It's undeniable that the real estate market has been hot over the last couple of years, with low inventory across the boards and high competition among buyers. However, the market now seems to be making a shift. After three years, the inventory of homes for sale has finally increased for the first time since June 2019, with newly listed homes up 6.3% nationally compared to a year ago. 

While sellers are still listing at rates 6.4% lower than the pre-pandemic years from 2017 to 2019, the market is in the process of making major shifts. It's still a seller's market right now, but for how much longer? As a first-time homebuyer or even a seasoned homebuyer, it's important to keep up with the shifting market trends in order to secure a successful transaction. Read on to learn more about the shifting real estate market and discover how to better navigate these changes. 

What Does the Shifting Market Look Like?

In May 2022, Realtor.com released some housing data that revealed some major turning points in the market. In terms of inventory, the data shows that the number of active home listings entering the market is higher than it's been since 2019. Nationally, the inventory of active home listings has increased by 8% over the past year, amounting to 38,000 more active home listings compared to May 2021. 

While having more homes on the market is good for buyers, homes are still spending less time on the market compared to last year, and home prices are still rising. The market is definitely shifting, but not necessarily in a buyer's favor just yet. Interest rates are continuing to rise. These rising interest rates coupled with all-time high listing prices have increased the cost of financing 80% of the typical home by 48% compared to a year ago. 

In addition to rising prices, newly listed homes are larger. In May 2022, the share of newly listed homes less than 1,750 square feet declined from around 47% to around 45%. In comparison, the share of newly listed homes more than 1,750 square feet increased from around 52% to around 54%. This may cause frustration for first-time homebuyers because while more homes are being listed on the market, many are larger and more expensive. For example, the national median listing price for active listings in May 2022 was $447,000. This is up 17.6% compared to May 2021 and up 35.4% compared to May 2020. 

Tips for Navigating Market Shifts as a Buyer

In addition to partnering with a local, expert real estate agent, utilizing the following tips can help first-time homebuyers better navigate continued market shifts. 

Know Your Budget

With rising mortgage rates and increased home prices, it's essential to do your homework and plan what you can truly afford in advance. In a seller's market, you should be prepared to pay the asking price. However, it is essential that you make buying decisions based on your finances and not on your emotions. Just because you can financially afford to pay over the market value of a home doesn't mean that you should or that it's in your best interest over the long term. 

Get Preapproval From a Trusted Lender

Along with having a thorough understanding of your budget before buying a home, you should obtain a preapproved loan with a trusted lender. Getting a preapproved loan signals sellers that you are a serious buyer, and it may even gain you access to earlier showings ahead of other buyers. 

Be Flexible and Patient 

A final tip for first-time homebuyers navigating today's market shifts is to be flexible and patient. There will undoubtedly be ups and down on your homebuying journey, especially with today's market and continued market shifts. While there will be ups and downs, just remember that buying a home is still within reach, and when in doubt, always reach out to a local, expert real estate agent for help. 

Tips for Navigating Market Shifts as a Seller

While the market is shifting, it's still an ideal time for sellers. The following tips will help you get the most out of your home selling experience.

Work With a Trusted Local Real Estate Agent 

Even during a seller's market, it's important to work with a local expert real estate agent when listing your house. A local real estate agent will be able to give you the most up-to-date information on the market, navigate stressful contracts, and help you get the best price for your property.  

Have a Pre-Inspection Before Putting Your Home on the Market 

In addition to working closely with a local real estate agent, it would be to your benefit to have a pre-inspection completed on your home before you list it on the market. Having a pre-inspection can save you a ton of time, headaches, or delays down the road. 

The market has favored sellers over the last couple of years. While shifts in the market are occurring, the market still resides in favor of sellers for now. However, the good news is that there are more active listings in the market today than last year. So, whether you're a seller or a buyer, the best way to navigate and stay on top of these market shifts is to work with a local real estate agent who you can trust.

