The next couple of months are going to be very interesting & very telling in the real estate world. The next couple of months are going to be very interesting & very telling in the real estate world. We are heading into what is historically the busiest time of the year, while also starting to see the signs of a market shift. We are coming off the busiest market in history and it makes me wonder what we should expect moving forward.
Typically, April is a strong month for sellers to list their properties, however, price growth is ahead of schedule right now and I don’t think 2022 will follow typical trends.
I want to discuss my Top 5 predictions for the second quarter of the year.
1. More Inventory – I think we will continue to see more supply hit the market and I have two main reasons for thinking this. Firstly, there are sellers who have been watching the market and trying to time it at its peak. Looking at the data and taking into consideration what is going on economically, it appears that the peak of the market happened mid – end of February, 2022 and that things are now cooling off. Therefore, I think there will be a rush of sellers trying to get their home on the market to try to catch it before it could potentially cool. Secondly, as the market shifts a bit and the buying environment become less competitive, I think there will be buyers jumping in again that previously did not want to purchase in the extreme sellers market. Generally, when someone wants to purchase a home, they need to put their home on the market first.
1 year history of Active listings across the Valley:
2. Higher List Prices – In a market like we have just experienced, where buyers greatly outweighed sellers, the strategy of listing low to get more offers on the table was a popular one. That said, this strategy is not one I would advise anymore. More recently, come offer day, it is not uncommon to hear that only one or two offers were received, and in some cases, no offers. I realize that this is a blanket statement and it really depends on the property type, but I do think listing at a price point that matches the sellers expectations as well as the fair market value should be the chosen strategy going forward. That said, the condo market is still seeing over asking sale prices and competitive market conditions – simply due to affordability.
3. Sale Prices Hovering – With higher list prices coming, actual sales prices should hover and we shouldn’t be seeing homes selling for substantial amounts over the list price – there are multiple factors that indicate we are moving away from that type of a market. I don’t expect sale prices to fall, but I certainly dont expect them to continue to rise at the pace we have seen over the last couple of years. Price growth is way ahead of schedule.
4. Interest Rates Continue to Rise – The BOC has increased interest rates twice so far this year and I expect that to continue into 2022. The most recent rate increase was a 0.50 basis point increase that happened in mid April. This was the biggest rate increase since year the year 2000 and has brought up the overnight lending rate to 1%. Looking back in history, this 1% rate is overall still very low. We were warned about rates increasing, so it is not a shock. These rate increases are a good thing and will help curb inflation.
5. Longer Days on Market – Sellers, please don’t be shocked if your home doesn’t sell in 2 days! Supply is increasing, giving buyers more choice. List prices are getting higher to reflect seller and market expectations. If a buyer is not competing with another offer, we should expect buyer contingencies such as home inspections, financing to come back into play, giving buyers more time to do their due diligence before removing subjects.
