Anyone who has even the most basic interest in real estate will be familiar with the terms ‘buyer’s market’ and ‘seller’s market’, and you will probably also be aware that in major metro centres in Canada it’s primarily been a seller’s market for the better part of 2 decades now. With all sorts of factors – and rising interest rates first and foremost among them – that has changed over the course of 2022 and as we get closer to 2023 Canadian real estate is going to continue to be more of a buyer’s market.
That is a very welcome change for people who are hoping to get into the market, and even if you are someone considering selling your home sometime soon you will likely agree there needs to be more a of balance here. There certainly hasn’t been for a long time now, and so while some will hope the pendulum shifts the other way we likely agree it should come to rest somewhere more in the middle. This is especially true for cities where affordable housing is needed, and that doesn’t just apply to Canada’s biggest cities anymore.
Realtors will see it this way too, and despite what one would see as the obvious advantages to the market being a seller’s market. What is happening right now with regards to the downturn is making it difficult for some, but here at Real Estate Leads our online real estate lead generation system is very effective for countering that and making it easier to generate new clientele. It is particularly recommended for agents who are new to working in the real estate business and working in an area of the country where the business is especially competitive.
Back to topic, we’ll take this week’s entry to talk about the current advantages for homebuyers with this slowed market in more detail.
Canada’s housing market is currently staggering under rising interest rates and sagging sales, and this means the prospects for buyers are now considerably better than they were before. Everyone has heard about bidding wars and the FOMO phenomenon that was pushing people to act rashly when it came to submitting offers on homes. So one of the biggest benefits of the market slowdown is that would-be buyers have more time to properly evaluate what they want to do.
60% of markets in Canada saw home sales drop between August and September according to the CREA. Monthly sales activity came in 32% below what was recorded for October of last year, and prices were down 1.4% between August and September of this year. What is more notable is that the declines took place in major markets – the Greater Toronto Area, Vancouver, Calgary and Montreal, and these are areas where high demand typically always neutralized market forces that were major factors elsewhere.
In a hotter market a buyer might have no choice but to put down offers on multiple properties to have a chance at one, and still perhaps be outbid on all of them. The market is less fluid now, still with plenty of inventory. Less competition means that buyers can take the time to have that second look before they make their offer.
More Conditional Sales
Agents are also saying they’re starting to see conditional sales offers come in again. Before it was usually a scenario where buyers had to put in their best bid, but now they can put conditions on their offers. This is smart when those conditions are related to securing financing, insisting on a home inspection, or checking on insurance requirements.
Connected to this it is interesting to note that the buying intensity seems to be concentrated on properties at the lower end of the market, and in desirable markets like Toronto and Vancouver those would be homes for sale in the $800,000 to $1-million price range. This suggests that more entry-level buyers now have the confidence and self-assuredness to be buying homes for themselves.
Some will say it’s ‘crazy’ that entry-level home purchases cost near to a million dollars, but it is what it is for these big cities and it really does come back to the age-old reality of what the market will bear.
Good for 2nd Time Buyers Too
Realtors will tell you this is a promising market for second-time buyers too. Those who have had ‘seller’s remorse’ because they didn’t get as high a price for their house as they could have last year may now be able to buy their next house cheaper than what they would have paid last year. This is an aspect of an increasingly seller’s market with real estate in Canada that doesn’t get talked about as much, but it is worthy of mention because the number of homeowners who move into a new primary residence within 2 years of purchasing a home is higher than ever before.
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