In a bid to pre-empt the province imposing a cooling-off period on home purchases, the B.C. Real Estate Association has released a white paper offering the government alternatives for protecting consumers amid a red-hot housing market.
A cooling-off period would give buyers a limited amount of time to change their minds and cancel a purchase with little or no legal consequences.
Among its 30 recommendations, the paper suggests creating a five-day, no-offer period — what the industry calls a pre-offer period — from when a property is listed that would give buyers time to research a property before making an offer; creating a more transparent process for properties where there are multiple offers; making property disclosure statements mandatory and available when a property is listed; making all strata documents available with a listing; and raising the entry qualification for new real estate agents.
The recommendations stem from surveys of real estate agents and consumers, the association says.
“BCREA shares consumer and government concerns that current housing market conditions are untenable,” said chief executive Darlene Hyde in a statement. “As the voice of B.C.’s 24,000 realtors, we want consumers to have full confidence in real estate transactions.”
Karen Dinnie-Smyth, president of the Victoria Real Estate Board, was still reviewing the association’s paper Monday, but noted some of the conclusions were similar to those in the submission the Victoria board offered in January after consulting with hundreds of local agents.
She said the Victoria board also felt the cooling-off period was not the way to go, and instead suggested providing both a due-diligence period and a modified cooling-off period
“It balances the needs of both buyers and sellers, which we feel the cooling-off period doesn’t,” she said.
Both real estate organizations say neither a cooling-off period nor taxation measures will solve the problem of lack of housing supply, which is fueling the hot market.
“I think the good thing is the input from both BCREA and all of the boards has been pretty similar,” Dinnie-Smyth said. “So hopefully the fact that it’s come from so many different areas [means] there will be some impetus on behalf of the government to listen.”
In a statement Monday, Finance Minister Selina Robinson said she understands a commission-driven industry has a vested interest in the market being hot, but the government’s role is to make sure people are protected.
“In an overheated housing market, we have seen concerns that buyers feel pressure to waive conditions like inspections to get their foot in the door,” she said. “We want to make sure that buyers have time to get the information they need to make a sound decision that is right for them.”
Robinson said pre-offer periods are unlikely to address concerns about the risk to buyers, while they can encourage multiple-offer situations and have an unknown effect on housing prices.
Robinson said the cooling-off period — similar to those already in place for pre-construction condominium sales — was a response to what consumers, mortgage brokers and some real estate agents have been saying in the midst of a housing market with very low inventory and high demand.
The B.C. Financial Services Authority, tasked last year with consulting with industry stakeholders and experts to determine what a cooling-off period would look like, will consider both the B.C. Real Estate Association and Victoria Real Estate Board’s submissions.
The government expects answers soon, as it intended to introduce legislation this spring.
Hyde said a cooling-off period won’t stand the test of changing market conditions or regional market differences, and doesn’t equally serve buyers and sellers. “It also does nothing to address the root of B.C.’s housing affordability problem — namely, lack of supply.”
Hyde noted the province currently needs 25,000 new listings just to bring B.C. back into balance, especially with more in-migration expected and perhaps new refugees coming from Ukraine.
“We have an even more acute supply issue in this province. We need new immigrants to shore up our workforce, but we have no place to house them,” she said. “This leads to a staggering home and price inflation, unsustainable price increases, and the multiple-offer conditions we have been seeing in the market.”