Weekend Reading: Bidding War Insanity Edition

Weekend Reading: Bidding War Insanity Edition

House prices across the country continue to soar. The average price for a home in Canada reached $695,697 in April, up an incredible 41.9% year-over-year. Ontario is driving the majority of those gains, as the province’s average price rose 46% during the same period.

Would-be homebuyers are getting into bidding wars and paying several hundred thousand dollars over the ask price to get their desired home. Insanity.

A reader bid $250,000 over the list price on the above home, but ultimately was not even close after multiple bids came in at an even higher price. The same reader put in two offers on different properties and lost in a bidding war. Houses are selling in just a few days.

“We find ourselves in a market where buying first seems to be the only path, because if I sold first, then tried to buy, I could be homeless! It is so crazy…makes us wonder if we want to play.”

Related: Buyers fed up with blind bidding, other shenanigans in red hot real estate market

Not every region in Canada is experiencing a real estate boom, mind you. The latest episode of the Globe & Mail’s Stress Test podcast featured a 30-something who moved from Toronto to Saint John and bought a house for $99,000.

Prices in my area (Lethbridge, Alta) are up 14% year-over-year but with an average price of $317,222 it’s still well below the national average. Here’s a look at how the provinces compare in average home price and year-over-year change:

AreaApril 2021April 2020% Change
New Brunswick$257,649$182,36841.30%
Nova Scotia$372,534$267,11039.50%

Regulators are concerned and will introduce a new stress test June 1st for uninsured mortgages where the borrower must be able to afford mortgage payments at 5.25% (up from the current 4.79%). The federal government will follow suit with the same minimum qualifying rate on insured mortgages.

I’m curious if other readers have been caught up in any crazy bidding wars, either as a buyer or seller. Let us know in the comments.

This Week’s Recap:

Earlier this week I wrote about accepting market returns and adjusting our expectations of future returns. That’s right, double-digit annual returns from a conservative portfolio is not normal.

On Young & Thrifty I wrote a comprehensive guide to Registered Retirement Savings Plans.

From the archives: Addition by subscription subtraction

Watch for new articles in the coming weeks, including an updated look inside my wallet (same $20 bill from last March), and a deep dive into BMO’s fixed income ETF line-up.

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Open an account here and fund it with $100 within 30 days and you’ll get a $20 cash bonus for free.

Weekend Reading:

Our friends at Credit Card Genius share the best cash back credit card offers available right now.

Travel expert Barry Choi explains the best and worst loyalty programs in Canada.

There’s a lot of pent-up demand – is it time to book your post-pandemic travel? For me, yes!

Mike Moffatt explains why Ontario real estate prices keep soaring: population growth and a lack of housing supply.

Gen Y Money wants to reach financial independence early and avoid getting trapped in the sandwich generation.

Morgan Housel looks at the limits of investing sanity:

“Every few years there seems to be a declaration that markets don’t work anymore – that they’re all speculation or detached from fundamentals. But it’s always been that way. People haven’t lost their minds; they’re just searching for the boundaries of what other investors are willing to believe.”

Millionaire Teacher Andrew Hallam explains why Cathie Wood’s ARK investors aren’t making much money.

A Wealth of Common Sense blogger Ben Carlson looks at how to lose money when the stock market is at an all-time high.

My Own Advisor Mark Seed joins Tom Drake on The Maple Money Show to discuss financial independence and early retirement.

On his own blog, Mark Seed looks at whether you can retire early on a low income.

PWL Capital’s Justin Bender compares the All World ex Canada ETFs (VXC vs. XAW) in his latest investing video:

The UK blog Monevator shares a thoughtful post on the origins of our money mindsets:

“Your inner child is still trying to pull the purse strings. If you don’t notice how then you will be doomed to misunderstand money all your life.”

Of Dollars and Data blogger Nick Maggiulli looks at whether you should ever invest in a leveraged index fund?

Michael James looks back at what might have been if he mined bitcoins, never sold his Apple shares, or took a managerial role that came with stock options.

Finally, a smart look at the FIRE movement and how it’s not about retirement, it’s about independence.

Have a great weekend everyone!

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  1. GYM on May 22, 2021 at 10:01 pm

    Thanks for the mention. Yes FI is all about having the choice to do something and I think that’s why it’s so empowering.

    There was a house that was listed for $3.5 mill and it sold for $4 mill here in Vancouver. It was a pretty new build and the buyers were millennials with a young family returning back from Seattle. They got a nice discount with the exchange, haha. And with lumber prices insane right now they probably did better than buying a lot and building from scratch.

  2. Carrie on May 23, 2021 at 5:33 pm

    We bought our home, north of Toronto, 20 years years ago. It is worth more than 5 times what we paid for it. We wouldn’t even qualify for a large enough mortgage to buy it now.

  3. David @ Filled With Money on May 26, 2021 at 8:03 pm

    It’s quite amazing at how much housing prices increased these days. $250k over asking and it still wasn’t accepted?! What’s come to this world.

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