Buyers that have been sitting on the sidelines, saving up for down payments, being picky, or waiting for the market to crash, need to act now.
The Fair Housing Plan announced in April fundamentally changed nothing. None of the 16 measures did anything to significantly alter the forces that continue to push prices up and inventory levels down.
What it did do was temporarily affect the psychology of the market.
It scared sellers, initiated a flood of new listings, and caused average prices to soften and sales to decline — wiping out a large portion of the gains we saw in the first six months of the year. It scared buyers into pulling back and sitting out until ‘things got better’.
Sitting On The Sidelines
Earlier this year, we were hearing from a lot of buyers who were frustrated and wanted to wait in order to save larger down payments because they couldn’t afford the home they wanted. Other buyers decided to stand out on the sidelines in hopes that the market would slow down or crash. Prices have softened from their peak in April but remain significantly higher than their 2016 levels.
Neither of these groups should be patting themselves on the back for making a educated decision because they got lucky.
Had the government not intervened in the housing market 7 months ago, these buyers would have lost tens of thsouands of dollars in appreciation or be priced out of the market completely at this point.
Our supply and demand issues have not been resolved, infact they will continue to get worse. We have never had such low numbers of new homes being built. We still have record numbers of new people moving into the area. Growing levels of immigration, historically low interest rates, low unemployment, increasing wages, record breaking economic growth; there are so many factors that are aligned right now that should be pushing our market to new heights.
This Is It
Buyers have been given a short-term window of opportunity over these last six months. As soon as these last aftershocks have passed, all of those factors that drove our market previous to the April announcements will drive it forward again. Buyers need to use this opportunity to get into the market because this is it. The softening that we’ve seen since April and May has done its job. Although prices have held steady anywhere from 6 to 13 percent year over year. This is down from the 20+ percent we were seeing in March or April — but that’s it. Things are not likely to decline any further.
We have now entered the very first stages of a seller’s market. This means sellers now have a slight advantage over buyers for the first time in about 7 months.
If this trend continues (as it did out west) it won’t be long before buyers begin to experiance increasingly difficult market conditions.
The economy continues to beat economists expectations, performing at very high levels, with a suprising amount of jobs being created throughout the fall. This means the Bank of Canada will likely stay on course with further interest rate increases in the coming months. Rates have already gone from 0.5 percent to 1 percent in a very short amount of time. At this point, analysts are predicting approximately 3 further interest rates hikes for 2018.
Along with interest rate increases, residential mortgage rules are changing starting January. As a consequence, buyer’s with downpayments of 20% or more will see their budgets decrease by approximately 20 percent.
Now is the absolute best time to get into the market. The market has stabilized and is picking up. It is now a seller’s market again. As every day ticks by, the fundamentals of the market are taking hold and pushing our market back towards growth. Interest rates will continue to rise in the new year.and buyers have less than sixty days to get into the market before the new mortgage rules take effect.