On Nov. 4, the Province of B.C. issued a news release outlining the plan to introduce legislation in the spring of 2022 to implement a cooling off period for people writing offers to purchase property.
The news release included a quote from Finance Minister Selina Robinson.
“People looking to buy a home need to know they are protected as they make one of the biggest financial decisions of their lives. Especially in periods of heightened activity in the housing market, it’s crucial that we have effective measures in place so that people have the peace of mind that they’ve made the right choices,” said Robinson. “With this step, we’re moving ahead to protect people and their interests in the real estate market by bringing in a cooling off period for homebuyers and looking at additional measures to ensure effective safeguards are in place.”
It also explained that the B.C. Financial Services Authority will look at other potential measures to protect consumers, including a review of the “blind bidding” system.
Is this the fix we need? What will the impact be on our housing market?
It will be interesting to watch how this affects our market. I have been fairly vocal about the crazy market conditions that clients are facing.
From the buyers’ perspective, I have seen people jumping into purchases in a frantic way because there is no time to consider options. If they find a home that is even close to suitable people have been writing offers, often well over asking price, so they can just get a home.
I have also seen offers written without a financing clause and offers written without a clause for a home inspection. Clients felt they had to write their offers this way merely to have their offer be considered by the sellers.
The long-term consequences for skipping a home inspection can be costly and so can the long-term consequences for writing offers well over the asking price, if our market sees a major correction.
From the sellers’ perspective, unless they do not need to buy another home, I have seen people pull back from selling because they are concerned about not finding a suitable property themselves. This, in turn, can create more pressure as an already short supply of homes on the market dwindles even further.
It will be interesting to see how this cooling off period impacts our housing market. I think the concept of being able to slow down and take a breath will be helpful. But, in reality, I expect that if buyers have been on the hunt for months and finally have an accepted offer, it will be unlikely that they step back from their purchase.
One aspect I do wonder about however is if we will see clients writing offers without having their finances nailed down, knowing they will have a week to get their affairs in order. I can imagine the chaos that could potentially create, where there are several purchases and sales lined up depending on each other to complete.
From my perspective, the bottom line is something needs to change.
As I say, it will be interesting to see how this cooling off period affects things — especially as it may be rolled out right in the thick of the spring market.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.