So what should you do NOW? As opposed to what you were doing earlier this year if you were buying or selling your home. Are things different now or are they the same? And if they’ve changed, how’ve they changed?
I’ve been spending a lot of time lately (and I mean a LOT of time) thinking about the market and trying to figure out what’s going on. Sure, I can look at pretty much any house that’s sold and tell you why it sold for the price it sold or why it hasn’t sold yet, but hindsight’s 20/20. What I’m really trying to do is detect trends in the market because it’s important to know the trends if I want to give our clients the best advice possible. The two key questions I want to answer are:
- What’s the most effective listing and pricing strategy to sell each particular house? (For our clients who are selling.)
- What’s a fair price to pay for this house? (For our clients who are buying.)
Now that the May long weekend is behind us, we’re in the home stretch and heading towards the end of the spring market. If you’d like to know what you might see in the near future, here are some of the things I’ve been mulling over as I try to figure out what’s going on in the market (keep in mind this relates to the market in central Toronto only as other neighbourhoods may be experiencing different things):
Has the market changed from where it was at in March (which is when it may have been at its craziest)?
I’d say yes and no. Certain aspects of the market have changed while others have remained the same. Some homes are still receiving multiple offers and selling for well above their list prices. That’s remained the same. But here are some differences: There are more homes on the market now so buyers have more choices. Many buyers aren’t moving as quickly. There are fewer showings. Lots of homes aren’t selling right away. And even when a home receives multiple offers, the number of offers is often lower (the price is sometimes, but not always, lower, too). Generally speaking, it almost seems like there are two markets – one that’s like the March market and one that’s more balanced.
What caused the change?
It’s as simple as a matter of buyers’ attitudes. Whereas in March every buyer was keen to buy right away, I’d say there are now two classes of buyers. There are still highly motivated buyers who want to buy your home today. When the right home comes on the market, they’ll move quickly. But not every buyer feels that way. The second class of buyer is not quite as motivated. They’re hesitant to act for one of two reasons. Some of them see the increased number of homes coming on the market, which is what happens every year at this time, and feel like kids in a candy store. They think that the relatively large selection of homes from which to choose means they can wait for the perfect home to appear. What these buyers may not realize is that the candy store will soon be closing for the season as the stream of homes coming on the market dries up with the approach of summer. Other buyers are hesitating because they’ve heard the market might crash or slow down significantly and are either afraid of paying too much or hoping to score a deal. As I’ve said before, fear is one of the strongest factors influencing the market. These buyers are also in for a surprise. There’s no sign of prices decreasing by any significant amount.
So have prices changed at all?
Once again, I’d have to say yes and no. Some homes continue to sell for March prices. They may be receiving fewer showings and fewer offers, but their prices remain high. Other homes may not be selling for March prices, but are still selling for more than they would’ve sold for last year. The average price may be down a little because of this, but prices are generally at very healthy levels. Remember, most sellers aren’t desperate to sell. If they don’t get their price, they’ll hold on until they do. That’s why most sellers aren’t panicking if they don’t get the price they want on offer night. They just increase their list price and wait for the right buyer to come along who’ll be willing to pay them the price they want.
Is this the new normal or will the market pick up again?
It’s the new normal for the moment, but I believe the market will pick up again. The question is when, not if. Some buyers may be hesitating at the moment, but there are still way more buyers than there are homes for sale. That we continue to see high sale prices and multiple offers on a regular basis, even if not as frequently as we saw them in March, indicates that things haven’t died down. Pretty soon, the buyers who are enjoying their visit to the candy store are going to realize the supply of homes is drying up and they need to buy something quickly if they want to achieve their goal of moving into their new home this summer. And the buyers who think the market is going to crash and are afraid of overpaying will realize that’s not going to happen and will also come back to the market. This could happen in the next couple weeks or it could happen in the early fall (there isn’t enough activity for it to happen in the summer), but I expect it will happen in the near future. Will we see the same frenzy we saw in March? Hard to predict. I don’t think anyone predicted the March frenzy so how could we predict if it’ll happen again?
Should you wait to buy a home?
Absolutely not. Take advantage of current market conditions. You may get lucky and not have to bid against any other buyers. That could change any day. And besides, there are so few homes coming on the market at any time that when your dream home appears you’d better jump up and grab it because you may not see something like it again for several years.
Should you list our home now?
If you must sell for whatever reason – you’ve bought something else, you’ve been transferred – then you have no choice, list your home now. And if you’re not in a position where you must sell, why not list now? You have nothing to lose. There are plenty of buyers out there. If you receive the price you want you can sell and if you don’t receive the price you want you can reevaluate. But be realistic. You can still get a very, very good price even if it’s not a March-like price. Remember, it’s impossible to time the market. But if you want to try, you can always take your home off the market, wait for things to pick up again and see what happens.
And now for the two key questions:
What listing and pricing strategy should you use?
To be perfectly honest, I haven’t detected any overall trends yet. I’m still seeing a very fragmented market so an individualized strategy should be developed for each home. I know some people prefer to put their homes on the market and look at offers anytime, but my own personal belief is that, in almost all circumstances, you have the best chance of selling for the highest price if you leave your home on the market for 5-7 days before offers are considered to give all buyers the opportunity to see your home. From there, you have to decide if you want to list low to try to generate multiple offers or list more reasonably and hope for one good offer. Lots of sellers and Realtors seem to be trying different strategies these days. The world hasn’t changed overnight so there’s no need to panic. Before you make any decisions, consider the time frame within which you need or want to sell, what’s going on with similar homes, how likely your home is to appeal to a large number of buyers and what you’ll be happy with price wise. Determining the right strategy isn’t easy in these market conditions. You can’t just throw your home on the market at any old price and be reasonably confident things will work out. You and your Realtor need to think things through to give yourself the best chance of success.
What’s a fair price to pay?
This is the million dollar question, quite literally. There’s never one correct answer to this question because no two homes are identical, different buyers place different values on the same homes and different sellers are willing to accept different prices. There are too many variables for price to be determined with any certainty. But we CAN estimate a fair price. Look at what similar homes have been selling for most recently. How does the home you’re considering compare? Is it worth more or less? Ask your Realtor for guidance. How keen are you to buy it? Are you willing to pay more than the other homes have sold for? If so, how much? How motivated are the sellers? Are there other buyers also offering? If you’re in a multiple offer situation, offer what you think the home is worth and consider adding an amount depending on how badly you want it. If you’re the only buyer who’s interested in the home, make the sellers an offer and see how they react. Most sellers won’t consider lowball offers so you may not want to set a bad tone to the negotiations or waste anyone’s time, but something on the low end of reasonable might be the right place to start.
Nothing is cut and dried these days, but I hope you’ve found some helpful things to consider as you navigate through the buying or selling process. It takes more experience and guidance to get you where you want to go in a market like this, but that’s what we’re here for. If you’re buying or selling in another area, make sure you have the right Realtor advising you. Whatever you do, remember the market is constantly changing so be prepared for all possibilities.
If you know anyone who is interested in learning how the market works and would like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.