Arrow points up on housing prices

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This article was published 24/06/2024 (485 days ago), so information in it may no longer be current.

Winnipeg’s housing market is not for the faint of heart.

The summer weather pales to how hot it’s become — and those entering it for the first time are most likely to feel the heat.

Shades of the record-setting landscape prior to the COVID-19 pandemic have re-emerged with many homes going for tens — and sometimes hundreds — of thousands of dollars over asking price; bidding wars becoming inevitable as the number of offers continue to climb; and optimism among house hunters wavering each day.

It’s a seller’s dream and, potentially, a buyer’s nightmare.

“A never-ending battle,” is how Evan Boychuk describes his first homebuying experience.

Boychuk, 24, and girlfriend Taylor Sumner, 27, were on the hunt for six months before they purchased a home in the South Transcona neighbourhood.

The couple estimates they looked at 40 homes and placed four offers before finally sealing the deal in May (for under the initial asking price).

“Overall, it’s a happy, exciting experience, but there are parts that are frustrating,” says Sumner. “We were looking for quite a few months and finally getting that offer that was accepted was just so much relief.”

The Winnipeg Regional Real Estate Board’s most recent market analysis revealed the second-busiest May on record in terms of MLS sales — 1,726, a 14 per cent increase year-over-year — and a 15 per cent increase in total sales in the first five months (3,854) compared to 2023.

That has the arrow pointing upward on prices.

The average price of a residential detached home is up six per cent, to $420,457 from $395,068 last year.

Boychuk and Sumner, a perpetually optimistic couple, admit to having many days where they questioned if they’d ever find the right place and how much longer it would take before they placed a winning offer.

Their first bid was on a home listed for $400,000; it wound up selling for $65,000 over asking — it was an eye-opener, to say the least.

“It’s hard to see the light at the end of the tunnel when all you keep seeing is everything collapsing in on you,” Boychuk says.

“It kind of made us think, ‘Why are we even trying?’” Sumner added.

It took a listing that had been on the MLS for about a month for the couple to avoid any competition. They call it their diamond in the rough.

“I think you do have to compromise,” says Boychuk. “There were things in the house that we bought that … I wasn’t worried about renovations because I work in construction.

“To me, it didn’t seem too daunting to paint or to patch holes and stuff like that, but to the average person they might look at that and say, ‘There’s no way I want to do that.’”

“Compromise” and “adapting” have become buzzwords in conversation between realtors and their clients. Winnipeg professionals are encouraging buyers to adjust to the new normal and broaden their horizons, which includes reconsidering what their desired home looks like, being open to living in other areas of the city and manipulating their offer to accommodate the seller’s requests.

“The market right now can be challenging,” says Jason Penner, a realtor with Royal LePage. “Very challenging if you’re looking for something specific.

“Relative to the need right now, I would say (the amount of inventory) is challenging.”

Penner has pushed a lot of first-time homebuyers to look at attached homes as a means to acquire real estate and build equity. His research found while the appreciation rate of residential detached houses is up six per cent over five years, attached homes are up 14 per cent.

“They appreciate faster than condos,” Penner said. “When you actually factor in your condo fees on your monthly cash out, it’s comparable, if not a little bit more favourable.

“It’s it’s not a bad option to look at in terms of what you get for your money.”

For realtors, it’s become increasingly difficult to represent first-time homebuyers. Penner says it can be challenging to keep them motivated through the emotional and unpredictable process.

Sandeep Singh, a realtor with Royal LePage, adds it can be equally as troublesome trying to estimate what the winning purchase bid will be. It’s a game of musical chairs, Singh says, and to win you need to be patient and strategic.

Earlier this month, the Bank of Canada dropped its policy rate a quarter-point to 4.75 per cent, the first cut in four years. Another BoC announcement is set for July 24, which many experts believe could yield another drop.

With lower rates, the belief is many house hunters who have patiently waited on the sidelines for the last three years are ready to re-enter the game and they will be as aggressive as ever in their pursuit — a sure-fire recipe to leave younger and first-time homebuyers boxed out.

“If you’re up against a buyer that’s been looking for two, three years, they may have put less weight on the hard, logical numbers and more weight on their personal decisions of spending to a point that will insure them the victory. That’s where it’s been a little bit difficult, when you can have a property just skyrocket for a price that did not necessarily support logical numbers and recent sales data,” Singh says.

“I think that over all of these potential future interest rate deductions, consumer confidence will rise,” he says. “The consumers, they gravitate toward the monthly payments versus the sticker price. This, as we know, could create more buyers coming off the sidelines and upward driving of the price could happen once more buyers re-enter the market.

“If inventory remains low, we’re gonna repeat that very competitive cycle that we saw from 2019-21.”

A recent Canadian survey by Royal LePage revealed more than one-third (36 per cent) of Manitoba and Saskatchewan renters plan to purchase a property in the next two years, while 34 per cent will not.

Nationally, of those who do not plan to buy a home in the next two years, 54 per cent said they believe they don’t make enough to afford the property they want — nearly two-thirds (61 per cent) of those respondents were aged 18-34.

Half of renters in Manitoba and Saskatchewan spend up to 30 per cent of their net income on monthly rent costs, while 36 per cent spend between 31 per cent and 50 per cent of their income, and nine per cent spend more than 50 per cent, the report says.

It’s a harsh market these days, for sure, but Boychuk and Taylor maintain it’s certainly not impossible: “Don’t lose hope. You can’t stop looking.”

joshua.frey-sam@freepress.mb.ca