Hey Peeps !!
Its my monthly update on the market and I thought I would share this little comparison. Right now everyone is saying the market is balanced. That month over month there are no huge changes. Well if we take a look back to March 2017 just before the government intervened to now, you will see there is a huge swing.
As you can clearly see, the market has made a definite shift. Average Sale Prices from March 2017 to May 2018 had dropped significantly. Therefore anyone selling their home right now needs to see what is happening and adjust their pricing accordingly. The days on market are always skewed as they do not take into consideration the listings that have terminated and relisted. Having said that, I had an excellent May because my sellers were informed of the market and used up to date comps to make informed decisions and now they will benefit from this market on their purchases.. as clearly the Buyers have an upper hand right now.
Having said that, we are seeing lots of Mutual Releases as well. A Mutual Release is signed when the conditions are not met and the deposit is returned in full to the Buyer. It would appear that people are not meeting the new stress test criteria and financing is becoming an issue for some. Please understand that a pre-approval should be done prior to looking at home and should be done by a reputable mortgage broker or mortgage representative at your bank. It is my experience that brokers tend to get the deals done quicker and with the best rates.. more often than not, better than your financial institution. So understand that a teller at the bank, saying you can buy a house up to $$$$$ is not a pre approval to buy anything. Pre approvals are based on credit score, income and also your recent tax documents. If you have not filed your taxes, this will be an issue for you when it is time to get your financing done. Trust me !
If you would like some recommendations of Mortgage Brokers which I have used for many years with great success, please don't hesitate to reach out and ask me. They also do re-financing of existing mortgages as well.
Now I want to touch base on one more relevant fact that I have heard lately and that is, "I am going to wait until the market picks up again".. Please understand that this is not going to happen in the NEAR future. We ar on the downward tick now and pending the outcome of the upcoming Provincial election, we could see it get a lot worse before it gets better. I am not going to preach politics but I will remind everyone of 1990 when real estate tanked and we saw Power of Sales galore and record high interest rates, Those days were scary for a lot of people who walked away from their homes because they didn't have enough equity in them and couldn't keep up with the payments and then the lay offs in employment etc because the economy tanked .
Further to that note, I am going to give you some updates I received from Benjamin Tal (Chief Economist at CIBC) whom I had the pleasure of listening to speak last week at the Congress Centre. We tend to see eye to eye with a lot of what he said and here are some short points, The real estate market as we know it is being tested. There will be major implications. Interest rates will start rising. 2017 was a wonderful year and lead very well by Canada. But in 2018 we aren't seeing that. There is a major disconnect. Other countries are now impacting our business. We have Trump talking about huge tax cuts in US.. which in turn will effect Canadian business. Canadians pay for carbon, they do not. Then there is this whole tariff war now. And what about NAFTA????? Where will foreign money be going now??? Think about it.
US will gain significant market share. Investment is now going to the US and not Canada. Mexico will be the biggest loser in all of this. There will be a trade war between Chine and U.S.
We will see Bank of Canada start moving interest rates up... the next one will be in July and another one I suspect in September. They will be very gradual but they will happen, so be prepared. Alternative lenders will do more deals now. Canadians are now transferring risk from the regulated sector to the unregulated sector.. which could cause a sub prime crisis in Canada in time.
Benjamin Tal predicted a recession in 2020/2021. If this is the case, we need to vote very carefully. We need to start saving money for a rainy day. The job market is strong but it will suffer if all these combined economic projections take place. Imagine how many people would lose their home if someone lost their job? How much do you owe and what is it worth? Is it worth more or less than what you paid? How much equity do you have? These are all questions you need to think about in the coming months and year ahead.
I am not trying to be doom and gloom. I am trying to prepare you for the future and how to be fiscally responsible so IF any of these possibilities happen, you will come out the other end of it without any collateral damage. Trust me I lived through 1990 and I don't wish that on anyone. Had I had the knowledge then that I do now, it never would have happened.
Any time you have a question about your home or ownership or market values, please do not hesitate to email . It's not all about making deals. It is about helping people understand the market better so they can make informed decisions about their BIGGEST investment and their future.
Houses under 500K are moving a lot quicker than the homes over 700K... at least in Durham Region. So the ones that are priced right and show the best sell. Hence why using a good photographer is worth every dime. For more information on the market or an in home evaluation, reach out anytime.
Have a great day everyone !! Summer is almost here !!! #poolside #drinks #heat #summer
Your friend in Real Estate
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