Buyer's and Seller's New Market Reality: 'Timing is Everything'
A great visionary businessman named John Sculley once said "Timing in life is Everything". This is probably not as interesting or mentally engaging as his other great saying: "the future belongs to those who see possibilities before they become obvious". Again, nothing earth-shattering in terms of theory or mantras to live by, but this may be the single most highly regarded sentiment by all buyers and sellers in the real estate market currently. A new market is taking shape around us, paving the way for the next 3 to 5 years in the world of real estate buying, selling and investing. Let's address some of these and how each will mold the market moving forward.
Yes the June 1st stress-test update had lightly dampened the market but that only lasted a few weeks, many who saw their buying power decrease by 4.5% have decided to adjust their purchase price limits or find alternative ways to make it up.
In general, buyers and refinancers are being treated to a host of great products at low rates from several lenders. Options have never been greater for shoppers, allowing you to significantly lower your lending costs while increasing your lending budget. Yes the June 1st stress-test update had lightly dampened the market but that only lasted a few weeks, many who saw their buying power decrease by 4.5% have decided to adjust their purchase price limits or find alternative ways to make it up. The Bank of Canada had definitely shook the market's confidence in late May with their signals and market sentiments-increasing interest rates due to out of control inflation & imposing capital gains taxes on primary residences. Both of these sentiments were proven lifeless very quickly, current inflation is correcting sharply and there seems to be strong forecasting to indicate that product prices will continue to fall as we progress through this pandemic. The capital gains rumors, were just that, rumors-the major banks (ehem RBC) put fuel on this fire indeed, but luckily all came to their senses and decided otherwise, the market forces will prevail. We will likely not see an increase from the BOC until end of 2022 if not later depending on the health of the North American market at that time, we are likely to enjoy these low interest rates for quite some time.
The Canadian Real Estate Association(CREA) has forecasted a 19.3% annualized gain for prices in 2021 then a sharp flattening of that price gain to 0.6% for 2022.
The multiple bids are definitely still occurring in the entry level market, $500k-$700k, with offer sessions seeing dozens of offers per sale. As a buyer you are unfortunately removing much of your safety net in order to place an offer, basic clauses such as a finance clause or home inspection clauses are being eliminated in order to make their offer more attractive. In fact this has become such common place that the seller's realtors aren't willing to look at offers with such conditions. The higher end market seems to have cooled slightly, seeing a slight retraction from the highs of March -housing inventory crept up from 1.7 months to 2.1 months in May(this is the approximate length of time to sell current inventory). Many sellers are waiting or holding on to their homes, hoping to see a return to the red hot March & April sales that were seeing house prices soar to unprecedented levels. Though we will not likely see those days again for sometime, it's more likely that we will hold this current pattern that we are experiencing. For those whose budget is $1.5M and above, the market will move more slower but that doesn't mean that you will not receive value for your dollar -for both buyers and sellers. The Canadian Real Estate Association(CREA) has forecasted a 19.3% annualized gain for prices in 2021 then a sharp flattening of that price gain to 0.6% for 2022. Granted much of this increase for 2021 has already taken place in the first 3 to 4 months and the remaining 6 months will see a more consistent pricing expectation which is good for buyers and sellers alike.
The condo market place, especially in the downtown core, is experiencing an uptick in activity as well, the market is adjusting to the newly vaccinated's wants and expectations, buyers are returning to the core to invest. Especially with such a burden on the entry level price point currently, this market segment will definitely find it's footing once again moving forward into 2022.
The pr-econstruction market outside of the city, outside of the GTA in fact, is also seeing it's own boom with many builders offering many products at varying price points for all types of buyers. With flexible deposit structures, buyers are finding a silver lining in the real estate market here, the price of entry for a detached home with 4 or more bedrooms is relatively manageable and there's a solid outlook for equity growth moving forward as well. Yet shoppers should be aware of the pitfalls, some farther out projects aren't offering the prices or incentives that others are willing to do, with their pricing well over $500 per square foot and very pricey deposit structures your entry into real estate ownership can become unnecessarily costly and burdensome.
Give me a call, book your appointment with me today. We can review the projects that you should be considering, whether this is a rental property investment or a first time home buyer proposition, let's look your next step carefully with a logical long term plan that will benefit your financial future for years to come.