No one expected that craziness that we experienced over the past 2 years.  We experience a huge spike in demand for houses with low inventory.  Bidding wars were frequent occurrences over the last 2 years. Record low-interest rates encouraged more buyers to get into the real estate market they as a result found themselves having to compete with a number of other aggressive buyers to purchase a home.   There was also a sense that owning a home for many was becoming less and less of a possibility. 

What Happened in March 2022 to Create the Shift 

In March we started to feel a shift in the real estate market.  From December 2021 to early/mid-March 2022 buyers were aggressively placing offers on any homes that came on the market and homes frequently sold prior to the offer presentation date for well above asking – it was just crazy and quite demotivating and frustrating for many buyers.  With increasing interest rates and government protocols being put in place in an effort to try and cool and slow down the real estate market were are now experiencing a much calmer and balanced market.  We are now starting to see fewer and fewer homes sell in bidding wars.  What has caused the slowdown?  Are buyings sitting on the sidelines hoping that the interest rate increases will cause the real estate market to crash?   Possibly but we are still in a seller's market but a softer seller's market where renovated properties that show well are continuing to sell quickly or in bidding wars but bidding wars are no longer the norms.  

In February the average price of a detached home in Toronto was $2,073,989 and in Vaughan, it was $2,226,200 - no matter the condition of the home – these prices were unsustainable particularly with interest rates increasing.  As a result, we are now seeing most homes take a little longer to sell which is a much healthier and balanced market, where buyers can take their time and possibly protect themselves with financing and inspection conditions.  We are now in a much healthier and sane market.  As a realtor, I much prefer this market as we can take steps to ensure our buyers have time to do their due diligence and ensure that they are purchasing the best home that meets their and their family’s needs. 

What if You Need to Sell in 2022 
 

 If you are a seller and need to sell in 2022, there is no need to panic thinking that you have missed out on the window of opportunity to sell.  When you buy and sell in the same market you will still be in a good position for you and your family to make the transition to your next home with less stress and anxiety.  If you sell high, you end up buying high.  Now you and your family can take the time to find that next dream home and not feel rushed and panicked with having to compete against many other buyers.   

In the last 2 years, my advice to sellers was to buy first and sell after to avoid the possibility of not being able to buy a home in a very competitive market.  Given the recent shift in the real estate market, my advice to sellers is now to sell first with a longer closing date so that you give yourself enough time to find that suitable next home.  

But ultimately it depends on your particular circumstances if you sell first or buy first by working with the right realtor that can guide and support you in making the best decision for you and your family based on your particular circumstances.  

Still Challenging for First Time Buyers 
 

 Although we are experiencing a calmer market it is still challenging for first-time buyers to be able to afford freehold property.  The calmer market will take away some of the stress of looking for a home but unfortunately, it will most likely not dramatically impact the affordability issue as prices are not likely to dramatically drop.  Demand is still high but buyers have simply decided to slow down their search to see what the impact of increasing interest rates and government initiatives to slow down the market will have on property prices.  Demand will most likely not be decreasing any time soon with Canada welcoming approximately 1.5M immigrants over the next 3 years which will continue to place upward pressure on house prices and rents for those renting. 

My advice is to save as much as you can and buy whatever you can afford to start building equity because saving alone with not help you stay ahead with the pace of price increases, you will need equity and savings to be able to afford that next property.  I highly recommend you purchase whatever you can afford and pay your own mortgage rather than your landlord’s mortgage

If you have any questions or you are considering selling, buying, or investing, reach out, to Sylvia Smith at RE/MAX West Experts, and I would be happy to guide and support you with your next home, investment, or cottage property.