Is the housing market still a seller's market, or is it finally showing signs of slowing down? And what could the changing market conditions, if this profound shift is happening, mean for you as a seller?

Leading real estate professionals have been predicting that the seemingly endless growth in home prices, coupled with an unprecedented shortage of home listings, wouldn't last forever. Several factors suggest that the pivotal moment for housing markets across the country is at least around the corner.

As a seller, you may have been waiting for the best possible time to sell your home, or you weren't ready to sell until now due to personal circumstances. But have you missed your window to sell your home in the post-pandemic seller's market? Here's how you should navigate the changing market conditions if you are listing your home for sale and what an experienced real estate agent can do to help.

New construction numbers increase, but will that correspond to a price fall?

The number of new listings hitting the market is up 4.5% month-over-month. But does an increase in the number of new listings correspond with an end of the supply-demand gap fueling the unprecedented housing market growth over the past couple of years? There is some indication that the long decline in new constructions, which began skewing the market in sellers' favor even before the pandemic started in 2020, is finally coming to an end.

Not quite. If we look at the figures a little closer, we'll see that while the supply end of the housing market chain is slowly recovering, it's still nowhere near the levels of the previous years. For context, the number of active sale listings is still less than pre-pandemic levels. So, purely looking at the supply-demand ratio, it's got a long way to go to becoming as saturated with available homes as it was in previous years. We're still in a seller's market. 

 As interest rates rise, the number of eligible home buyers will inevitably reduce. In the biggest increase since 1998, the Bank of Canada raised the overnight rate to 2.5%.

While homes listed for sale are still not staying on the market very long, you may not get as many offers as a seller on the day your listing goes live as last year. Still, homes are not failing to sell, and they're going fast.

Local context is always king

Median home prices and nationwide trends always need local, regional nuance to understand how changing market conditions will affect you personally. One thing worth noting is that, right now, large metropolitan areas are recovering significantly from the relative lack of interest during the pandemic. This has created migratory patterns from expensive coastal and urban areas into medium-sized metropoles and suburban areas.

The other trend you should be aware of a seller is that interest rate increases will inevitably hit the lower tiers of the market hardest, meaning that first-time buyers will find it the most difficult to qualify for a mortgage. If you are about to sell a higher-tier family home, you have less to worry about than if your prospective buyer is a first-time homeowner.

But even within the first-time buyer market segment, regional variations will play a key role. This is where a real estate agent with in-depth local knowledge becomes valuable. A real estate agent with experience in your particular type of home in the area where you're planning to sell will have seen it all. They will know precisely who and how to market your home to, ensuring it sells at the best possible price within a desirable timeframe.

"Did I miss my window to sell my home?"

The answer is: not quite. While the housing market is showing signs of change, it isn't currently changing at a rate that is concerning from a seller's point of view. However, depending on your home type and location, we'd recommend you not delay much longer and aim to sell this year.

We've helped many folks navigate market shifts and we'd be happy to help you, too. We invite you to read our reviews and learn more about our services.

The Wild Wild West housing market had many people in panic mode — worrying that if they didn't act now, they may never be able to buy a house amid record-high housing prices and increasing interest rates. With the changing market conditions of today, hopeful homebuyers may be in a better position to act. It’s important to remember, though, that no matter what the market is doing, buying a home is something you shouldn't rush into. 

A mortgage is one of the biggest — and most important — responsibilities you’ll have in your life. Entering into home ownership before you’re ready could have negative impacts on your financial wellbeing. In this post, we’ll take you through some steps to help you decide whether or not you’re actually ready to purchase a home.

Ready or Not? How To Determine if You’re Ready To Buy a Home

In today’s changing market conditions, homebuyers must ensure they are in a good financial position before buying a home. Here are a few top things to consider.

You Have Little to No Debt

While there’s no hard rule that you have to be out of debt to buy a house, the lower your debt, the higher your pre-approval and the lower your interest rate — a homebuyer’s dream formula. In addition to these perks of having little to no debt, you should have more dispensable income to spend on your mortgage payment, repairs, furnishings, and anything else your heart desires.

