Another market update? Yes because things are about to change…2023 is already looking up. Prices seem to have leveled off and it is likely the BoC will “pause” their interest rate hikes. I say that tongue in cheek as they have gone back on their word several times. Let’s be optimistic though…

Let’s look past the interest rates for a minute though as it seems buyers are becoming accustom to the rates. Putting it into perspective, 6% is historically still a reasonable interest rate to pay. In the 80’s and 90’s they saw interest rates into the double digits almost hitting 20% in 1981. (reference)

There definitely has been an increase in the activity in the market. It seems that houses under $1 million that require little to no work are what people are looking for. Houses like this are even going into competition. This time it is a healthy competition seeing 2 or 3 offers, sometimes a few more, but nothing like what we were seeing. Sold prices are hovering around list price even when in competition. Sure they may go a little over, but nowhere near the $75 thousand over asking like we were seeing just a little while ago. More like $3 to $5 thousand is much more common.

It is still a “weird” market though as there are a few properties that one might predict would sell quickly, and they are not selling. It is very unpredictable in some neighborhoods. Days on Market has taken a drastic increase which is great. Just over a year ago sellers were holding off offers so people could get a chance to see it. If they had not, many houses sold in 2 or 3 days. Now it is over 30 days on average, even more depending on your location.

Conditions are finally a common occurrence again. It is never a good idea to remove finance and home inspection clauses but during the peak of the market if you did not remove these clauses you were assured your offer was not even looked at. It is understandable for the seller to take an offer that is firm with no conditions over one in which the buyer could back out of for several reasons. Thankfully buyers are not forced to make the decision anymore.

So now that the market has returned to somewhat normal with clauses and competition levels decreasing, and with prices having likely leveled off, where do we sit going forward? Instead of telling you, let me paint a picture and allow you to come to your own conclusions…

People have wanted to purchase a home for many years but it got to the point where the prices were insane. The list price was over-inflated and frightened and desperate buyers were paying $50, 000 if not more over these sky high prices. You can read more about why people were over-paying here.

Things have changed now and buyers are willing to pay list price (or a little more) on the “corrected” price on homes. In most cases they are paying on average 97% of list price compared to 120% to 125% that we saw last year. Because of this buyers are becoming more confident.

Now consider all these people that wanted to buy but stopped looking because the market was too crazy. When they realize it is not as crazy, are they likely to start looking again? You bet your bottom dollar they are. Add on top of this pent up demand the half a million immigrants arriving in 2023 who are going to be looking for a place to live and that adds up to a significant amount of demand.

What about supply? Sure the number of houses on the market has increased, but it is well known that there is a housing shortage in Ontario. Has the government done anything substantial to solve this shortage, or even provide some sort of relief to it? Simply put…no. So lets call the pent up demand and housing shortage the kindling to the fire.

What has doused the flames of the red hot market were uncertainty due to war and sanctions affecting our local economy, and interest rates climbing at an unprecedented rate faster than any other country in the world. What happens when you take away that uncertainty? We become accustom to the new price of things, desensitized to the war in a foreign land, AND interest rates stop increasing. What if interest rates even came down a little bit?

If you are thinking selling, now is the time to prepare. Get your property ready for market. If you are thinking of buying, get your affairs in order. Have a budget and a preapproval ready to go. The chances that this spring market is going to be active is high and although we can never predict with 100% certainty, it is better to be prepared and the market does not heat up, then unprepared and miss the opportunity.

Now would be the perfect time to have a conversation. Please give me a call or send me an email and lets discuss how you can be prepared. Don’t miss this opportunity.