The state of the housing market throughout the country continues to garner headlines as we head into the spring real estate market, traditionally the busiest time for home sales.
The federal government made housing a major focal point in their recent budget, with various initiatives including temporarily banning foreign buyers, new variations of savings programs for first time buyers, and throwing dollars to municipalities to speed up the construction of new housing. Good talking points for sure, but ultimately, none of the initiatives will solve the housing issue.
Did the government even consult anybody before coming up with these initiatives? Did they talk to the builders who they expect to build a bunch more houses? Last time I checked, builders were having a hard time meeting deadlines on current builds due to labour / trade shortages and continuing supply chain challenges, never mind building a lot more.
The municipalities are even confused on how to use the funds being offered. Bottom line, the government programs are simply too little, even misguided in some cases, and will take too long to roll out to have any short-term impact in any event. Do we need more housing, including higher density? Yes. But that is a tough sell, especially in smaller communities. Housing is an issue that needs to be dealt with at the local, not federal, level.
On the other hand, another half a point increase in interest rates with more increases on the way will start to impact the market moving forward. You can read multiple opinion pieces out there supporting the thesis that increased immigration and a supply demand imbalance will continue to push prices higher. Others are predicting a major downward correction and some are suggesting an extended period of stagnating prices. In other words, unpredictable. No one really knows for sure. This unpredictability itself is impacting the market, with some buyers putting a purchase on hold.
Locally, the market continues to shift, with less buyer activity across the board. Inventory in Centre Wellington, Arthur and area continues to be quite low, but I expect quite a few more new listings to hit the market this month. The holding offers strategy is not producing the same results as a month or two ago. One example is where we recently listed a bungalow at market price, with another realtor listing a bungalow one street over at an intentionally low price to create activity, multiple offers, and an over ask selling price.
Our bungalow ended up with 2 offers and selling over asking (setting a new high price point actually), while the other bungalow ended up with no offers on offer day. That bungalow was then relisted at market price, eventually selling below that number. In my opinion, if the realtor had listed at market from the beginning, the home would have ended up selling at a higher price. Realtors, especially out of area realtors, are having a hard time with pricing right now, leading to less-than-optimal results for their seller. You really need to have an active local realtor who has their finger on the changing pulse of the market when selling in this shifting market.
This leads me to another aspect which will not be popular with some sellers: seller expectations. We saw some pretty exceptional results in the months prior to March break. And while I’m not saying we will not see some continuing cases of record pricing for certain properties, the market has shifted to the point where overall we will not see the type of results on many properties which we witnessed earlier this year, especially on subdivision homes.
In other words, just because your neighbour’s home (similar to yours) sold for a certain price in February doesn’t mean you will sell for that high of a price now. Not a popular statement I know. In fact, we have probably lost a few listings in the last month over pricing. But I will also say those homes are still on the market unsold. I want to give my clients good advice and a realistic listing price. Could you end up selling for more? Maybe. (See above.) But I want you to make an important financial decision based on good info.
I will not throw out a high number just to get a listing. That is in nobody’s best interest. The market is changing, and yes, January and February were probably the ultimate time to sell. But we cannot control that. Besides, you are still going to do well when you sell (maybe just not quite as well as a couple months ago).
Moving forward, generally speaking homes will start to take longer to sell, and you will start to see conditional offers again – including inspection and financing conditions – even sale of buyer property conditions. A return to “normal” let’s say. Staging your home will become even more important. And while it seemed any home (regardless of condition) sold over the past 6 months, doing some improvements before listing will often be recommended as the selling environment evolves.
Thinking of selling? Not sure what you should do before putting your home on the market for sale? Call me anytime at 519-766-3716 to arrange a no obligation discussion.
Until next month, take care.