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With two kids under the age of six, living in a two-bedroom, one-bathroom household, the couple have long known it would only be a matter of time before their family outgrew their beloved home. Long hours in the small space while mom was pregnant, and toiling from home during the COVID-19 pandemic, along with a visit to a neighbour, who was selling their ‘beautiful’ place that was ‘the perfect size’, convinced the couple to start their new home hunt again.
The market has been sluggish since last year, when prospective buyers started putting off plans to purchase homes, as the Bank of Canada aggressively hiked interest rates eight consecutive times. The quick succession of increases eroded buying power as borrowing costs rose and sent prices falling, discouraging sellers from listing their homes.
With the Canadian Real Estate Association data showing average prices have dropped 19% from their February 2022 peak of $816,578 to $662,437 last month. BMO Capital Markets’ Chief economist predict they will bottom out after falling 20-25%, realtors see many edging towards a purchase once more.
‘We got a flood of buyers in January and February and we still are getting more and more. We started seeing multiple offers return and bully offers return’, said a Toronto broker. ‘We’ve started getting calls where buyers are just like ‘I think I’ll just adjust what I want, but I don’t want to miss my opportunity’.
These clients are a mix of people who have to move because they are relocating for work. Or they have growing families and also first-time homebuyers, keen to not let lower prices pass them by. Many first-time homebuyers are finding it harder to qualify for mortgages, but still want to make a purchase, so they are compensating by adjusting their expectations.
‘Maybe they can’t get the square footage they thought they could get, because they can’t qualify for much, but they still really want to get a good deal.”
Vancouver has also seen a resurgence in buyers.
Weeks after the Bank of Canada signalled further interest rate hikes were unlikely, the realty agents have started selling quickly and with multiple offers.
A condo was spotted listed for $699,000, garner 11 offers and a house listed for $2.8 million, snag five bids last month. Others aren’t wading into the market just yet, but are preparing to do so soon.
Everyone who wasn’t pre-approved, is getting themselves pre-approved because people want to jump on buying something, because they’re worried that prices are going to start going way too high again.
Despite such sentiment, the realty experts don’t see the market returning to the frenzied pace of 2021, largely because of the lack of properties available.
February’s new listings, totalled 51,366, down 26% from a year ago, the Canadian Real Estate Association recently revealed. On a seasonally-adjusted basis, they hit 57,535, down nearly 8% from January.
If a sharp drop in new listings continues along with tightening demand-supply conditions, a moderation in prices will materialize over the coming months, according to the RBC Economics’ assistant chief economist. If those conditions are sustained, he forecasts prices will bottom out sometime in the summer or shortly thereafter. Sellers will be watching what direction prices move in closely.
“A lot of sellers are beginning to want to list, but most of them, I am noticing, are a little bit cautious’ says a realty expert. They’re noticing the shift in the market as well, and they want to get top dollar for their property, so they’re thinking maybe let’s wait until the spring of the summer.”
Original article: www.bnnbloomberg.ca