Canadian Housing Market: To sell the 'dip' or not?
A historic correction that is leaving sellers wondering what is next
One thing remains a major concern for a country with a growing population boosted by its open policy to receive a sizeable number of immigrants yearly. Housing; its scarcity, and affordability.
Anyone who follows Canadian real estate will agree that the madness experienced at a heightened level during the pandemic is finally experiencing a major level of correction. The Royal Bank of Canada, (RBC) predicts a further decline of housing sales up to 12% from the February peak by early 2023, distinctly in provinces like Ontario and British Columbia.
If you are a resident of Calgary, particularly those in the emerging residential areas in North West, North East, and South East, then you will surely have noticed that ‘’For Sale’’ signs that barely lasted a month before a ‘Sold’ tag is placed on it are now having an extended life on the lawn, some staying up for more than 60days.
Earlier this week, the Premier of Ontario, Doug Ford, re-listed his Etobicoke home in the market for $2,800,888. The two-storey property which boasts nearly 4,500 square feet of living space with six bedrooms, four bathrooms, a two-car front garage, and an in-ground pool at the back was initially listed on the market on July 15, 2022, for $3.2 million.
According to a report released by Strata.ca, a Toronto-based real estate site, sellers terminated 2,822 condo listings in June, a 643 percent increase from 380 cancellations in January.
‘’I’ve not seen anything like it and I’ve been in the business for 15 years,” says Andrew Harrild, the co-founder of Condos.Ca on the canceled listings.
The reasons for this are well known. With soaring food prices, gas prices, and energy bills, yesterday’s price in every area of our lives is not today’s price.
Inflation is rising at a rate not witnessed in decades, jumping to 8.1% in June, a new 39-year high. This has forced the Bank of Canada to increase its interest rate by as much as 2.5 percent. Add this to the higher mortgage stress test qualifying rates that are making first-time buyers reconsider jumping into the market.
This situation has created a dilemma for sellers, some of whom out of fear of missing out on the excess gains in the market hurriedly put up their property for sale or others who are unable to maintain their mortgage are selling to scale down on their cost of living.
The bidding war that their neighbor who successfully sold their home within a week promised them is not forthcoming. No one is even bidding above the asking price as was the case earlier in the year. The few offers received have been tentative and well below what was advertised and as common in the Canadian market, the longer a house stays without a buyer, usually a period of 90days, it is deemed as ‘’stale’’ and forces a way lower price just to get the house off the market.
So what then is the way out for sellers? To sell the dip and take whatever decent offer comes their way or take the property off the list just to study the market better and get more information on what is going on in the mind of buyers?
With this situation likely to continue in the short term, the best advice is always to get the services of a trusted property agent. One who understands the local market, and is armed with the knowledge of recent sales and buyers’ biases.
An agent that can guide on the actual worth of the property in the open market and not the pandemic-inflated figures while also advising on necessary incentives like paying a part of the closing costs that may help sweeten the deal to get the home off the market without a significant loss of its actual value.