As the calendar hits April, this is traditionally the time of year where the spring real estate market kicks into high gear. The reality is the market has been in high gear since January 1 – and what the rest of the year will bring nobody really knows. There are too many unknowns.
New record pricing continued to be set during March, although there were some signs that things could be changing slightly as March came to a close. The local real estate market has been driven by 3 main factors – low interest rates, record low inventory, and of course the flow of buyers coming from the GTA. If any of those factors start to change, the market will evolve – and quickly. I think we should also add a fourth factor into the equation – buyer psychology. It has been a tough year to be a buyer, and certainly buyer fatigue may set in as buyers retreat from the market after they lose yet another bidding war. Of course, pricing has gone up so rapidly, some buyers have left the market as they can no longer afford to buy.
To add to this, sellers have seen what their neighbours have sold for earlier in the year, driving up expectations for sellers – but some of those results may not be replicated on certain housing types as inventory levels rise. I do believe buyers are now expecting homes to sell for way over ask (in the under $800,000 range specifically), which is not always the case, as it is entirely dependent on so many factors including how low the listing price is set. In other words, it is getting very confusing out there for buyers. And this is resulting in outcomes where realtors are holding offers and not even getting offers on offer date – certainly not the 18 offers we were seeing a month or so ago. Part of this is because if the buyer assumes the home is selling for $100,000 over ask, they are not even offering, and it may be a case where the seller would have been happy with a much lower number.
As I said, very confusing for buyers – and frankly realtors too. As the market evolves, it will be important for realtors to adjust their marketing strategy so they don’t end up with disappointing results for their seller. We will see less of the “holding offers” strategy later in the year, but it is a strategy we will still see on many homes over the next couple months. If inventory spikes up, holding offers may be a less effective strategy.
For example, if there are 6 backsplits for sale on the market instead of one, buyers will have more choice, resulting in less upward pressure on pricing as you don’t have all the buyers chasing and bidding up the price on one backsplit. Further, as more choice hits the market, buyers will gravitate to the home with better location, better finishes, etc., whereas earlier in the year buyers were offering on pretty much any home. So sellers may have to spend a bit more on updates before putting their home on the market to get a desired result. Part of the reason I introduced my $20,000 HOME RENOVATION PROGRAM for sellers last month. Ask me for details.
Upward price pressure will subside somewhat on many types of properties as we progress through 2021, so there is no doubt that if you are looking at selling, the next couple of months is a great time to bring your home to market. We have definitely seen more people move up the planned sale of their home to early this year to “cash in” on the current market, even though they may have to temporarily rent somewhere as they put the rest of their retirement plan in place, wait for their new home to be built, or secure the purchase of their new home in another area – which seems to be the East Coast for a number of my clients!
One observation I will comment on is regarding the upper end of the market, which I define in the Centre Wellington area as homes over $1 million. We have definitely seen more activity in this part of the market, even seeing multiple offers of up to 10 or so buyers on one property – something we haven’t seen before in our area.
More subdivision homes are selling over the $1 million mark, and we set an all-time high record price of $1.9 million for a home in Downtown Elora. Country properties have seen high demand and are also selling for record pricing.
Moving forward, the overall market will remain robust, with above average demand for bungalows, Downtown Elora properties, country properties – and of course any homes selling for under $700,000.
If you are thinking of selling, I recommend getting your home on the market by the end of April or mid-May.
For a confidential, no obligation discussion on your real estate needs, call Erica or myself anytime.