Open bidding is not the answer
Most experts think the solution to Canada’s runaway house pricing is to have open bidding. It’s not!
Michael Moffatt of the Smart Prosperity Institute:
WOULD A BAN ON BLIND BIDDING SLOW THE GROWTH IN CANADIAN REAL ESTATE PRICES?
Key Points From This Report
During the election campaign, the Liberal Party ran on a promise to include a Home Buyers’ Bill of Rights that would ban blind bidding, arguing that blind bidding drives up home prices. While he arguments that blind bidding processes cause higher prices are plausible, the evidence, while limited, suggests that increased bid transparency leads to higher, rather than lower, prices in a hot real estate market.
Sweden, which does not permit blind bidding, has experienced even faster home price growth during the pandemic than Canada, and comparable home price growth over the last 20 years.
New Zealand, where open English auctions for homes are common, has experienced the fastest-growing home prices in the world over the last 20 years.
The experience in Sweden, New Zealand, and Australia is suggestive that bid transparency can lead to higher, not lower, prices in a hot real estate market.