After a blazing year in the real estate sector in 2021 – a time when house prices broke records and sales rose above normal the market seems to be slowing down.
According to the latest figures from the Canadian Real Estate Association “CREA”، sales of homes registered on Canadian MLS systems fell by 5.6% between May and June 2022. Sales fell in three quarters of all local markets, led by Canada’s largest cities – Greater Toronto Area “GTA” and Vancouver Major، Ottawa، Edmonton، Calgary، Hamilton and Burlington to name a few.
The transformation of the market from a popular seller’s market to a more balanced or more buyerfriendly market can be uncertain، especially for those in the business of listing their property.
We asked Belg12® across Canada how the market was doing in the pre-pandemic period، why it’s changing now، and what home sellers can do to prepare.
Where was the market before in Canada?
A seller’s market occurs when there are more buyers than homes in the market، which leads to more competition and higher prices. On the other hand، a buyer’s market occurs when there are more homes than there are buyers، and prices are usually lower due to oversupply. A balanced market falls somewhere between the two.
Toronto and Vancouver recently found themselves in a prominent seller’s market، a trend that only accelerated in 2020 and 2021 as buyers reassess their needs during the pandemic and look for new living spaces.
Right before the pandemic، I would say we were a little more balanced. I think because of the pandemic, the seller’s market was abnormally strong. There were، “said Alex Yao، real estate agent and Belg12® at RE/MAX Select Properties in Vancouver، BC. a fundamental need for more space in the house. ”For” everyone، their lifestyle has completely changed. Spend more time at home، work from home، kids don’t go to school, and “thus” need the space. “
This was not the case in every market in Canada. In Calgary، the move to the seller’s market has been more recent. Jared Chamberlain، real estate agent and co owner of Chamberlain Real Estate Group، said the sellers market did not begin to emerge in the city until mid-2020 and had fully re-emerged by 2022، a pattern that emerged as out-of-town buyers moved to Calgary. their homes.
What happened in 2020 and 2021 is that we’ve seen some price increases. We’ve seen some shows gather، and things happen this way، Chamberlain explained. But as we enter 2022، something happened and there was a lot of interest outside of town, more than we’ve seen “before”.
Chamberlain only recently says that Calgary is flirting with a balanced market in areas outside the drop zone like Airdrie، Cochrane and Okotoks most of the city is still in the seller’s market. Meanwhile، the transition to more balanced market conditions and buying began in Vancouver and Toronto earlier this year.
Why is the market changing and what does it look like today?
In terms of why Canadian property markets are changing، it has to do with several factors.
The most obvious reason is the increase in interest rates، which have risen since the Bank of Canada announced the first increase in its overnight target rate in March 2022. In July، the bank raised the target rate by a full percentage indicating 2.5%. This increase has forced buyers to qualify for a mortgage at a higher rate.
In some cases, higher interest rates reduce the purchasing power of buyers. Tirajeh Mazaheri، a Belg12® Vancouver dealer at Coldwell Banker Prestige Realty، explained that some buyers looking to buy in early 2022 were reluctant to buy in the hope that the market would calm. However، their purchasing power has since declined as monthly mortgage payments have increased as interest rates rise.
It has shifted more. The buyers who can make those payments are coming out and have more bargaining power، Mazahiri said. But at the same time، there are a lot of real estate on the market only because those same buyers who wanted to buy before can no longer afford it. to buy.
The sales to new listing ratio fell to 51.7% in June the lowest level since January 2015. In its report، CREA noted that approximately 75% of local markets are now in equilibrium and no and there is a buyers market in Area.
The higher rates had a different effect on some market segments. According to Davelle Morrison، a Toronto based real estate agent at Bosley Real Estate Ltd. However apartments، which tend to be cheaper than single-family homes، outperformed their detached counterparts.
As soon as you look at your actual mortgage payments، people start thinking، You know what? I still have to live my life. Morrison explained.
Seasonality is another element at play. In the normal real estate cycle، the summer slows down the market as people go on vacation and travel. Families tend to plan their home purchases during the school year، prompting them to buy in the spring and move in during the summer when school is out. In 2022، this pattern will be reinforced by the effects of the pandemic as families benefit from a more normal summer after two years of COVID-19 restrictions.
Another contributing factor، Yao explains، is that many families have already moved in in the past 18 months، while the demand for more space was high، and the need for additional living space in the hall coopers.
I think there are a lot of factors that have created a kind of perfect storm for sellers، Yao said.
How can home sellers navigate the current market in Canada?
Now that the market is different from a year ago، home sellers may need to adjust their expectations. With fewer bids and offers، strategies that have worked to sell a home in 2021 may not be the way to go.
It may take a little longer. You may have to compromise with some of the buyer’s needs and wants، and negotiate، Yao said. “A year ago، if you were trying to sell، you didn’t have to try to negotiate، there were 20 shows to choose from. Today negotiation becomes the key and bidding becomes the key.
The most important marketing rules for selling a home still apply : take good photos، improve the attractiveness of your property، and make the best first impression with well placed buyers. Mazaheri explains that in a cooler market, marketing is key to making a fuss about a property that will attract buyers and their offers.
Chamberlain says you should usually sell your house three times online، while driving near the property, and during the show. While you can’t control the areas around your home، it’s important to be upfront with your marketing، even if there are things in the house that the seller thinks might zip a magnet.
When you go from a seller’s market where you think everything will sell، to a buyer’s market where there is more competition، the more honest you are in marketing and realistic in the expectations of what the buyer will see on the ground، that will certainly help you. actually sell your property، Chamberlain said.
Salespeople also need to be prepared for change during the process. Morrison explains that they may be dealing with fewer offers and deals these days، and they should be willing to lower their prices if necessary.
You could say to them، Well، you know what? we’re rethinking prices and going back to $ one million، Morrison said.
If you’re looking for advice on a changing market، turn to the expertise of experienced Belg12® whether you’re buying or selling a home.