Over the past 7-10 days there are some signs that the local real estate market is shifting. The frenetic pace we have witnessed seems to be slowly (perhaps temporarily?) dissipating. The number of multiple offers we are seeing on homes is decreasing—even showings in general have slowed somewhat in many cases. Of course, certain homes are still attracting high interest, but across the board I would say things are settling down a bit.
Now, before buyers rejoice, it is still a seller’s market. But there may be more opportunity for buyers to finally purchase without competing against 12 or more offers at the table on every home. We are still seeing multiple offers on a number of properties, but we are also seeing properties get no offers on offer day—which is definitely a change from the past few months. The word unpredictable is once again creeping into the description of the local real estate market.
Keep in mind, we are just now entering into the prime Spring market, and I am expecting good activity over the next couple of months.
There are a lot of variables at play that are leading to market unpredictability.
- How big will the next interest rate hike be?
- Will the higher cost of living impact the market in regard to overall affordability?
- Is buyer fatigue just temporary and will we see another surge of multiple bidding as the nice weather arrives?
- Or is there a bigger shift or trend happening?
- How much new inventory will hit the market in April?
- And of course, larger global issues can impact the real estate market as well.
If you are thinking of selling, it is still a good time to sell. However, some of the exceptional results we have witnessed over the past few months may not repeat. Again, certain homes will do better than others. Nice bungalows, condos and country properties will outperform the market in general (we just sold a nice attached condo townhome bungalow with a loft in Fergus for a record $1.125 million). Families moving from the GTA are also increasing demand for larger subdivision homes. (We just sold a newer Fergus subdivision home for a record $1.7 million.)
At the end of the day, it’s always about supply and demand. If half a dozen similar homes hit the market all at once, that will affect the selling price of those homes. Higher inventory will be one of the reasons we will not see some of the exceptionally high sale price results from a month or two ago. Having said this, I do not see an overall price correction in our market.
As I alluded to in my previous update, what will need to change is the marketing strategy your REALTOR® uses to market your home successfully and sell for the best price. Over the last few months, realtors have been “holding offers” on almost every new listing (i.e. list on a Thursday, look at all offers the following Wednesday, for example). In this strategy, the home was generally listed a bit below market price to attract lots of interest and multiple offers. This approach, while still appropriate in some cases, will become less effective moving forward should the market continue to shift.
Buyer fatigue is part of the reason why this is the case. Many buyers are now just willing to wait it out rather than get into another multiple offer frenzy. (And frankly, prices have gone up so much over the past year, some buyers have simply been priced out of the market).
Moving forward, selling “the old-fashioned way”, as I call it, will be the more effective way to sell your home. Price the home at the price you want and take it one offer at a time. That is not to say you will still not see multiple offers. But the idea is if someone brings you a firm full price offer for listing price, you will probably take it.
Accurate pricing moving forward will be key. While there may be a tendency to overprice based on a few exceptional results earlier in the year, the last thing you want to do in a shifting market is start too high and end up having to make several price reductions—eventually selling for less than if you priced correctly in the first place. Having a realtor who really knows what is going on in the local market will be very important as the market continues to fluctuate.
The real estate market in April is going to be very interesting to watch.
Until next month, take care.
George
