May 2022 Market Update
It is no secret that the late winter and early spring real estate market was on fire this year, but when interest rates rose we started seeing major changes in the market in just about every sector. We represent both buyers and sellers from entry level condos, through townhomes and duplexes, all the way to luxury single family estate properties. Each of these markets have slowed down substantially since the 50bps interest rate increase in mid April. At the same time, just about every other market has cooled off as well (stocks, crypto, commercial real estate, etc). Unfortunately (for most of us), the only increase we are experiencing is on consumer goods, gas, labour costs and variable mortgage rates.
With these changes in the market we are seeing properties that would have been snatched up in multiple offers back in March, now getting only one offer (often selling below the list price), or sitting on the market with no offers at all. In times like these we often see a stand off in the marketplace where sellers want yesterday’s prices, while buyers want tomorrow’s prices to protect themselves from potential downside in the short to medium term.
We see this kind of market as a great opportunity to acquire investment properties, first time purchases, upgrading to new homes and even luxury homes. We will start seeing the “have to sell” homeowners coming online while the overpriced listings are likely to not get much attention.
When the pendulum swings like this to more of a buyer’s market, strategies change. Relying on the sale proceeds to fund a new purchase before selling becomes quite risky and stressful. For most of the last two years we have been recommending that our clients buy before selling, as the market was increasing and buying was the more challenging of the two processes. But as the market changes, so does our advice, and we are now recommending to all of our clients to list and sell their home before committing to a purchase.
For our investor clients we recommend staying patient. Wait for the perfect property and be disciplined about the price they are willing to pay. For first time buyers this is a great time to get into the market, but be aware that prices rarely dip substantially in the lower price points, as values are driven more by rental income than sentimental value. In other words, don’t wait too long and try to time the “bottom” perfectly, as the market can shift the other way in a hurry.
If you are interested in a real estate check-in, don’t hesitate to reach out or stop by our office for one of our world famous oat milk lattes.