You may have seen the news, it's been all over the media! The housing market across the GTA is adjusting to higher borrowing costs, with the number of transactions down on a monthly and annual basis. As has been the case with previous rate tightening cycles, some home buyers have moved to the sidelines to determine how they will reposition themselves in the marketplace given the higher rate environment and related impact on affordability.
Subsequently, average prices may be down in certain areas from the peaks of February & March. Outlying areas tend to react first to any market change.
Will the market crash? Supply still seems to be low in most areas. Prices are still up 15% vs. last year. Areas that are the most affected:
- Beautifully renovated properties - still command top price
- Areas that are desirable to live (or are connected to transit) - still command top price
- Entry level properties - buyer demand for value priced properties is still strong
Some sellers continue to test the market: as a consequence, you will see homes staying for sale longer, as some sellers want to hold out for peak prices (we call these 'unmotivated sellers' - they are willing to wait out this cycle.
Offers anytime may still mean sellers want over asking price: It used to be that there were 2 strategies used to sell a property: 1. List at a price that left room for negotiation and 2. List low to stimulate a bidding war. Now there seems to be a 3rd strategy - if the property did not sell in a bidding war, the seller keeps the price low to encourage showings but still wants over the asking price.
More than ever, choose to work with an experienced Realtor! As a consumer, understand that crazy home prices mean that many people think getting their real estate licence will make them some fast, easy money. This means there are many part time & inexperienced realtors out there. Can you imagine if you were the buyer and your agent did not understand how to draft a contract that protected you in your biggest financial transaction? Or if you were pressured into making a quick decision without the advice of an experienced professional?
My personal insights:
- when I'm the listing agent, I am noticing you need to price aggressively to get as many of the 'sideline buyers' through a property as possible
- there are fewer offers on offer night, but prices are still high for in-demand homes
- there are a lot of sellers hoping for February/March prices 'testing the market'
- buyers think the sky is falling and are not afraid to put low offers forward
- offers are coming in with conditions (we have not see that for a while)
- there are opportunities to be had - you need to look for them!
- motivated buyers are taking their budget and buying 'lower rung' properties so as not to miss the market
- anticipated interest hike in June may take another bite out of the prices...
- Scarborough still remains one of the best value areas in Toronto - both for Condos and for Homes
We are not sure how long these conditions will last, perhaps through the summer?