With an extraordinary six months of the year now behind us, I would like to take a moment to recognize the outstanding work that has been accomplished by real estate brokers.
First, let’s take a step back. March 2020: Quebec is plunged into a pandemic while in the midst of a remarkable economic upswing. Financial institutions are investing more than ever in our residential real estate market. Their mortgage rates are at historic lows, to the point of forcing the implementation of a stress test.
Governments are deploying generous assistance programs to help deal with the pandemic. The result: thousands of Quebecers suddenly find themselves with a lot of cash and more time to spend it.
Because of lockdown measures, people flock to individual sports and leisure activities, to the beaches of Gaspésie, to building material stores, etc. Bikes, ATVs and lumber are selling at high prices, causing product shortages and waiting lists.
The impact of the pandemic on the real estate market
The same can also be said of the real estate market. Many Quebecers are discovering that their home is inadequate, particularly because teleworking has become the new norm, and they are therefore looking for a new home or even a second home. Everything to stimulate residential demand!
In terms of supply, many factors are contributing to a significant reduction in housing stock. Think, for example, of the dire lack of dwellings, the slowdown in the construction of new homes, administrative slowdowns, and homeowners who are overwhelmingly choosing to hold on to their existing home. Everyone has their reasons!
In short, the list of socio-economic factors that create overheating is long.
As a result, the number of active listings continues to decline. In March 2021, Centris had only 27,675 active residential listings, a historic drop of 43 per cent compared to March of last year, when the pandemic began. But unlike a merchant’s inventory, the inventory of resale properties is made up of only those properties that an individual chooses to dispose of.
Increased demand, combined with an insufficient supply, causes scarcity in Quebec – and everywhere else – which leads to price increases. The median price of a single-family home in Quebec jumped from $276,000 in the 2nd quarter of last year to $373,000 in the 2nd quarter of this year (+35 per cent).
The role of a real estate broker in an overheated market
As we know, a seller who puts their property up for sale is looking for two things: a smooth transaction and the highest possible price. This is where the role of the broker comes into play: brokers accompany their clients throughout their transaction, advising them along the way and facilitating the sale.
As for potential buyers, the shortage of properties available is forcing a number of them to postpone their project. Brokers may have to deal with the negative emotional impact that this causes. Motivated by the need for housing, buyers often have to compete with each other and situations of multiple offers are becoming commonplace. Sometimes buyers go as far as waiving essential protective measures such as a pre-purchase inspection, legal warranty and certificate of location, provided the lending institution or its certified appraiser accepts the amount offered.
Here too, the role of the buyer’s broker is to facilitate the achievement of their client’s objectives. It’s important, of course, to warn and advise them, but the final decision rests with the client. Too many reports in the media fail to make this distinction, wrongly attributing the central role to brokers.
Another record-setting year?
It is also worth noting that during the first half of 2021, real estate brokers helped 69,758 buyers and as many sellers to complete their transaction. That’s a 32 per cent increase from the 52,823 transactions that were concluded in the first half of last year. And let’s not forget that 2020 was a record year!
That represents nearly 17,000 more buyers for whom a real estate broker has made a difference, in the midst of an overheating market no less.
In closing, I would like to acknowledge the creativity, resourcefulness and professionalism that real estate brokers have demonstrated in carrying out their transactions under these unprecedented health and market conditions. I also wish to commend their resilience in having to sometimes serve potential buyers who must resign themselves to postponing their project, leaving brokers without compensation or recognition.