What the heck is happening with the market?

We’re in a pretty strange time in real estate right now…for so many reasons. First off, the height of summer isn't typically the busiest season for real estate. Then there’s the fact that we don't have any clarity on rate hikes. Will they keep going up? Stabilize? Actually go down at some point? We will see what happens on September 6, when the Bank of Canada makes their next announcement. Then there’s the rental market – prices are nuts and bidding wars for rentals are somehow now the norm.

It's so much harder to be a buyer right now. That 8% stress test is making it very tough to qualify for a loan. So it's no surprise so many buyers are taking a “wait and see” approach and stepping back for the time being. That’s why there are a lot of listings just sitting on the market: appetite to purchase has taken a hit. As a result, people who have bought new places before selling their existing homes are facing some challenges. 

Read more: Should I buy or sell first

This market is pretty confusing. 

Honestly, I've never experienced anything quite like it in my career. Tried and true strategies aren't always working, and it's taking hard work and thoughtful strategizing to get the best results for my clients (both buyers and sellers). The sense of urgency we’ve seen for so long just isn’t there anymore. 

Sellers: you may not get as much as you might think

Unless they have a super-special property or you’re selling in a high-demand location, people who are being too ambitious with price right now aren’t getting much traction on their listings. Remember: if you price too high, the listing could sit and get stale, which could impact price even further. 

For most sellers, I would also say that selling first makes sense in this climate. You’ll know exactly how much money you have to work with – and will face a lot less pressure to unload your old property before you close on your new one. (No one wants to unexpectedly have to carry two mortgages.)

So what's going to happen next? 

It’s hard to say. Traditionally, fall is a time when demand really picks up. But a lot depends on the upcoming Bank of Canada announcement. It could go either way. If they raise rates again, even more buyers will drop off. If they hold, that might boost confidence a bit, but I think it will take a couple of holds in a row to make a significant difference. 

No matter what happens, though, I think fall will be a great time for buyers who can pass the stress test. Let’s say you can get a good deal now, and you have the means to pay the current interest rates for a while. When rates eventually come down (and they will!),  you’ll end up paying a lot less than if you had bought at a higher price with a lower initial interest rate. Remember, you can always do a short-term fixed-rate and refinance when rates come down – or stay variable and ride the wave, which seems to be a thing again.

Downsizers who have cash and don't need to get a mortgage are also in a fantastic position. However, if you're in the market for a larger luxury condo, you may face some competition. There aren’t a lot of those units out there right now that appeal to that demographic. And when they do come up, they're getting snapped up fast. Interestingly, the entry-level luxury market is very undersupplied right now as well. If you're looking in the $2 million plus range, there isn't much to choose from there, either. But overall, only properties that tick all the boxes are selling quickly right now.

If you have questions about how this market could impact your goals, give me a shout! I'm always happy to talk.