The numbers are in and they are, well, normal. This may be a bit unsettling for some, as we have not seen “normal” in so long. We forget what it looks like.
Should I Buy Or Sell This Fall? The Unsettling Experience of a “Normal Market”
After incredible growth, year upon year, in the housing market, we should all be able to stand back now and acknowledge that prices had become untenable.
While some would argue they still are unsustainable, the nuttiest time was around March 2017, when the market reached its peak and the average detached home in Burlington was selling at nearly 1 million dollars. Despite the unquestionable insanity of a million dollars being the price people were paying for a renovated sidesplit with a few trees in the yard, right now we find that prices for the same properties are down only 10%.
If you’re a seller who’s frustrated you didn’t list at the absolute right time, we get it. But, you should do just fine, assuming you’ve had your house longer than 18 months.
Good news for Upsizers, Meh News for Downsizers
This market normalization is obviously good news if you’re looking to move up in the world and into a bigger home. Lower prices mean your dollar can go a lot further, and you can tick more boxes on your wish list. Houses that were out of your price range a year ago are now suddenly very realistic.
This is especially good news if you’re looking to sell your condo to get into a freehold home. Condo owners are actually seeing increases in value since the peak in March 2017. At that time, the average price of a condo in Burlington was $477,619. Meanwhile, in August of 2018, the average price was $539,240.
This surge in the condo market isn’t great news for first time homebuyers however. Those who thought they had saved just enough to make the downpayment on an entry level condo, may now find they need to wait to buy for another year or so.
The market is also not ideal for downsizers, with higher end homes seeing a bit of a loss. If you are trying to sell your 3000 square foot home in Tyandaga right now, you may be kicking yourself for not selling in the spring of 2017. But again, we can’t stress enough that those market conditions were not normal.
Furthermore, most people in a position to downsize their homes have been there for a decade or so. Just ask yourself, has your house ever seen a VCR hooked up to the main TV? Wood paneling in the basement? A mustard shag rug anywhere? If you answer yes to any of those questions, chances are you will retire well with the equity you have gained in real estate over the years. Chances are, you’re the luckiest generation of homeowners ever.
The biggest change buyers and sellers are probably observing right now is Average Days on market. 38 days feels like an eternity when everyone expects their home to sell in a weekend. That said, 38 days is not actually unreasonable. It’s simply more ‘normal’. In Vancouver agents are reporting 7 months of inventory, while Burlington is producing only 2 months of inventory in attached properties and condos and 3.7 months of detached inventory. In short, sellers have nothing to worry about, as long as they price their house correctly, and as long as it doesn’t smell of cat pee and ashes.
Is This Somehow Simultaneously a Buyers’ and Sellers’ Market?
Normal is good. So this normalization has actually created pretty good scenarios on both sides of the “For Sale” sign.
For sellers, Burlington’s previously insane market has increased your home in value over the last few years, so you’re still going to see a great return on your investment. You’re not selling at the absolute apex, but previous gains and momentum mean there’s really no “bad” time to sell.
Meanwhile, for buyers, mortgage rates are still very low at around 3.5% for a 5 year fixed mortgage. With the purchasing power of buyers remaining strong, a little more time to actually weigh the options on the market, and a 10% decrease in the value of many homes, you’re likely to get more for your budget right now.
Sure, there have been changes that created understandable uncertainty like foreign buyer tax, new stress tests for a mortgage and slightly higher interest rates. But, with low unemployment and high levels of immigration in the GTA buyers and sellers should feel good about the real estate market overall.
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