The 2022 buyer’s market everyone is talking about!
Have you ever noticed, that when it comes to real estate, everyone seems to have advice, an opinion or even a favourite quote they love to share the moment they hear you are buying or selling a home?
“This is a real-estate-driven economy from top to bottom.” ~ Christopher Thornberg, economist
“Don’t wait to buy real estate. Buy real estate and wait.” ~ Will Rogers, actor
“There are three things that matter in property: location, location, location.” ~ Harold Samuel, real estate tycoon
Now maybe you’ve heard some of these famous sayings or maybe you haven’t. Yet I would hazard a guess there is one saying you’ve definitely heard…
Sounds easy enough and yet, over the last couple of years, as the GTA housing market skyrocketed, the adage, buy low, sell high seemed like an impossibility.
So, why are the house prices in GTA so high?
It actually boils down to a few simple reasons…
- A supply shortage in desirable locations,
- Higher immigration levels have put pressure on demand
- COVID and stay-at-home lifestyles prompted a lot of people to evaluate their living arrangements and desire more space
Now that may have been the case a few months ago, but right now…the saying “Buy low, Sell High” is about to make a comeback!
Like a blessing from above or a sheer miracle the GTA housing market has made what we like to call “The Dip” at The Kormendy Trott Team .
What is “The Dip” and why is it happening?
- A substantial cool-down in Toronto’s red-hot housing market
- Because prices reached ridiculous highs, and hardly anyone could afford them
- Lending mortgage interest rates have increased
- A substantial increase of inventory over a short period of time, in many cases caused by sellers trying to cash in on a hot market
So, how can anyone take advantage of this incredible opportunity? It’s easy, follow the KT Confidential 5 pro tips to “Buying in the Dip”.
5 Pro Tips to “The Dip”
1. How to predict “The Dip”
The first thing to know about the real estate market is there are always warning signs when the market is about to change. Here are just a few things you will always need to keep your eyes on to predict “The Dip”
- Look for market trends and conditions in your area
- Check out active homes (homes for sale) on the market
- Find out the attrition/turnover rate. Meaning the Total Number of Homes / Total Number of Homes Sold = Neighbourhood Turnover Rate
- Scan listings for how many homes have sold in your area in the last week.
- Real estate agents have the inside scoop and are privvy to information that the general public may not see such as the number of showings booking at listings, the number of offers being submitted on a property, how competitive each offer is, etc.
2. The Dip 101 – Understanding the Dip
So, what happened? According to the Toronto Regional Real Estate Board the number of home sales across the GTA are falling drastically since the beginning of the year.
Sales are down 27% month-over-month, and a whopping 41.2% compared to the same time last year.
This is happening, in large part, to the fact that negotiated mortgage rates rose sharply, prompting some buyers to delay their purchase.
NOTE: prices are down, but still far higher than May 2021.
3. Who should buy now, sell later?
Most people would believe “the Dip” is only a buyer’s market. However, we believe both the buyer and seller can take advantage of this great opportunity.
The Buyer: Why?
- For a first-time home buyer, they may be able to afford a dream home.
- Homes that were out of any buyer’s budget are now affordable
- Seller’s are desperate to sell their homes
The Seller: Why?
- A seller who is upgrading their home may be able to afford houses that were out of their budget in the past
- The percentage difference between selling and buying price could work in their favour
- The seller’s home may sell for less, but the price of the home they want to purchase is lower.
- Difference in percentage losses could be in sellers advantage to buy
4. Lifespan of “the Dip”
Unlike other dips in the real estate market, this particular dip is going to be short-lived. In fact, it may be over as early as Fall 2022.
If you are in the market to buy, it is highly recommended you take advantage of “The Dip” ASAP!
Reasons “The Dip” could have a short lifespan:
- We’re already seeing seller’s who tried to ride the hot market wave realize they missed out and they’re pulling their properties off the market, reducing inventory
- It will be a quiet summer with most people (hopefully everyone soon) being able to travel after two years cooped up
- Some companies will revise their work arrangements requiring previous work-from-home employees to attend the office more frequently, prompting relocation
- Gas price increases will force people to move closer to work
- Government policy changes
**Disclaimer – This is a KT Confidential prediction/opinion
5. Similar Dips (NOT the kind you serve with Tostitos)
Experts are saying today’s housing market looks a lot like 2017’s Dip.
- 2017 and 2022 – the year started with home prices at record highs
- 2017 and 2022 – the GTA not having enough supply and a surge of inventory in the early spring of sellers trying to ride the wave (but often missing out)
- 2017 and 2022 – mortgage rates and approval requirement changes
- 2017 and 2022 – Government intervention (foreign buyer taxes/policies, etc.)
We want to know what you think!
Do you feel we are in the Dip?
For more great tips like this, check out KT CONFIDENTIAL The Real Estate Podcast