The Billion-Dollar Question. What’s happening in Real Estate?
Today I want to talk about the evolving market in Ontario and some predictions about what will happen as we begin to open the Province back up.
First the big question I hear is “Will the residential market crash” The short answer depends where you live and how your property price compares against the average sale price in your local market. It is normal to be swept up in the frenzy of big international news stories, but the truth is the value of your properties is far more effect by what is happening across the street then across the world.
So, if you are wondering if your neighbourhood will see a drop in home values, you need only look at your neighbours properties. Are you seeing well maintained houses and lawns, or do you see the telltale signs of neglect and crisis (vacant properties, overgrown grass, maintenance issues?) If more then 5% of the homes in your neighbourhood are showing signs of neglect, then that would normally signal that there is a devaluation happening.
You need only look back to 2008 to get a good idea how the market will respond to crisis. For those who were not in the real estate game in 2008 the first thing that happened after the Sept 2008 banking failure was panic and fear (sound familiar?) We saw unit sales drop off significantly (around 50% less sales in the 3 months after the crash then the previous year). This is playing out again although slightly higher. I am seeing numbers closer to 70% off last year’s numbers. That dramatic drop in real estate sales is bad for the industries that support real estate. However, its not all bad news for homeowners.
Why? Because sellers are down, but so are buyers. With a drop in both supply and demand we see prices hold. That is what is happening right now. I have been closely watching the activity for the past 30 days. We are still seeing far more listings go live then sales happen. This is pushing us into a strong buyer’s market. Typically, that results in a downward pressure on home values.
Right now, we are still in a very dynamic situation. There is still a lot of confusion in the upper ranks of our industry. We are being instructed that we should only be working on “absolutely necessary” transactions. However, what defines “Necessary” is very ambiguous. That means each brokerage and Realtor® are left to decide if they should help a client or not. I am hearing many stories of Realtors® telling their buy/sells to postpone their activity while we are in lockdown. I am also hearing the opposite is happening. What does all this mean?
- There is a lot of pent up demand for people who planned to sell in spring 2020. Many of them will choose to sell once the lockdown is eased.
- There are many buyers who have gotten cold feet and are taking a “wait and see” approach.
So, the billion-dollar question. What will happen when they announce the slow re-opening of the Ontario economy?
I suspect there will be a LOT of new listings. Will there be the buyers to grab them? I suspect that the reality is some buyers will no longer have the funds to afford the property they wanted, and they will choose to wait, So I am predicting a strong buyer’s market for most of Ontario. This will result in flat prices in the low and average price points in a municipality and down pressure on the high value properties.
Some people are asking… If prices are going to drop, should we sell our home now? It depends on your situation and risk tolerance. First you need to work with a team that is skilled in virtual listings. This is not business as usual. Second, you need to ensure minimal public access to your property. Not just for your health, but to minimize community spread.
We have developed a low-cost system to give each of our sellers a full 3D virtual experience which minimizes the risks of community spread while ensure maximum exposure to the buyer’s who need to buy today. One strategy I am seeing is sellers listing today and securing top dollar with a very long close. Then as the market opens and new listings are added today’s sellers become tomorrow’s buyers and with the increase in inventory there is a great opportunity to buy your dream home at a great price with less competition.
If you would like a virtual home consultation or if you just want to talk. Reach out! We love to chat real estate. Here is some of the services we can provide:
- Virtual Tours
- Virtual Home Marketing
- Virtual Home Evaluations
- Interview us Online
- Remote Buyer Consultations
- 360 Tours
- Electronic Signatures
- Electronic Inspections
Stay safe, sanitary, and most importantly sane during this crazy time!