Should we ban blind bidding for cooling Canada’s real estate market?

According to the National Bank of Canada CEO Louis Vachon, Canada should address the issue of blind bidding in order to cool the real estate market. Moreover, it’s important to investigate broader pandemic caused factors pushing the prices higher.

In his opinion, provincial and industry regulators need to control or even ban blind bidding to increase price transparency and make it more difficult for buyers to give up on some of their rights trying to impress sellers. The deal is that many Canadian buyers give up on their rights to home inspections or remove certain clauses in the agreement that protect them in case they can’t provide the necessary finances in attempt to make their purchase offer more attractive for the seller.

“The new rules may better protect buyers and could also slow the current dynamics at the housing market”, – he noted. In addition to it, Vachon believes certain changes to mortgage underwriting criteria could be necessary during the next 6-12 months.

He says Canada needs to conduct massive surveys on whether some market changes caused by the pandemic will remain for good and how to react to them. Vachon pointed to such questions as whether baby boomers will start selling single-family houses after the pandemic, or whether the on-going remote work trend will stay. He’s also interested in the role that parental support plays in financing today’s homebuyers.

“In case a speculative bubble bursts, it will lead to very negative social and economic consequences,” -Vachon noted. “Policy makers and bankers are definitely aware of this.”