning to Tech to Help Them Become Homeowners
Millennials have not had an easy time becoming homeowners. Some have been fortunate enough to receive help from their parents, others invested in more affordable condo units and made the most of urban living, and some are still hunting for a home that they can afford.
Despite the challenges, a 2020 Zolo survey found that 24% of Canadian buyers would buy right now if the home and price were right, and 23% say stability and safety are their most significant motives. So although COVID-19 might have put financial pressure on many households, it merely increased 74% of Canadians desire to buy a home.
In addition to having the freedom to move further, millennials have one extra tool at their disposal — their tech-savviness. This generation of buyers will instinctually do their research online. Still, they don’t mind doing virtual home tours either, and some will even make the biggest purchase of their lives entirely online.
Virtual reality (VR) tours aren’t exactly a new concept. A few years ago, there was an acknowledgment that new technology would make it possible for prospective homebuyers to tour homes without scheduling disruptive viewing appointments. VR tech hasn’t become as ubiquitous as some might have thought it would become, but video tours have become quite common, especially since in-person viewings were temporarily discouraged. To be clear, it’s not just millennials buying homes sight unseen, but they may be more comfortable than older generations.
What Type of Sight-Unseen Home Buying Options Exists for Canadians?
1. Video Tours
Agents needed to find creative alternatives to face-to-face showings. That has led to brokerages adopting new rules and guidelines that prioritize virtual interactions, leveraging technology to maintain a safe and satisfactory level of service to clients.
Video tours have become the norm for real estate agents trying to attract out-of-province buyers. Nova Scotia, in particular, was targeting potential buyers living in Toronto to relocate permanently. As a result, homes were sold to people who had never even been to the province — let alone seen the property in person. It’s a bold move, but it may be one way to avoid bidding wars and disappointment. Buying in a less populated province also allows people to leave cities like Toronto or Vancouver to find a bigger home for a drastically lower price.
2. iBuying
The new phenomenon of iBuying is gaining traction in Canada but seems to be more prevalent in the United States. iBuyers cut out the need for a realtor or agent by purchasing homes directly from owners and selling them to buyers. Its primary goal is to save homeowners time and stress by providing a quick and convenient alternative to the traditional buying/selling process.
iBuying offers some potential cost savings and can be extremely useful if you need to relocate quickly or are concerned about paying two mortgages. The two companies mentioned below are leading the way and may become more popular if buyers get more comfortable online homebuying. But, keep in mind, this option comes with a much higher risk.
- Properly
With Properly, buyers can purchase the home they want when ready, without the pressure to sell first. In addition, instead of paying an agent a commission, you pay Properly a service fee.
The Canadian company connects with clients to see if buying first and selling later is the right move. Then, they will match the client with a local real estate agent who will help them find a new home. Properly primarily offers services in the Greater Toronto Area (GTA). Still, if you are leaving the GTA and want to buy somewhere else, the company may refer you to a Properly partner agent who will help you find the home you want.
- Opendoor
Opendoor makes near-instant cash offers on qualifying homes. If your home fits the company’s criteria, you’ll receive an introductory offer within a day. In some cases, you can complete the entire sale process in two weeks.
If you’re buying, Opendoor allows you to tour homes and make offers instantly. It also backs your bid with cash to give you an edge over other buyers. If you’re not happy with the house, Opendoor will even repurchase it within 90 days. Currently, the company only serves select U.S. states, including Texas, Florida and California.
Purchasing a home sight unseen is still a risk that many buyers won’t take. But as agents and technology evolve to meet the new realities of home buying, submitting an offer online could become the norm instead of the exception.
Although technology can make our lives easier, that doesn’t mean it’s the right (or best) option for everyone. Make sure you speak with a real estate professional, do your research, and know what you’re getting into before buying a home sight unseen.
