The 2021/2022 housing market will surely go down in the history books as one of the fastest roller coaster rides in the Canadian real estate market.
With groundbreaking prices from the end of 2021 to the peak in Jan-Mar 2022, the frenzy to sell was met with eager buyers scrambling to get into the hot market.
The chart below shows the exact roller coaster ride it was, with slow and steady growth over 2020/2021, to the mind-blowing peak in early 2022.
We now find ourselves heading into 2023. The market has cooled, and prices are as much as 20% lower than January 2022. So what does this all mean for hopeful buyers?
Over the past couple of years, many buyers were out-priced in the bulging market and basically checked out of being able to buy their own homes. The hope now for many, is that as the market goes into a free fall, house prices will fall even further.
According to the RBC, while prices have dropped and will drop further into Fall, they predict that the market may bottom out in early Spring 2023. This could be good news for first time home buyers and investors in the next six months, but the balance will be what happens with interest rates.
Are We Entering a Buyer's Market?
A buyer's market occurs when the prices are low and the overabundance of homes exceeds the number of buyers. You start to see homes staying on the market for longer and regular price reductions as they wait. According to the Canadian Real Estate Association, national statistics show 3.4 months of inventory at the end of July, compared to 1.7 months set a the beginning of 2022.
While the market is changing to give the buyer more negotiating power, you have to remember that interest rates are still on the rise. So the balance of buying a home now has to be weighed against the interest rate rises.
Smart Tips for Buyers:
Know the Market
Have your finger on the pulse
of what is selling in the area you want to buy in. Watch for price changes and see what's staying on the market for a longer time and what is selling quickly.
Do Your Homework
Look through as many houses as possible before settling on one. Time is on your side, and you now have breathing space to research the market and see what prices are going for in similar homes.
Look Behind the Couch
Well-designed and staged homes can be deceiving to the eye, and it's easy to get caught up with all the 'shiny things' of the renovated house. What can be lurking behind that gorgeous shiplap or luxurious porcelain tile in the bathroom could be public enemy #1 = mould.
When you do come to make an offer on a house, make sure you have the right conditions in the contract. Highly recommended is a house inspection by an independent home inspector. They can pick up any unseen issues that could cost you down the road.