Realtors all across Canada have certainly been beneficiaries of the tear Canada’s housing market has been on for years. Come mid 2018 and we’re seeing that that era may now be over, and in hot markets like Vancouver and Toronto it’s becoming the ‘bubble’ isn’t going to exactly burst as predicted, but it isn’t getting any bigger either. That of course means something of a plateauing for home values, and particularly for detached homes that were nearly always selling for way over asking as a result of bidding wars. This and the larger number of qualified buyers looking to buy homes before the new Mortgage Stress Test Regulations via the BoC.
Home sale volumes for the period between March and April hit a nine-year low, according to the Canadian Real Estate Association (CREA), and that of course has effects of all sorts as the increased amount of inventory make it not so slantedly a seller’s market anymore.
Of course, realtors will have fewer prospective detached home buyers as a result of both these trends. Here at Real Estate Leads, our online real estate lead generation system is a great way to get more out of your client prospecting efforts and connect with individuals you want to be in touch with as a new realtor.
No Pop, For Now
Home prices for the most part aren’t dropping, at least for now. The national average home price slid 6.4% last month as compared to May 2017. Most of that’s attributable to the fact that the mix of homes being bought and sold now includes greater numbers of comparatively inexpensive properties, like condos and to a lesser extent townhomes, and less in the way of detached houses. The national average lower is skewed lower accordingly.
Looking at CREA’s benchmark home price, home values were up 1% in May 2018 compared to May of last year. That’s not cause for alarm, but it’s still a very big dip from the often tens of thousands of dollars worth in annual home equity gains many Canadian homeowners had been basking in.
The reality now seems to be price increases in the low-single digits. CREA predicts national average home prices to rise by 3.8% in 2019, with gains in Ontario, British Columbia, Quebec, New Brunswick, Nova Scotia and Prince Edward Island, and prices staying stable in the Prairies and Newfoundland and Labrador.
That trend of stagnating or modestly rising pricing, if it holds up, has implications for home sellers, home buyers and even homeowners who aren’t planning to sell.
Bidding Wars Becoming Fewer
Clients thinking of putting their home on the market should no longer rudimentarily assume that their home will sell for a higher price than their next-door neighbour received last year. There will be exceptions to that, and most likely in Ottawa and Montreal, where home prices are still recording healthy gains.
As a real estate agent, you should have a firm idea of how to price a client’s home competitively by looking at price trends over the past three months in your particular area. Being in the know up front prevents any type of misstep on the part of the seller that may hinder or disappoint them in the future. Know market value, and suggest listing prices accordingly.
Have your clients best interest firmly in place, and have all 3 of you ‘know’ your story as you say, knowing how to defend your price. Ideally, you’ll be able to present the buyer and the buyer’s agent with a spreadsheet showing prices for similar properties in your area over the past few months.
Pricing a home in the ‘high range’ of what it’s worth gives you and your clients room to negotiate, while underpricing a property with the idea of sparking a bidding war isn’t nearly as advisable as it used to be.
See bank appraisals for reasons for that. They’re not as assured as before either, and banks want to protect themselves as well in case of any downturn. Long and short of this is banks won’t lend more than a home’s appraised value. The winner of the bid war may not have the finances to cover the difference once the bank looks at mortgage terms.
It’s important to also have an end date for your client’s listing, to avoid their property languishing on the market and to place a cap on expenses incurred within listing the home professionally.
Downsizing Reconsidered More Often
As we mentioned in our blog of 2 weeks ago, more and more detached homeowners are staying put and not downsizing to smaller living spaces as has been the trend for a long time now. That’s because these owners are now having to resize their expectations, especially if home is Toronto or Vancouver.
Yes, sellers will still make a profit, but it won’t necessarily be the big gains they’d been planning on, and naturally their predisposition will be to hold tight for now
Relatedly, condo prices are soaring in all major urban areas in response to this and many other trends in Canadian real estate.
The prospect of getting a home for slightly less than the asking price has improved, and that’s good news for some buyers. Sign up here for Real Estate Leads and receive a monthly quota of qualified, online generated buyer and/or seller leads delivered to you exclusively for your independently-serviced area of any city or town in Canada. It’s a great way to supercharge your prospecting efforts and generate meeting opportunities with potential new clients.