Open bidding options in Ontario: A small piece of a larger puzzle

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Open bidding was introduced in Ontario at the beginning of December as part of the latest update to Ontario’s realtor legislation, the Trust in Real Estate Services Act. The legislation gives sellers the option to disclose submitted bid prices to potential buyers, an important caveat (i.e. the option) to this plan to ensure fairness among both buyers and sellers.

This has been a hot topic since the spring of 2022 when the Liberals proposed to create a national bill, A Home Buyer’s Bill of Rights, that would “make the process of buying a home more open, transparent and fair,” according to a statement from the government. The bill also included a national plan to end “blind bidding,” a process that has frustrated buyers and has often been blamed for driving up home prices across the country. 

 

Mixed sentiments and past experience

 

The move in Ontario has been positively received by some governments and real estate professionals who maintained that doing this could curb artificially inflated selling prices and address Canada’s housing affordability challenges. 

However, Canada’s housing affordability crisis didn’t start — and it won’t end — with blind bidding.

For several years now, Re/Max has been advocating for greater transparency in the home-buying process. While this is a step in the right direction, the reality is, Canada’s housing affordability crisis is rooted in a severe lack of housing supply in every community, city and neighbourhood across the country.

In taking learnings from other countries such as Australia, Sweden and New Zealand, which have all implemented similar policies around blind bidding, we know that price inflation has continued. 

 

So, what’s the solution? 

 

We need a coherent and achievable national housing strategy that addresses the lack of supply and improves affordability for more Canadians. To do this, collaboration between our federal, provincial and municipal governments is the key. 

However, it’s not enough to just build more homes. We need to build more diverse housing to fill the “missing middle,” with municipal zoning laws that support this.

We need to expand capacity for laneway developments and the like.

We need to be more strategic and visionary in how we can use existing lands and real estate to drive our housing supply.

Ultimately, if we compromise wetlands, grasslands and reservoirs, then we potentially make new-home developments and existing communities susceptible to extreme weather events, which is likely to drive up the cost of insurance for all homeowners.

The strategy also needs to see to it that new housing development projects are getting approved and built much faster, by cutting the red tape, and through immigration policy that considers Canada’s labour shortage, including skilled trades.

We need to look at all options to offset the pending shortfall. And the vast majority of Canadians agree.

According to a recent Leger survey commissioned by Re/Max, 72 per cent of Canadians believe that as municipal, provincial and federal governments make plans to increase housing supply, it’s important that they also consider the diversity of new housing that’s being developed.

 

Transparency: Important but no remedy for piecemeal solutions

 

Transparency in the market will always be a good thing, but we need to differentiate between positive measures to increase fairness in the market, and piecemeal solutions that skirt around the core problem: Canada’s lack of housing supply. 

It’s important that Canadians see the end of blind bidding for what it is: a more transparent home-buying and selling process, not a market-cooling measure. For the long-term health of the market, we must protect it now, and for years to come.

 

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