Market conditions have home buyers fearing the worst as home prices continue to rise. The BC Real Estate Association (BCREA) details that the March 2022 year-over-year change in home prices have increased by 11.3% in Greater Vancouver and 18.7% in the Fraser Valley. This leaves BC’s home buyers scrambling for property and making offers that they will later regret. For the first time, the Government of British Columbia has responded to consumer complaint and intervened by creating a “cooling-off period” in attempts to alleviate some of the current frustrations around buying a home in BC in 2022.
What is the cooling off period?
In November 2021, the BC government announced that they have intention of creating a cooling-off period for the purchase of resale and newly built homes. A cooling-off period, or more commonly known as a recession period, allows a buyer with an accepted offer to revoke without explanation or penalty within a specified time. The risk that home buyers are facing in today’s competitive market is like nothing we’ve seen in the past. The sense of frustration and defeat that is circulating across British Columbia, especially in Greater Vancouver and the Fraser Valley, has home buyers practicing little to no due diligence to stay competitive. It is extremely common to see buyers placing offers well above property value, without reviewing important documents and entering without subjects.
After consulting with the BC Financial Services Authority (BCFSA) on its nature and potential effects on consumers, the BC government announced last month that the new “cooling off period” will be rolling out to all resale and presale listings as early as this Spring.
The Community’s Response
There are mixed feelings about this new Legislation from the Real Estate community. On one hand, it allows home buyers with an accepted offer to secure financing and schedule proper home inspections. If they are suffering from buyer’s remorse, they can withdraw their deal and walk away from an accepted offer without penalty. On the other hand, the cooling-off period has little to no effect on the intense demand we are seeing and will continue to see for subsequent months.
It’s important to note that the cooling-off period only has a positive effect on home buyers with accepted offers and those who benefit from a heated market. Prices are expected to keep climbing, forcing home buyers to consider purchasing homes outside of the province. British Columbians want solutions to the current housing landscape, but unfortunately this still doesn’t impact our number one challenge, supply.
“I’m not sure I can think of a time where government intervention has had a positive impact on our local market, but hopefully this is the first,” says Brittany Reimer, Managing Director for Fraser Valley, MLA Canada.
Watch the Fraser Valley April 2022 Pre-Sale Pulse for more information on the cooling-off period and market insights.