This Buyer's Market is coming to an end sooner than you might think...
If you've been keeping your eye on the headlines, you would have seen a shift in the last few weeks indicating that the real estate market is showing signs of life, bringing with it the end to the short-lived buyers' market.
If you've been thinking of buying a new home or investment property, but you've been waiting on the sidelines, it's now time to make you move. Why? Let's discuss...
Interest Rates are Holding Steady & Are Predicted to Decrease This Year
One of the key factors contributing to this market shift is the steady hold of interest rates by the Bank of Canada for the third consecutive time. This stability in interest rates, coupled with the expectation of receding inflation, is predicted to lead to a decrease in interest rates as well, which is prompting buyers to re-enter the market with renewed confidence.
Decreased Inventory
As more buyers enter the market, we are already starting to see a decrease in inventory levels, and multiple offer scenarios are becoming increasingly common again. In fact, sales for last month compared to the same period last year have increased by 37%. This surge in sales indicates that inventory will continue to decline, creating more demand and leading back to the dreaded multiple offer situations.
Sales to New Listings Ratio
Another sign that the buyers market is drawing to a close, is that the sales to new listings ratio currently stands at 50%, which signifies a balanced market. Traditionally, a ratio of 40% or lower is indicative of a buyers market, whereas a ratio exceeding 60% suggests a sellers market. The current ratio of 50% strongly suggests that the scales are tipping in favour of sellers.
Recommendations for Buyers
As a buyer, it's time to ramp up your search. You still have the advantage of purchasing a property while inventory is available, potentially avoiding competition from multiple offers. Additionally, you have the power to include conditions in your purchase, which is generally not as easy in a sellers market during a multiple offer situation. Most importantly current prices are still lower than they've been, offering an ideal opportunity to secure a property before demand puts an increase on pricing.
Recommendations for Sellers
For sellers, the decline in inventory coupled with stable and potentially lower interest rates promises to generate increased interest from buyers who were previously hesitant due to high interest rates. Many potential buyers have been waiting on the sidelines, monitoring the interest rate situation before committing to a purchase. As interest rates become more favourable, we're anticipating a surge in buyers entering the market, driving up demand and potentially creating a competitive selling environment.
I'd also like to note that the thought from the Toronto Real Estate Board Chief Analyst (Jason Mercer) indicates that as 2024 moves along, competition between buyers will increase greatly as demand goes up and inventory remains constrained.
Whether you're ready to buy or sell this year, or not, I'm happy to sit down with you and discuss your options. The more knowledge you have, the more informed decisions you can make, and I'd love to support you with your next (or first!) transaction.