Your Savings Account Is Robust

When buying a home and going into owning a home, expenses are a plenty and seem to pop out of nowhere — any homeowner knows this. From the down payment to closing costs to real estate taxes — and that’s before you even move in! Then, you have to be prepared for furnishing your home, replacing appliances, the AC going out, and any other emergencies that come up. 

It’s imperative — especially amid today’s changing market conditions and potential looming recession — to give yourself a healthy safety net when it comes to all of the bills and expenses that come with home ownership. Some experts recommend having six months of expenses set aside in your savings account, while others recommend having up to a year’s worth. 

One thing’s for sure, the more money you have in your savings account, the less stressful all of the expenses that come with homeownership will be. So, make sure your savings account is up to par before you sign on the dotted line for your new home.

You Have a Steady Job

Of course, no job comes with a 100% guarantee of permanent employment. But, the longer you’ve held a position, the more likely your job will be viewed as steady enough to get your mortgage approved. One big no-no during the home buying process is switching jobs, or, God forbid, up and quitting your job.

Changing jobs can impact your loan approval, which means you may lose the approval on your dream, or your monthly payment could increase to something that’s out of your ability to pay comfortably.

Also, having a steady job will ease the burden of making your mortgage payment because you’ll have an idea of what you can expect on each paycheck and whether you can realistically afford your mortgage.

You Can Realistically Afford the Monthly Payment

We’ve all been there, scrolling through Zillow, and we find the perfect house — and it even has a pool! We use the website’s payment calculator, and much to our surprise, the monthly payment seems completely manageable!

Not so fast. It’s important to remember these online payment calculators often don’t consider all of the expenses associated with a mortgage payment. They also default to you providing a full 20% down payment. In reality, there are many more factors that will go into your house payment, including:

• Property taxes — which can increase each year (sometimes pretty significantly).
• Homeowner’s insurance.
• Homeowner’s association fees.
• City taxes and fees.
• Water, sewage, and garbage.
• Canada Mortgage and Housing Corporation - If you don't have 20% to put down you'll need to have insurance through CMHC.

These added charges will likely add hundreds of dollars to your monthly payment, so it’s critically important that you don’t forget to factor these in to get a full picture of what you’ll be paying each month. Then you can ask yourself whether or not you can realistically afford it.

Looking for Your Dream Home? We Can Help

To navigate these changing market conditions, hopeful homebuyers need expert help. If you’re interested in buying a home, contact our team today. We’ll guide you through the process and help you find your dream home.

Ever-changing market conditions can make purchasing real estate feel like a daunting task, and adding complicated math to the equation certainly doesn’t help. As interest rates increase, you’ll need to work closely with a real estate agent and mortgage broker to help you get a fair deal. You won’t believe how much money you save when you lower your interest rate by a small amount. 

How Much Does Your Interest Rate Affect Home Prices?

Excluding Vancouver and the GTA, Canada’s most pricy markets, the national average home price is $588,500. For simplicity’s sake, let’s say you want to buy a house that costs $600,000, and you have $120,000 for a down payment. If your down payment is under 20% of the purchase price, you will also need mortgage insurance. 

A mortgage term determines your interest rate for a set period. Most Canadian mortgage holders have a short-term mortgage of five years or less. These short-term mortgage rates can be fixed or variable. After the set term, your mortgage contract is renewed until your house is paid off. The time it takes to pay off your mortgage fully is called an amortization period. The most common amortization period in Canada is 25 years.

You’re borrowing $480,000 to purchase your home. How much will interest rates affect the total amount you pay before you own the house? 

5% Interest Rate

So, let’s start with the math for a 5% fixed-rate mortgage with an amortization period of 25 years. In this scenario, you pay $357,511.18 in interest. That’s $837,511.18, plus the $120,000 you used as a down payment. Clearly, it’s important to understand the real estate math before going ahead with a home purchase. 

