What is Happening in the Market RIGHT NOW?

May 2024

Wondering what’s happening right now in the real estate market? Here are 5 things you need to know:

1. The Buyers Are Back

For almost 2 years now, Canadians have faced an uncertain real estate market as historically high inflation led the Bank of Canada to increase interest rates ten times. Higher borrowing costs led to slowing consumer demand, which led to lower home prices… exactly what the government set out to do.

But here’s the thing about real estate market fluctuations caused by economic factors like interest rate hikes: they change the timing of when people decide to buy or sell – they don’t change the NEED to buy or sell.

As an example over the last 20 years, the Toronto Real Estate Board has recorded an average of 88,791 homes sold per year and 121,712 at the peak in 2021. In 2023, there were only 65,936 homes sold – a full 25% less than the 20-year average and almost 50% from the peak. But the buyers and sellers of those 23,855 to 55,776 home sales didn’t just vanish – most simply decided to wait for better economic conditions.

The family that had baby number 3 in 2023…They still need to move from their 900 sqft condo to a bigger house. The person who is retiring and thinking of moving to Hamilton or Niagara still want to get out of the city. It’s the same story with first-time buyers, downsizers, and yes, even investors – their real estate goals didn’t change – but their timing absolutely did.

Lifestyle needs, demographics and immigration are the true drivers of the real estate market in the long term – not the economy. Economic factors just influence when those moves happen.

And with better economic conditions now on the horizon (so we’re all hoping), the influx of home buyers in Toronto has already begun. What does that mean for us? The buyers from the GTA can’t buy your house here unless they sell their home there. That’s why I keep my eye on the Toronto/GTA market.

2. Bidding wars are back too.

To be completely honest, even experienced real estate agents are surprised by how fast and fierce bidding wars are right now. Was involved in a offer situation on the Mountain in Hamilton. 1100sqft bungalow, needed complete renovations. Listed at $500k…28 offers and sold for $653k.

3. Smart homebuyers (who have the $$) are seizing the opportunity to buy a property BEFORE interest rates drop.

While a lot of home buyers are waiting for interest rates to drop, those who can weather higher rates in the short term are choosing to buy now. There are real good reasons to do so:

Try to avoid competing with all the buyers that are expected to enter the market when rates decrease.

Prices will increase in the next 6-12 months and are hoping to buy at a lower price now. The price you pay is your set point. That never goes up, it only goes down as you pay your mortgage. Remember you date the rate; you marry the price (in other words, interest rates are short-term; the price you pay is locked in forever). The difference between what you will save on the 5% vs 4.5% rate will be much less than saving $50k on the price.

4. The best time to list your home for sale was yesterday; the next best time is tomorrow.

Don’t worry…there wasn’t really anything magical about yesterday, and tomorrow will probably be unremarkable. But when you’re buying or selling a home, the benefits of certainty – knowing the exact conditions of the market – are significant. Remember: there’s no such thing as ‘timing the market’ – the people who brag about buying low and selling high? They got lucky…and if they’re honest…will admit that 😊

(That’s not to say that staying informed isn’t really important – because it is – so please keep reading my newsletter and asking questions, lol)

5. Interest rate cuts are coming

Continued lower-than-expected inflation is now pointing to an imminent cut to interest rates, with economists (and myself, see past issues) predicting it could happen as early as June 2024. It may slide to July as the US economy is still on fire which can influence the CDN Bank.

Advice for Buyers

If you have the financial means to buy at current interest rates, consider making a move ASAP. When interest rates fall, there will almost certainly be an influx of new buyers competing for properties. If you want to avoid even fiercer bidding wars and higher prices, the time is probably now.

Choose your REALTOR carefully – you’ll need someone experienced in strategically navigating a heated market if you want to get the house you want.

Make sure you’re working with a great mortgage broker who can help you navigate the current borrowing options. Shorter-term fixed-rate mortgages are worth exploring.

Advice for Sellers

If you want to sell your home in 2024, it’s time to get ready. Historically, homes listed between February and May sell for a higher percentage of the asking price than the rest of the year. Bumps in activity and prices – like what we’re seeing right now – don’t always last.

The number of homes for sale is historically highest in May-August, so if you’re hoping to avoid competing for buyers with too many other homes, consider listing asap. Fewer homes for sale + motivated buyers = $$$.

Should you buy or sell first in this market? It totally depends on your situation, neighbourhood, and the type of home you own and want to move into. If you would like more information just let me know and we can talk, coffee is on me 😊.

What’s Happening in the Real Estate Market right now