LACKIE: Real estate market statistics talk, but who’s listening?

Content of the article

I feel like I’ve been writing about the signs of a housing market downturn for months.

Advertisement 2

Content of the article

After the highs in February, it seemed hard to imagine that the run wouldn’t just continue. After all, it’s been two years of COOVID highs that only keep rising.

But then, of course, there were signs. Offer dates generate fewer offers. Perfectly charming underpriced homes that don’t reach their price the night of the offer only to be relisted higher the next day. It seemed like buyers were suddenly showing some reluctance and certainly some discernment – ​​they weren’t willing to buy just anything.

The first real sign of trouble I noticed was in early March when my colleague had a hot listing in a red light district and after a week of non-stop visits she only received two offers. His seller still touched his price but the whole thing was a bit disconcerting.

Advertisement 3

Content of the article

I then had a beauty signup the following week which was nice and busy but only yielded three offers. Again, we had a great result, but the clear signs of waning interest made me feel like choppy waters lay ahead. At that time, interest rates were rising, but the real Bank of Canada roundup was still only conjecture. It seemed to me that people were getting ready.

And now here we are. On the other side of this crisis, borrowing costs tend to rise and prices tend to fall. Exactly where we should all have expected to find ourselves one day since rates cannot stay low forever.

Despite all the talk of supply, supply, supply and rampant speculation fanning the flames of our FOMO-driven market, the nearly free flow of money was the fuel that kept the flames burning. And while rates are rising sharply, some of the craziness we’ve seen over the past few years has obviously started to subside.

Advertisement 4

Content of the article

We apologize, but this video failed to load.

Just look at the TRREB’s April market stats to see how this moderation plays out.

Home prices in Toronto fell 6.4% from the previous month, the biggest monthly drop since April 2020, when the world came to a standstill with the arrival of the pandemic. With homes sold down 26% month-over-month, even the bulls among us who fervently believe in the courage of this real estate market must surely be starting to wonder.

Colleagues who insisted that everything was fine and that my observations were nothing to fear are now beginning to change their minds. Everyone agrees that change is afoot – the question is what the next six to 12 months and beyond will look like.

Will this be like so many previous downturns that turned out to be relatively short-lived reactions to new government policies and interventions or should we look to the stock market crash of the early 90s to see what lies ahead?

Advertisement 5

Content of the article

Will it take consumers some time to realize that borrowing costs are returning to moderate levels before re-engaging again? Or will our broader economic precariousness fail to provide enough stability to get us out unscathed.

Even economists cannot find a consensus. Some reports say we should expect a 24% drop in house prices while others suggest we will land somewhere in the 5-7% arena, still a far cry from where we were before the pandemic.

This makes this period particularly difficult for real estate agents who are asked to advise their clients. The last thing you want to do is be alarmist since no one knows for sure what will happen – there are people still sitting on the sidelines who have cashed in to wait for prices to drop only to find themselves now out of price for a long time.

Advertising 6

Content of the article

We apologize, but this video failed to load.

At the same time, I find myself scratching my head at the type of “estate-only-amount” agents who still declare now a good time to buy. I sincerely wonder if they pay attention to their markets and consume media beyond TikTok.

Generally speaking, now is not a great time to buy unless, of course, you really need it, have the income to comfortably afford that shipping cost, and are willing to stick with it. on the long term.

For people who need more space, a change of location or who have planned a short to medium term retirement on the equity in their home, putting their life on hold in anticipation of an uncertain future is an error. Get yourself a seasoned agent who can fight for you and get out there. If you can land a property at 10% below February comparables, you are mitigating a substantial portion of the risk, IMHO.

Selling in the same market conditions you should buy in usually means even impacts.

That being said, for people who are still wondering if they should maximize their line of credit to buy an investment property, by betting on a guaranteed appreciation, I find it very hard to believe that this kind of risk in worth it.

Is it a blue sky in front of us? Not really. Are we headed for a world of suffering? For some, yes, absolutely. For the rest of us, maybe, maybe not.

Don’t like this take? I apologize. I’m just trying to be honest.

@brynnlackie

Advertisement 1

comments

Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. See our Community Guidelines for more information and details on how to adjust your email settings.

Comments are closed.