A balanced, or dare I say buyers market, is officially upon us.
The real estate market in the GTA exploded over the past two years. With the uptick of people working from home, this ability to work remotely created wider opportunities for home buyer’s to decide where they wanted to live. Since there was no longer a lengthy daily commute to consider, some of the highest prices and sales volume spanned from the suburbs through to rural areas. As demand diminished from late fall into the new year, a buying frenzy ensued, driving prices up by close to 30% in a mere matter of months.
From a seller’s perspective, those who decided to list their homes were cashing in huge. Showings were booked back to back and most properties were selling in a week or less, more often than not on an offer presentation night with dozens of offers pouring in.
Credit – Maronda Homes
Like any other trend, the real estate market is cyclical. The seller’s market we’ve seen driving up prices was largely fueled by the circumstances, lack of demand and low interest rates.
To slow down the pace of inflation, the Bank of Canada announced not only one but two mortgage rate increases on Mar. 2 and another on Apr. 13. Russia invaded the Ukraine, creating increases in fuel prices and supply chain issues. In addition, the volume of homes on the market more than tripled.
And just like that, the sellers market we’ve seen escalating like a speed train for the past two years quickly started to shift into a buyers market.
Homes stopped selling on offer night so REALTOR®’s changed their strategy from offer nights to offers anytime.
Homes began sitting on the market longer as buyer’s took their time to explore their options.
Instead of selling for tens or hundreds of thousands of dollars over asking, buyers began putting in offers tens or hundreds of thousands of dollars below list price.
Part of the problem with this sudden market shift is that some seller’s are not willing to compromise on the value that they think their home is worth, however, the reality is that a home is only worth what a buyer is willing to pay for it. If it’s priced higher than others listed or sold in the same area, most buyer’s won’t budge, no matter how much they love a house.
Credit – Best Edmonton Real Estate
If a seller isn’t in a rush to dispose of their property, they may decide to wait to see if a buyer comes along that is willing to meet their price point. They may also choose to take it off the market for a period of time and list it later on, if and when the market starts to shift back in their favour.
How long will that take? Nobody knows. But, more than likely, it’s going to take some time.
Now that’s we’ve explored what’s happening, let’s also take a look at the factors that can determine how quickly a home may sell in a buyers market.
One of the biggest impacts on how fast a home may sell is competition. If there are a lot of active listings in your area, the price that you offer your home for and also how much power you have at the negotiation table.
As noted above, market trends ebb and flow between sellers and buyers markets and sometimes, the transition can happen very unexpectedly, and almost instantly. Whether you’re looking for a home or trying to sell, it’s extremely important you understand what market conditions you’re working within and how flexible you can be with your parameters. In a sellers market, this often results in buyers expanding their budget and in a buyers market, the compromise tends to fall on the shoulders of the seller.
Credit – Market Business News
As you likely understand by now, a seller’s market is created when there are more buyers than there are homes on the market. This competition drives up prices, giving sellers power and buyers less. There may also be fewer conditions, if any which can put a buyer in a precarious position.
In a sellers market, it’s advisable for a buyer to move quickly and ensure you are pre-approved for a mortgage before they start house hunting.
From a sellers perspective, you still need to make sure your home looks it’s very best. Photos, videos and virtual tours are large drivers for buyers. If you don’t put your “best foot forward”, you may not get the traction or sales price you’re looking for. Strategically, you may list your property a bit lower than you want to sell for to further increase demand.
If you were looking for a home from the end of 2021 into the beginning of the new year, I’m sure you saw A LOT of homes listed at $999,000.
Now that we’ve shifted from a sellers market to a buyers market, let’s take a closer look at this stage in the cycle.
If a sellers market is driven by a lack of supply, then a buyers market is most definitely impacted by an abundance of supply. This gives buyers much more choice – and in turn power- when they are house hunting. This gives buyers a better chance at securing a property under it’s asking price and include a number of conditions that they may have gone without in a sellers market.
For those looking for homes now, in a buyers market, it’s a good idea to keep an eye on homes that have been on the market for a little while. In some cases, but not all, these sellers could be more motivated and in turn, more inclined to budge on the list price. You could also ask for other things such as requesting that the seller covers your closing costs.
While MLS is the number one channel for advertising properties, in a buyer’s market, a REALTOR® will need to invest more time and money into marketing a property to find more buyers. In addition to MLS, you’ll want to make sure the property is promoted on social media and other community focused platforms.
To attract additional attention, it’s a good idea for a seller to get their property professionally staged. This may cost a little more money up front but if the goal is getting your home sold, this may help a lot!
In a buyers market, it’s more common to see house hunters asking for incentives so a seller could also consider offering up a couple up front. This could include custom furniture or offering to cover some costs for a specific period of time, anything to stand out and help sweeten the deal.
Credit – Susan and Moe
Understanding the type of market we are in, whether it’s a sellers market we were in to the buyers market we are in now will significantly help you adjust your expectations, whether you’re trying to buy a home or sell one. Try to go into the process with the strongest position you can so you can come out on the other side with a deal in hand.
If you’re looking to buy your next home, don’t be overwhelmed by climbing interest rates. They are still historically low (still half of what they were when I bought my first property in 2007!). This is your time buyers. Let’s talk! 647.896.6585 | info@serenaholmesrealtor.com. To learn more about me and what you can expect if we work together, watch my intro video here.
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