“Normal” has not been a word to describe the Canadian real estate market for a long time. When the pandemic first hit in late 2019, most industry experts expected home sales to slow to a crawl. Nearly every other industry took a hit, so it would also make sense for real estate to stall. But as you know, that’s not exactly how the story went.
Instead of crashing, the housing market boomed. Prices soared to all-time highs, and buyers continued to scoop up nearly every listing as soon as it became available.
What Is Behind The Change?
For a while, it seemed like the good times (for sellers) would never end. Then, three things happened in rapid succession.
- Interest rates increased, making it more expensive for buyers to borrow money. Some stopped trying to purchase or left the area altogether. As a result, there is less competition and fewer bidding wars and multiple offer scenarios.
- Inflation began to soar out of control and affect supply chains all over the country.
- The Russian war on Ukraine plunged the world into a state of instability.
Are you thinking of selling your home? Here are some of our top resources to help you in any market:
- Our Top 10 First-Time Seller FAQs
- Your Quick Guide To Real Estate Marketing
- How To Sell A Home With A Busy Family Life
Even in the busy GTA, the ultra-fast market growth ground to a sudden halt. In March of 2022, the average price of a home in Toronto soared to $1.3 million. In April, those prices fell ever so slightly to $1,254,436. That was the first sign that a shift might be on the way, but it was far too early to tell.
In May, average property values dropped for the third month in a row to $1,212,806.
What is even more significant is the number of homes that were selling. In May, sales were down 38.8% compared to this time last year.
How Far Has The Market Shifted?
On paper, these numbers may seem catastrophic when you compare them to the boom we experienced last year. Last year’s market, however, was far from typical. What we are seeing now still indicates a strong seller’s market, just not one as frantic as what we just came out of. Homes are selling, and the buyers are still out there.
However, as a seller, the time has come to accept that the market has reached its peak, at least for now. With more interest hikes on the way and no end in sight to rising inflation, many buyers are stepping back to wait things out. Some analysts predict a more balanced market by the end of the summer.
Is A Buyer’s Market On The Horizon?
As of right now, we have a long way to go before we turn around into a buyer’s market, but some analysts think it could happen. After all, look at how quickly market conditions have changed over such a short period. Who knows what another few months can bring? What does this shifting market mean for buyers and sellers?
For current homeowners, there is very little to worry about. Some sellers may feel upset that their house won’t fetch as much as it would have back in February. But remember that you will also pay less when it’s time to buy your new home. Plus, you’ll have more options to choose from and less competition to contend with.
For sellers, realistic expectations and proper home preparations are imperative to success.
- Be patient when listing your house. It may take longer to sell now than it would have earlier in the year.
- Maximize your sale by making minor repairs, proper staging and effective marketing.
- Set your price carefully. The key is to find the sweet spot that attracts the most attention from buyers. It is easier to get more from your sale when your listing generates a lot of interest and receives multiple offers.
What Buyers Can Expect Right Now
High prices and rising interest rates may cause some first-time buyers to struggle. The more you can put aside for your down payment, the less you will have to borrow. Your monthly payments will be lower, and you’ll pay less interest in the long run.
Buying your first home can be scary but exciting! These other resources will make you a more confident and better-informed buyer:
- The Top 5 Misconceptions When Buying Your First Home
- Our Top 10 First-Time Buyer FAQs
- How OLEA Real Estate Group Helps Buyers
For current homeowners, some of that pressure is off. As new listings become available, conditions become far less competitive. For the first time in over two years, it may be better to sell first and then start the search for your new home. That is one of the most significant changes for buyers over the last few months.
Until then, many real estate agents strongly recommended securing your new home before selling so that you didn’t get priced out of the market. For buyers, the timing has improved dramatically. However, you need to remember that conditions still favour sellers overall.
- You will still need a compelling offer when buying your new home.
- Multiple offers and bidding wars are less common, but can still happen in various neighbourhoods and on very desirable properties.
- Getting prequalified remains one of the best steps to stand out to a seller.
Why Timing Is Everything
Should you wait to see if the market drops even further before you buy a new home? Unfortunately, trying to time the market is risky and relies primarily on luck. Even with all of the available data, no one can accurately predict what the market will do.
What we do know is what prices have done historically. Prices may be down for the moment, but property values almost always rise in the long term.
Instead of trying to predict the market, look at your personal situation and what resources you have available. The best time to buy a house is when you can afford it and when you’re ready for a move.
Is the time right for you to begin the buying process? Ask us anything when you book your free buyer’s meeting. Just click the button below!
