Im looking to buy my first home in the Scarborough area, specifically near the North York/Scarb boarder. Im noticing that many homes are being priced lower in the area to set up bidding wars, also most homes that are priced right are going for over asking in general
Is this the new norm? does this type of thing happen over the fall and winter months?
According to what I've read, it's not the new norm yet in that they're not as common as they were two years ago, but nonetheless bidding wars have been much more common recently than they were three months ago. Given your above post, I suspect that the real estate agents are trying to push bidding wars again.
It also depends on your price range. Lower priced homes are more susceptible to price wars, but higher end luxury homes often sit longer on the market and don't as often have bidding wars.
And from the agents' and sellers' perspectives, they can definitely be effective when the market it tilted towards sellers. The slight underpricing generates a lot of foot traffic to see the place. Back near the peak of the market, we priced my 2-bedroom townhouse condo at what I thought was maybe 2% below fair market price. It went for 7% over asking because of a bidding war. My girlfriend's 1-bedroom condo was priced at close to fair market price, maybe 1% under. It went for almost 8% over asking because of a bidding war. It's not just the pricing either. It's way the sales are set up (like fixed bid dates) that partially encourages bidding wars.
Despite the recession, as you know there are two factors working against buyers right now in terms of real estate pricing:
1) Low interest rates. Well, that's not a bad thing for buyers obviously, but it does drive up the demand for housing.
2) Low inventory. I guess a lot sellers got cold feet because of the downturn so homes have been taken off the market, so we're working with reduced inventory now.
The low inventory will change with time, and interest rates may (or may not) increase slightly by next year. OTOH, some
wonder if 5-year fixed rates may fall again slightly in the short term.
Note thought that homes tend to sell more poorly in the late fall and winter months, and prices often fall at that time. However, often times lower priced homes don't really fall that much, esp. in the condo market. It's the higher priced homes that seem to fall more during that period.
