Prices are lower right now, but that's about to change.
Wednesday Jan 31st, 2024
We are in a Buyer’s Market. We have low inventory and, what we call, ‘pent-up’ Buyer demand. Why is it pent-up - because interest rates are still high and all the Buyers are holding back until they (start to) come down. The Bank of Canada held their rate at 5% for the 3rd straight month and all indications are that we will see lower interest rates.
What’s going to happen when the rates start coming down? Buyers will come out of hiding and not only will we see greater interest in making offers and purchasing, but it will push up prices. Low inventory + low buyer activity = a stagnant market which we’ve been in for quite a while. But low inventory + high buyer activity = a dynamic market. When there is not much to buy, and many Buyers, prices are destined to increase.
In the last week, I can report that in several areas of the GTA there were 7, 12, 18, 25 and a whopping 85 offers on different individual residential properties. Yes, the one that received 85 offers had a ridiculously low list price - but it showed how many Buyers were willing to come to the table.
We’re in a changing market, yet again. And as soon as the interest rates lessen, we might be right back in a Seller’s market where there are not enough homes for sale for all the Buyers ready to buy.
We all talk about a ‘Balanced Market’. A balanced market has two meanings:
1) When you sell high, you buy high. When you sell low, you buy low: a balanced market
2) Is there enough for sale to meet the buyer demand? If not, the balance is in the Seller's favour. If there’s more sale inventory than Buyer interest, Buyers have more choice and that balance is in their favour.
Let’s play this out: If all the waiting Buyers, who see rates coming down, walk (run) back into the market and start to compete for a small number of available homes, prices will push higher and higher. Let’s remember the Seller’s market when there were hardly any homes for sale in 2021 - prices went sky-high.
How many times have we said and heard, “I should have bought when the prices were lower” ? Now is a very good time to buy and work with your Mortgage Broker/Financial Institution to negotiate the best possible mortgage rate scenario. Maybe even consider part of your mortgage at a variable rate and lock in the other part.
All markers and predictions are that, by June, the real estate market will be booming again. With lower interest rates and renewed Buyer activity, a Seller’s market is on the way - along with higher prices.