What side of the fence are you on?
March typically marks the start of the Spring Real Estate Market. In three of the last five years, March has had higher sales volumes than April, May, or June. Even before the pandemic, March would typically be 10-15% below the monthly sales volume of April. It was not as robust as peak Spring, but it would denote a significant change from the slow winter months of December, January, and February. This year, home sales came in at their lowest levels in three decades - we had to go back to March of '98 to find a lower total sales amount. If March is any indication of what's to come this Spring, there are likely a lot of agents and home sellers in for a rough ride.
There is a sense of limbo with home buyers this year. Buyers have been operating under the natural run rate of demand in the market. Real estate sales have been suppressed since late 2022 when home buying initially recoiled in the face of rapidly rising interest rates. In 2023 and 2024, annual sales were below 70,000, a level on par with the late 90s. The difference - our population is significantly greater than it was 30 years ago. People still need and want to move! Growing families, divorces, empty nesters, and first-time home buyers are eager to move. After patiently waiting out the interest rates, it felt like buyers were primed to return to the market. Enter Donald Trump and US tariffs/ trade wars.
The speculative damage and narrative economic change were swift. Discussions of a recession have heightened as economists and the BOC project the potential implications of tariffs on our economy. Inflation and interest rate cuts no longer dominate the headlines; they have been replaced by unemployment and GDP contraction. In February, there was a palpable shift from Buyers. Fear of falling home prices and losing their job caused many to sideline their home search. However, the contraction is butting up against the pent-up demand, leading to a strange, unpredictable market with two very different tides.
On one side, homes are garnering lots of attention. Showings are abundant, offers are rolling in, and the market favours the Sellers. We have personally participated in several bid nights with clients, winning some and losing others. I have seen several properties receive double-digit plus offers on their bid night. Prices are going well above asking, and, in some cases, above market value.
On the other hand, homes have been sitting on the market for months. They may or may not be getting regular showings, and most are definitely not getting offers. If they are lucky and get an offer, it is commonly a lowball offer, well below reasonable market value. Some sellers are holding out, while others, desperate to sell, reluctantly take what they can get. Even in the 'lifeless' condo market, we are seeing good-quality end-user condos sell at a decent price. But the majority of investor-owned, dog-crate condos are immovable. There is demand from first-time home buyers, but they are willing to wait for the best option.
The divisive market is causing lots of confusion for both Sellers and Buyers. Sellers see a house on the street get a great price, and they want the same. They overlook the numerous other homes sitting on the market or explain away the ones that sold for less. Buyers are reading about deals and opportunities and want to take advantage. They are confounded when their offer is blown out of the water on a property that six other buyers offered on in competition.
The analogy I am sharing with both groups is, "There are lots of buyers sitting on the fence looking for homes - the only thing getting them off the fence is a great home or a great price."
For more information and advice, stay tuned,