Covid-19 changed the world as we knew it, and it also completely transformed real estate in Canada. Looking to micro-markets, the Southern Georgian Bay region has experienced unprecedented demand and housing price growth, and this has been amongst the hottest topics of discussion for the past two years. In 2021, there were record breaking sales volumes, despite low inventory, and a record annual sales price growth of 30%. Yes, you might say, with hints of wryness intended, we are in a seller’s market of absolute note.
Adding to the growth of the market here is how people are working these days. The pandemic has shifted the perception of what is required of going to the office. An excellent article written by Tess Kalinowski, real estate reporter for the Toronto Star last month, delves into the research done by the Toronto Region Board of Trade and MARU Public Opinion. The research found that 80% of workers in Toronto who have been working remotely do not expect to return to a 9 to 5 existence. Forty-three percent expect they will be spending the same amount of time working from home this year and 19% feel that they will work from home more. It was found that workers are saving an average of $30 a day being productive at home, without commuting and extraneous costs. The pandemic caused a ‘great migration’ mindset as people fled from the city. This mindset is still prevalent, as the pandemic drags on, despite the possibility that a light at the end of the tunnel is coming with the announcement of the lifting of many restrictions coming.
This combination of factors demonstrates that demand for this area will continue to be exceptionally strong. And that is not going to leave us anytime soon, despite the Bank of Canada’s vow to raise interest rates in 2022. You may ponder why this is, as it seems counter-intuitive. Surely if interest rates rise, this should change the housing market markedly. However, the continued unprecedented low inventory levels, combined with unmet demand, will continue to fuel this market. Sought-after areas such as Southern Georgian Bay, have always had strong demand, and this is currently amplified. RBC has stated that there will be a slowdown, as affordability dwindles and investment and speculation may cool, but within this slowdown, a seller’s market will remain firmly in place. The pace may slow of exponential rising housing prices, but the direction of prices continues to be forecast upward to 6.2% of 2022 in Canada. Read the article here https://www.bnnbloomberg.ca/rate-hikes-will-turn-down-the-housing-market-heat-rbc-1.1714436
So how does one navigate a seller’s market? And especially looking just a few months hence to the spring market, which is predicted to be busy before the Bank of Canada acts on its promise of many interest rate basis point increases this year.
We can break this down for you in just a few salient and concise points, to give you an advantage over other who may be competing for the same property that you have set your heart on.
- Work with an agent that you trust. The RJ Real Estate Group prides itself on ensuring that we guide you home. We are required to always keep your best interests at heart, and we really want you to be happy with your new home. We have made real estate our career of choice and we are the experts in many areas. We have the knowledge of local markets and can sometimes know of homes coming on the market before they hit it. We understand the local variations in the marketplace. We know the neighbourhoods. We have the negotiation skills. And we have your back. We will guide you through the process.
- Be prepared. And by this, we mean;
- Have your financing in place, with a pre-approval. Look for properties that are priced below your pre-approval which gives you the wiggle room you may need to offer over list price, and your mortgage payment affordable. (As an aside, it is important to know that pre-approval is not a final mortgage offer, and the bank may still need to do due diligence on their part before confirming the mortgage).
- If possible, arrange a pre-offer property inspection so that you have knowledge as to the condition of the home you are offering on because……….you need to act fast and concisely without hesitation, with a few conditions as possible. As REALTORS®, we do not advise buying the largest purchase of your life without protecting yourself with conditions. It is not ideal. However, the market moves extremely quickly, so many buyers feel they are left without a choice in this matter. That is why obtaining pre-approvals, and pre-inspections can assist you in making an educated offer with peace of mind, and still be able to compete.
- And most importantly, stay on top of the market. We can help you with this, but it is imperative that you investigate and educate yourself with what homes are selling for in the area in which you are interested. This will give you confidence within yourself to feel strong about any offer that you place. You should also consider broadening your search parameters, as prices escalate in chosen areas. By broadening your search area, you open your choices of properties as they come onto the market.
- Always go in with your best foot forward. The market these days. does not allow in most cases, conditions to be negotiated or price. Offering lower than you are prepared to go overall, will be a detriment to your offer. In the majority of homes offered for sale these days, the norm is to set an offer date by which the seller will be reviewing all offers received. This means that you will most likely be in competition with others, and you want to make it easy for the seller to find your offer the most attractive in terms of price and hassles.
- Think about the strategy of having an offer accepted in a competition. The intricate details matter; such as increasing your deposit amount, including your deposit with your offer, being involved in all negotiations (if any) with your agent looking after your best interests, and being flexible on closing dates. Having your down payment readily available to you in the form of cash in the bank is essential. Sometimes, flexibility to allow the seller to depart their home when they need to, can be the difference, even if someone has a higher offer than yours. In certain circumstances, a letter of motivation to the seller can work. If the seller has an emotional investment with their home, knowing that you are the ones who want to create your memories can have influence. Another strategy is to go in with a bully offer. This is also called a pre-emptive offer. This simply means that you submit an offer before the deadline with the hope that you can ‘beat’ the others that may also place an offer. Sometimes, the seller will consider looking at the bully offer. Generally, this type of offer needs to be exceptionally strong to incent the seller to accept it, without waiting for the pre-determined offer date where they would then review all offers on the table.
- We have said it before. You need to be extremely nimble and quick to action. Consider having your agent do a FaceTime viewing with you if you cannot make it to the home either to see if the home is worth trying to arrange your diaries to see, or before the offer date stated in the listing.
- Do not let the process discourage you. So many people are in this position, and someone has to win. Be prepared to lose out on a few houses before the home that is meant to be yours, becomes yours. You may just have to be flexible with the market conditions as they currently are.
This year will be a strong year for the housing market. It is essential that you plan for it. Zoocasa has these predictions for this year.
- Rising interest rates are going to be scrutinised as to their impact on the housing market. The last time interest rates rose in 2018, and the market cooled, it was the introduction of the stress test that caused a decrease. With that test well in place now, it is uncertain what impact this will have.
- There will be lower supply than in 2020 and 2021 and that influence of strong demand will not be leaving us.
- Home prices will continue to rise. This is in agreement with RBC’s research. Home prices in Ontario, according to Zoocasa, will rise 11.5%, more than the Canadian average forecast by CREA.
- Tech will play a increasingly important role in how buyers look for homes. Zoocasa states ‘buyers have shown a continued interest in a virtual, tech-focused real estate experience – and aren’t necessarily in a rush to go back to the old way of buying houses. Virtual tours, high-quality videos, and browsing listings on an app are just a few examples of pandemic-fueled buyer tools we believe are here to stay.’
Despite predictions that housing prices will continue to rise, this is not all doom and gloom. This indicates that whether you are investing for the first time in the market, or you are selling and buying another home, your investment will be worth it, both from the emotional aspect of moving home, to the financial venture.
The RJ Real Estate Group pride ourselves on recognising and deciphering your unique requirements and decreasing your stress in this very tight sellers’ market. Call us today.
Becky Hunt 705 888 8385
Robert Palamar 705 994 4408
Judy Cheney 289 887 4100
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