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If you read this newsletter every month, you will know that we discussed a potential shift in the market last month.  In that newsletter I mentioned that the early signs were there, but we need to see more data to really tell if that shift is going to happen or not.  Another month has come and gone and while I still cannot say it with certainty as we never know the future, it does appear that the shift is taking place towards a little more stability and balance in the market.  I do not think that this means prices will drop in all sectors, or that homes won’t still sell relatively quickly, just that the ratio of potential buyers to sellers (also known as supply and demand) is becoming more balanced.

Despite the fact that early signs of a shift are there, we did see prices continue to increase throughout the month, seeing an increase of around 6% through February 2022.  If things keep going the way they are, the “momentum” of the market will likely see homes increase in value again through March 2022, while likely stabilizing in the following months. In saying this, I do think there is potential for homes that are at the lowest price point of said type of home to come down in price a small amount (ie. Townhouse or detached home) as the lowest priced homes of each property type have increased at a greater rate than the average home of the same type.

While the number of sales in February 2022 was 39% higher than January 2022, it had 8% fewer sales than February 2021. If the total number of available homes was still as low as it was in January, this would not be a sign of a shifting market, but we saw 75% more new listings hit the market in Feb 2022 compared to Jan 2022, as well as 14% more new listings than a year ago in February 2021,  finishing the month off with an active inventory of 3,790 homes for sale, an increase of 65% compared to the end of Jan 22. 

More homes were listed than were sold, in February 2022, allowing the inventory to increase which is the main sign that there may be a shift happening.

With rising interest rates and a “slowing” (I use quotations as we are still in a hot market, just not quite as hot) market, it does appear as if there may be some relief for buyers in the near future. I do not think that this relief will come in the form of lower prices, rather it will mean more time and more properties to choose from, with a higher chance of having subjects on the offer. I still think that the average house is likely as affordable as it will get in the near future, so I would not recommend waiting until prices drop. If prices drop, it will likely mean that interest rates have risen and affordability will remain about the same.

If you are thinking of selling, now is still a great time to do so, but the excitement of 100 showings and 20 offers within 3 days of being on the market are likely a thing of the past unless your home is truly amazing or you list your home at a silly low price (doing so may get you 20 offers, but I am quite certain you won’t like the prices on those offers if you are expecting to go way above asking price)

These transitioning markets can certainly be tough to navigate as buyers may still have the mentality that they have to pay above asking price for their offer to be considered, while sellers may start pricing homes at or even above their current value. When both of these things are happening at the same time, it can mean buyers don’t bother looking at homes they actually could afford. Let’s break this down with a simple example.  Bill Buyer has been in the market for a couple months and can afford to spend $800,000. He has been focusing mostly on homes priced at or below $750,000 to give himself a buffer of what he thinks he can afford. Now that the market is shifting, Sally Seller decides to list her home which has a current market value of $775,000 at $785,000.  Bill buyer, though able to afford the market value of the home, does not even bother looking at it, because he figures it will go out of his price range. Bill would not be unique as a buyer in this situation, and Sally is left frustrated because she only had 5 showings in the first week. Time will correct this issue as the market continues to transition, but in the meantime, you can still navigate the market with the assistance of a savvy real estate agent on your side. I am of course happy to be that agent for you and help you navigate this craziness we call a real estate market.

Call now to start making your unique plan to make your next move as stress free as possible.