3% Interest Rate

You’re unlikely to find a fixed rate at 3% in today's market. Variable rates are available in the 3% range, but as the name implies, these rates are subject to change. For the sake of comparison, let’s do the math for a 3% interest rate with a 25-year amortization period. A difference of 2% may not seem like much, but the numbers say otherwise. 

With a 3% interest rate, you spend $201,473.52 in interest. The total purchase, not including your down payment, comes to $681,473.52. Lowering your interest rate by just 2% saves you $156,037.66 over 25 years. Think of all the things you can do with that much money! 

Know What You Can Control

You can control some factors easier than others when you buy a home. For example, you can probably get a lower interest rate by saving for a larger down payment and working to improve your credit rating, but ultimately, your lender will choose the rate. You also don’t have much control over home prices. 

However, you can control how much you pay toward your mortgage each month. The quicker you pay your mortgage, the less interest you’ll have to pay. You could save a lot of money by making a small additional payment each month, but check if your lender has a prepayment penalty before going ahead. 

Let Real Estate Math Benefit Your Search

Real estate can feel incredibly confusing when you need to navigate changing market conditions and fluctuating interest rates. Reach out to your real estate agent today for expert advice. It never hurts to get a professional’s insight into how real estate math can benefit your search!

As the market continues to shift, more and more questions are being asked about how home prices will behave in the coming months. Will home prices continue to rise, or will they finally start to come down? If you’ve been interested in selling your home and/or buying a new one but have been intimidated by the fast-moving market, you’re in the right place. This post will explore real estate market conditions and when we may start to see home prices drop.

Rising Interest Rates: What They Mean for the Real Estate Market

Nationally, new home prices were up 10.3% in 2021 compared with 2020. In some regions, that number was even higher.

The red-hot real estate market conditions were caused by a few factors, including the Covid-19 pandemic and ensuing Great Resignation, limited inventory, and historically low interest rates. Interest rates are now on their way back up — while this may not sound like the best news for home sellers or home buyers, it does mean the market has started to settle. In fact, rates are expected to rise throughout the rest of the year. These increased costs are putting pressure on the housing market. 

According to the Bank of Canada, there has been a steep drop in mortgage applications as Canadians start to borrow less money in the form of mortgage debt.

The national average selling price fell to $665,850 in June from $678,280 in the same month of 2020. Meaning that prices are down 6.4% on the month and down 18.5% from February's peak.

Although the real estate market conditions are cooling, that doesn’t mean you can expect significant drops in home prices overnight. Most experts agree that we're experiencing a correction, not the signs of a crash.

Will the Housing Market Crash?

There have been a lot of murmurings online and in social circles that we may be heading towards a housing market crash. Most experts are not anticipating this.

TD's latest report predicts a 19% peak-to-trough decline anticipated between the first quarter of this year and Q1 2023. Then, it's predicted modest growth beyond Q1 of 2023.

Should I Wait for Real Estate Market Conditions to Improve?

Since there are no signs a chaotic downturn in the housing market, if you are interested in selling your home, you should not wait. Start the process now! Remember, there’s a lot that goes into selling a home — getting it deep cleaned, de-cluttered, and staged, fixing broken appliances and cosmetic issues, finding a real estate agent, listing the home, preparing the home for showings, having an inspection and appraisal and fixing issues these processes find — and the list goes on. 

If that list seems excessively long, it’s because the process can be arduous. So, there’s no need to wait. Get ahead of it and get started now! As the market slows down, it is taking longer for homes to sell — they are still selling fast, but we’re not seeing people lined around the block, and multiple above-asking price cash offers roll in like we were a few months ago. 

If you’re a home seller, it’s also important to list your home before the real estate market conditions change and prices drop. This is key so that you can make the highest profit possible on your home. If you wait too long, you risk missing out on full-price offers that will likely be a thing of the past when the market changes later this year and into next. 

Spring and summer are also considered the best times of year to sell a home. If you start the home-selling process now, you’ll still have time to capture the market of people looking to move before the new school year. 

