{"id":18150,"date":"2021-07-02T11:11:00","date_gmt":"2021-07-02T18:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=18150"},"modified":"2021-07-02T10:15:12","modified_gmt":"2021-07-02T17:15:12","slug":"real-estate-gridlock-25-of-canadian-sellers-cant-afford-to-sell","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2021\/07\/real-estate-gridlock-25-of-canadian-sellers-cant-afford-to-sell\/","title":{"rendered":"Real Estate Gridlock? 25% of Canadian Sellers Can&#8217;t Afford to Sell"},"content":{"rendered":"<p style=\"text-align: justify;\">Rising home prices across Canada have increased so much, many homeowners can\u2019t afford to sell. Zillow Canada commissioned a new survey via Ipsos on buying and selling real estate. Buried amongst the usual insights on things like affordability was an unusual insight for sellers. A quarter of homeowners ready to sell haven\u2019t listed, because they can\u2019t afford to upgrade. The result is buyer\u2019s gridlock, where people are \u201clocked\u201d into their situation. It only happens during the frothiest of bubbles, which we are apparently in.<\/p>\n<p style=\"text-align: justify;\"><strong>Homebuyer\u2019s Gridlock<\/strong><\/p>\n<p style=\"text-align: justify;\">Most of you already know what the property ladder is, and it\u2019s a simple concept for those that don\u2019t. Buyers get a starter home to help build up equity, and then use that equity to upgrade. The starter home owner sells it to another buyer, and uses the equity for a mid-tier home. The person who sold the mid-tier can now upgrade to a more expensive home using that money. Each buyer keeps doing this until they own Park Place and Boardwalk.<\/p>\n<p style=\"text-align: justify;\">Homebuyer\u2019s gridlock is what happens when one of those groups can\u2019t afford to make the jump. If the gap between a starter home and a mid-tier one grows too large, the starter homeowner can\u2019t upgrade. If the starter homeowner doesn\u2019t upgrade, the mid-tier owner can\u2019t upgrade either. When things get really bad, there isn\u2019t even a suburb to flee to, due to flattening prices. This results in everyone being \u201cstuck\u201d in place, like they\u2019re in gridlocked traffic.<\/p>\n<p style=\"text-align: justify;\">If the starter homeowner doesn\u2019t sell, the first-time homeowner can\u2019t purchase. This forces them to look further out from the center of the city, or compete with a smaller pool of buyers. This drives home prices higher in either case, making it even more difficult to sell. Fewer people are moving, placing more pressure on home prices.<\/p>\n<p style=\"text-align: justify;\">Eventually most people are stuck, or gridlocked in the market. It turns into a self-feeding loop, getting worse with each iteration of the process. Falling prices become the only thing that can release the inventory, and get people moving.<\/p>\n<p style=\"text-align: justify;\"><strong>1 In 4 Canadian Sellers Haven\u2019t Listed Because They Can\u2019t Afford to Upgrade<\/strong><\/p>\n<p style=\"text-align: justify;\">Zillow\u2019s survey data indicates this is happening in Canadian real estate. They found one in four sellers have put off listing their home, since they can\u2019t find a new one. It also shows 29% of households see low inventory impacting their decision to buy, sell, or move. This results in a lot of people staying in place, and sends well heeled first time buyers into bidding wars, or to other regions. Rather than an orderly flow, everyone is stampeding for the same few units. Now the flow of buyers is screwy, with a quarter of inventory now inefficiently allocated.<\/p>\n<p style=\"text-align: justify;\">A real estate market with low inventory produces a market with even less inventory. This is partially why price corrections tend to see so many sellers all of a sudden. They don\u2019t need money, but they can finally sell and take some of those gains off the table.<\/p>\n<p style=\"text-align: justify;\">Once prices fall to a level where starter homeowners can afford to upgrade, they do. Freeing up starter homes, and keeping the system working. Ironically, falling prices can create more inventory.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/betterdwelling.com\/homebuyers-gridlock-25-of-canadian-real-estate-sellers-cant-afford-to-sell-zillow\/\" target=\"_blank\" rel=\"noopener\">Zillow : Homebuyer\u2019s Gridlock? 25% Of Canadian Real Estate Sellers Can\u2019t Afford to Sell<\/a> by Better Dwelling<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rising home prices across Canada have increased so much, many homeowners can\u2019t afford to sell. Zillow Canada commissioned a new survey via Ipsos on buying and selling real estate. Buried &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2021\/07\/real-estate-gridlock-25-of-canadian-sellers-cant-afford-to-sell\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-18150","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Real Estate Gridlock? 25% of Canadian Sellers Can&#039;t Afford to Sell &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2021\/07\/real-estate-gridlock-25-of-canadian-sellers-cant-afford-to-sell\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Real Estate Gridlock? 25% of Canadian Sellers Can&#039;t Afford to Sell &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Rising home prices across Canada have increased so much, many homeowners can\u2019t afford to sell. 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