The year of 2021 is remaining consistent with a higher number of sales in October 2021 than average, with fewer than average new listings for the month. As I have mentioned before, the simple rules of supply and demand make things obvious why prices have continued to increase with these conditions.

With 1,865 total Sales in October 2021, we saw an increase of 3.9% compared to September 2021, but a decrease of 18% compared to October 2020.

October 2021 saw 1,989 new listings and finished with an active inventory of 2,974 homes available for sale, which is only half of the number of homes that buyers had to choose from just one year ago in October 2020 which is more confirmation that we are in a supply deficit. As I have mentioned in previous months, I believe that the supply deficit is a symptom of a much larger issue that is the total number of homes that exist, and the red tape and prohibitive costs associated with building new homes is not doing any favors to correct this issue.

Overall, the market has not shifted much since last month and my sentiments on the market are much the same as they were last month.  Click HERE to view October 2021’s newsletter to get a feel for the market.

I do want to touch on the latest hot topic to hit the real estate industry, and that is the announcement of the new “Cooling Off Period” that was announced last week.  While we still don’t have any defined legislation on things, the overall narrative within the real estate industry on this new cooling off period is quite negative, but I disagree with many of my colleagues on this topic.  Before we get into why I think it could be a good thing for buyers, I will explain my interpretation of what this new rule could look like.

We currently have a program on new construction condos and townhomes called a “Seven Day Right of Rescission Period” which is essentially a mandatory period of seven days that all offers enter into after acceptance.  It is a period where buyers do not need to have any reason to backout of the contract of purchase and sale, and it essentially becomes similar to the subject removal period of a traditional offer when the buyer and the buyers agent will do their due diligence on the home to make sure that it is what they are expecting and to confirm their ability to get financing amongst other due diligence checks. In short, it is a seven-day period that the buyer can back out of with no negative repercussions.

I will start by stating that this cool off period would benefit buyers at the expense of being a potential detriment to sellers. This is easily justifiable in that fact that all sellers were once buyers. There will of course be many people in the first few years that did not get this benefit when they purchased, but will face the detriment when they sell, but that will be the case with any legislative changes. The biggest criticism that I have seen against this program is that buyers may make offers on more than one home despite only intending to purchase one home and just choose the best one in the end, therefore tying up properties that the buyer only tied up as a plan b. I absolutely agree that the potential for this to happen does exist, but I would counter it with the fact that it can exist in the way things are currently done, and the only thing preventing more people from doing this is that it is unethical to make an offer on a property that the buyer has no intention on purchasing.

The cooling off period will benefit buyers who are maxing out their budget and are not comfortable with writing subject free offers, as it now levels the playing field by essentially making all offers have a 7-day subject removal period in which time a buyer can get the property approved for firm financing. A first-time buyer will now have a much better chance of competing with investors making cash offers as the benefit to a cash offer is that the deal is done at the time of signing instead of after subject removal. With a mandatory 7 day cooling off period, that instant firm deal is no longer firm at the time of signing. I believe that buyers should be given the opportunity to do their due diligence and the cooling off period will do just that and create a more equal opportunity for buyers in this crazy market of mostly subject free offers. Even those currently writing subject free will benefit from reducing their risk by being able to do due diligence themselves.  For a deeper dive into this topic, watch my monthly video as I do get into more scenarios that this program could be good or bad.

Sellers will no longer have the instant gratification of a firm deal on subject free offers, but the hidden benefit to this would likely mean that fewer deals will collapse prior to completion, as those buyers who were once pressured into writing subject free (whether through unethical pressure of their Realtor or just the frustration of losing so many other deals to subject free offers) will now be able to back out of the deal before things are firm and sellers will be less likely to face the repercussions of a buyer backing out of the deal.

Let me know your thoughts or if you have any further questions!