The best way to describe the Ontario housing market today? Sizzling, on fire, red-hot.
From its major urban centres to the rural communities, every corner of the province is witnessing record sales activity and exorbitant price growth. For years, only the Greater Toronto and Hamilton Area (GTHA) and Ottawa enjoyed a red-hot real estate activity in Ontario. But now, every jurisdiction is reporting once-in-a-generation gains in the post-pandemic economy, and it is anybody’s guess if the market has peaked.
According to the Ontario Real Estate Association (OREA), in May, residential sales soared 108.6 per cent year-over-year to 28,046 units, a new sales record for the month. Home sales were also 23.8 per cent above the five-year average and 18.8 per cent over the 10-year average. The average price of resale residential homes climbed 37.6 per cent year-over-year to $866,307. To put these numbers into perspective, the national average price rose 38.4 per cent to a little more than $688,000.
How did this happen? Shrinking inventory, soaring demand, record-low interest rates, and evolving consumer trends. There have been many developments unfolding over the past 16 months.
But as competition for limited housing stocks intensifies, a new, potentially problematic trend has emerged across Ontario real estate market: Homebuyers are ditching property inspections. Or, as the National Post calls it: “Buy now, inspect later.”
Buyers Forgoing Home Inspections in Fiercely Competitive Ontario Housing Market
Home inspections are a critical aspect of making the most significant purchase and investment decision of your life. It ensures that you know the house’s condition, such as the foundation, structure, and mechanical systems. Indeed, household inspections could discover life-threatening issues, like faulty wiring and mold. Put simply, it is something that every homebuyer has done for decades.
Unfortunately, home inspections are declining in the modern-day ultra-aggressive real estate market. Given the fierce competition for a three-bedroom detached home anywhere in the Greater Toronto Area (and beyond), many people are looking to increase their odds of landing a property by abandoning any conditions. This includes choosing not to request an inspection.
If there are a dozen or so buyers interested in a house, I’s hard to get that “leg-up” among a slew of other bids. A home inspection takes time, and in this red-hot real estate market, many sellers will take a lower bid in favour of a quick, seamless closing.
CBC News spoke with several industry professionals who are sounding the alarm about this brewing danger, noting that consumers are not protecting themselves by forgoing home inspections.
“It’s like playing Russian Roulette with your finances and your home’s finances and your family’s finances,” said Len Inkster, the executive secretary of the Ontario Association of Certified Home Inspectors. He believes that fewer than 25 per cent of all home sales are being inspected.
Bob Price, a home inspector for Windsor, with 15 years in the industry, told the media outlet: “In this current situation, Ontario buyers are in trouble. It’s so out of control. Home buyers, I think, that they now realize they’re making the biggest purchase of their lives, but they have no protection.”
Other experts believe it is a case of misinformation, with some sellers telling prospects that “they can’t have a home inspection, or they’re not going to get the house.”
Another type of inspection is also taking place in the Ontario real estate market: limited-scope inspections. These consist of allowing homebuyers to only focus on only certain areas of a home instead of letting professionals perform a complete inspection. Unfortunately, these limited-scope inspections are becoming popular across the province, including Windsor-Essex, Chatham-Kent, Peterborough, and Kingston.
“The problem with the limited-scope inspections, if you do it for a buyer, is it’s not extensive enough to give the buyer the right information on the condition of the property to let them understand what sort of maintenance costs they might be letting themselves in for,” Inkster explained.
In the end, Damon Winney, the president of the Windsor-Essex County Association of Realtors, urges buyers never to waive a complete home inspection whenever possible, even if they are under a time crunch.
A Note on Home Inspections
If you are looking to be a bit more cautious about your $668,000 home purchase, and you are choosing to opt for a home inspection, here are some tips to consider:
- Ensure that the home inspection is thorough inside and outside.
- Remember that newly-built homes should also be inspected.
- Ask for a sample report and read the full inspection report.
- Select certified home inspectors and ask the right questions.
- The most common problems that cause a home inspection failure: ground sloping, foundation problems, mold, rotting wood, and electrical failures.
It is critical to do your due diligence and be more conservative when making the largest purchasing decision of your life. This is potentially a lifetime investment, not a bet on a hot stock. For more questions regarding home inspections, or for help understanding the details of your home inspection report, talk to a trusted REALTOR®.
Original Source Credit: RE/Max Canada Blog