The Market Has Shifted A Little, What Does That Mean For You?
Well, the numbers are in and I have heard interpretations ranging from the wildly misleading to the occasionally accurate synopsis of the state of the Real Estate Market. The single family market has slowed down dramatically across the board and particularly in Markham and Richmond Hill. The areas downtown south of Eglinton from Jane to the Beach are what I primarily deal with so I will focus on those areas in my comments.
The single family sector has more listings now than it did two months ago. Partly because it is June but mostly because sellers are not getting the numbers they want. During the month of May houses were routinely put on the market with an offer hold back date but they did not get the price they were expecting so the sellers refused to sell. In fact, many sellers just raised the price to the number they were expecting and decided to take a more traditional approach to selling. As more houses do not sell in seven days they accumulate on MLS thereby increasing the number of listed properties. This happened in 2004 when they tightened lending regulations. Sellers are inflexible downward and therefore are not willing to immediately accept less for their property. Buyers on the other hand are cautious and not willing to bid as high as they would have back in March and April.
There is a disconnect between buyer and seller right now.
The condo sector now has 1300 units for sale downtown as opposed to incredibly low 900 units for sale in April. This is still unbelievably low. For instance, just one year ago in the first week of June there were over 2000 condos for sale on MLS. So we are up 40 percent from April but down 40 percent from last June. The media would have you believe that there is a flood of property for sale. Well, the good news is there is more for sale than there was in April and that is a healthier market although still heavily tilted in favour of the seller. Just not as much as it was 45 days ago.
For buyers, there is a little more to choose from in all sectors and for those purchasing (and their agents) the process is a little less forced and a little more relaxed but good properties are still selling with multiple offers and at record prices. There are also less buyers as many choose to take a “wait and see” approach. This break from the feverish pitch we were seeing in the first four months of the year is the result of new regulations and the “media spin” which comes with the market adjustments caused by them. This will not last and buyers should take advantage of the next 3 to 6 months as this will be the best opportunity they will have to purchase or alternatively they can wait until everyone jumps back in to the market and conditions return to where they were before.
For sellers, there are less buyers. Those who have to sell will have to accept what the market in its current state offers which is often less than what they would have got prior to April. Those who do not have to sell and therefore will not accept a number which is less than they would have expected will be on the market for longer or will choose to de-list. Getting the most for your property now will require more than just putting a sign on your lawn, holding an open house and then taking offers on Tuesday.
It is important to note that these market conditions we are seeing are 50% related to the new legislation introduced by the Province and 50% the result of media driven hysteria based on the reporting or partial facts. This will not last just as it did not last when mortgage regulations changed in 2004 and just as it did not last in 2008 when we saw the greatest financial meltdown of our lifetime. The market came back in six months or less on both occasions and you can expect the same this time. Prices will drop moderately on many properties in the interim but there will not be a significant correction. Sellers should hold on and buyers should take advantage of current market conditions.
One thing we know is for certain, for the foreseeable future as we move forward there will be a shortage of property in all categories of real estate in the downtown districts and prices will continue to rise.