The housing affordability crisis is really a land affordability problem

REALTORS® are starting to see a “spring” in the market, (pardon the pun). Sales are up for the third consecutive month as are listings, and prices have stabilized after several months of decline. Likely coaxed along by the sense that we may have seen the last of rate hikes for a while, this typically seasonal activity is a welcome and far cry from the frenzied market during the pandemic when it was not unusual to see offers made on properties, sight unseen, ten, twenty, thirty per cent or more above asking price. Fear of missing out stoked market demand, triggering an historic rise in prices.

To counter the overheated activity, then-Finance Minister Selina Robinson introduced the Home Buyer Rescission Period (HBRP), which gave buyers a three-day grace period following an accepted offer to perform due diligence, arrange financing and generally allow the emotional quotient to subside. The thinking was that additionally this might also help curb prices by injecting rationality into the equation. It made sense in principle but was less than effective in practice. Few buyers exercised the provision and demand continued unabated keeping prices elevated.
The market has long since settled down but it doesn’t mean a resurgence won’t happen again and when it does, it is critical that buyers are afforded adequate protections. Instead of the HBRP, perhaps a more effective approach would be BCREA’s proposed five-day pre-offer period (see p.22). Starting at the date of listing, sellers would be prohibited from viewing or accepting offers during this time while buyers conducted diligence and arranged financing. It would drastically reduce the potential for buyer regret while avoiding unintended consequences to sellers by unscrupulous buyers who use the HBRP “loophole” to tie up properties.

A fairer playing field helps protect both buyer and seller, while allowing market dynamics to adjust fairly to prevailing conditions.