The bottom line is that continued supply shortages mean that now is a great time for home sellers to list their homes before prices start dropping significantly as interest rates continue to rise.

Is the seemingly never-ending era of the seller's market finally over? Can home buyers finally breathe a sigh of relief as they navigate an ultra-competitive housing market? 

To say that the housing market has been volatile over the past two years would be a gigantic understatement. The pandemic created a perfect storm of factors. A supply and demand mismatch and skyrocketing home prices have been tough for buyers. 

Is change afoot, and what are the main things every homebuyer needs to know right now?   

1. More home listings don't mean lower home prices

The reality is that home prices are continuing to rise, with no indication that they're about to start falling. While the pandemic-era trend of record home price growth is likely over, this does not mean that home prices are about to crash. Buyers can expect cooler real estate market conditions, with home prices increasing at a more sustainable rate. So, instead of the record-breaking increases, expect something closer to 5%, as the Royal LePage forecast points out.

2. Ultra-low-rate mortgages are no more

The era of historically low mortgage rates has ended, with mortgage interest rates now having crossed the five percent threshold. Mortgage rates will not return to the all-time low rates homebuyers enjoyed pre-pandemic, and anyone buying a home right now should be aware that their monthly repayments will be higher than if they had done so even a few months ago.

3. Homebuyer competition is still high

You may see headlines suggesting that as interest rates rise, there will be fewer buyers on the market as mortgages become more expensive. This isn't currently the case - the market is still incredibly competitive. There are some factors at play in making the housing market so pressured, with demographics playing a key role. An enormous number of millennials are currently attempting to secure homes before interest rates rise even further, which keeps competition for homes high. As Statistics Canada found, there was a 51% uptick in interprovincial migration in the second quarter of 2021, meaning hundreds of thousands of people are settling down in different parts of the country.

4. There are signs that the market is slowly rebalancing

This is another way of saying that the seller's market conditions that have dominated the housing market throughout the pandemic are finally giving way to something more resembling an equal market. The number of new instructions is steadily rising, narrowing the supply-demand chasm that had fueled unprecedented market conditions for so long.

5. Home sales are on the increase

Home sellers are continuing to slowly come back to the market. The wait-and-see strategy of the pandemic, where a lot of home sellers were holding back from listing their homes, is now definitely coming to an end. Aware that soon enough, the number of home buyers will begin going down, home sellers are finally taking the plunge and putting up their homes for sale. Again, as with the other market conditions, this is a slow change, and there still is a deficit of new listings. However, the overall trend is toward an increase in the number of homes for sale.

6. An immediate economic downturn is unlikely

Home buyers are worried about purchasing a home because of fears of a crash needn't fear. There are no indications that the rising interest rates will cause a dramatic economic downturn. If homebuyers are hesitant to make a home purchase because they fear layoffs and/or unemployment, this factor is unlikely to come into play for several years yet. 

Some expert economists are warning of a potential economic correction in 2023 that will last for about a year. However, homebuyers ready to purchase should make decisions based on their current unique circumstances. There is no immediate danger of a crash that would bring a collapse to housing market conditions right now. 

Don't panic, but act fast.

To conclude, homebuyers who still haven't secured their dream home shouldn't panic: things are looking up, with several key factors slowly improving in buyers' favor. However, anyone thinking of buying a home should not hesitate due to rising interest rates.

A good real estate agent can help you narrow your home search to what is right for you at this point in time. You should always choose a real estate agent with thorough local knowledge of the area you're looking at - they will know more about the conditions at play in the local market and be able to offer location-appropriate service and advice.

At the end of the day, only you know when the timing is right to begin your home search. Make sure you don't let fears of difficult housing market conditions hold you back. With the right professional help, you can realize the dream of home ownership even in a competitive market. 

 Finding an experienced real estate agent right now can get the process of finding that forever home rolling. Start that search for your dream by scheduling a call today.