Timing Your Move in a Downward Market
It is no secret that the trajectory of the real estate market has been a downward spiral over the past few months as the Bank of Canada has continued to increase interest rates. While many media outlets have described this as a buyer’s market, that’s not quite accurate. Yes, it certainly appears that there is more supply than there is demand, but the buyer’s are out there, hiding. Most of them are watching and waiting for prices to decline enough for them to afford the home they want. If there isn’t really much movement from buyer’s, and if seller’s are not ready to decrease their prices, it is safe to conclude that it is indeed more of a balanced market… it is what I like to call a “watcher’s market”. To learn how to navigate this new era of real estate, follow these tips and strategies:
You are a First Time Home Buyer
In this current financial climate, we are seeing real estate prices decline. It makes sense that as a first time home buyer, you may want to wait until home prices plateau. This is ‘watching the market’ so to speak. You might be comfortable waiting on the sidelines, but there are things you should be doing now, to get ready to buy when the opportunity presents itself.
1. Connect with a Mortgage Specialist – Whether it be directly through a bank, or a broker that works with many different lenders, it is important that you know what you are pre-approved for before you begin to look at properties. Keep in mind that most pre-approvals are good for 90-120 days. This means that if you do find a property you wish to purchase, you must ensure that your closing date be within that period.
2. Connect with a Real Estate Team – Even if you do not think that you will be purchasing a home for another six months or more, connecting with a real estate team now, will allow you to get a better idea of the real estate landscape. What I mean by this, is through your team of agents, you will gain a better understanding of what is happening in the market right now and where it is going. It also is not a bad idea to begin to view houses. By doing so, you will get an idea of what you do and do not like. When it is time to buy, you will know exactly when the perfect home comes along.
You are Selling Your Home
The experience for sellers in the current real estate market is much different than what we have seen in past years. Maybe you want to upsize, downsize, or re-locate.
1. Selling to Buy – In an uncertain market, when you are selling your property and planning to purchase another property, it can be tricky to determine if you should buy or sell first.
a) By ensuring that your home is sold before you purchase your next one, you eliminate the stress of not knowing if and when your current house will sell and for how much money. This can make house shopping a bit more of an enjoyable experience. What it also means however, is that you need to buy and close around the same time your sold property closes, or have a back up plan if you can not or do not find your perfect home in time.
b) When you buy before you sell, you most likely are doing so with a sale of property condition. What this means is that your offer is conditional on you selling your current home. These types of conditions are good for about 30 days and usually come with an escape clause. If another buyer comes along, they could potentially “bump you” forcing you to either firm up your offer on the property you are purchasing, or walk away. You also may not know how much money you will have as a down payment until your property sells. This could add some additional stress if you need your home to sell at a specific price in order to afford your next home. Waiting to sell your home, however, affords you more time to find a new place to live and you will not have a deadline influencing your decisions.
In a downward market, a solid strategy for your buying and/or selling process matters. It is important that you are working with knowledgeable professionals who you can trust and who are familiar with current market trends.
Even if you are not thinking about buying or selling until next year, having conversations now can better prepare you for when you are ready in the future.