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The Signs of a Changing Real Estate Market

If you’re one of the many Canadians who are wondering where our red-hot real estate market may be heading, here are a few facts that you might want to know.

First of all, remember that real estate is – and always will be -- a cyclical business. According to many industry experts, there are several signs that we may be about to enter a new cycle. Very low interest rates have been in place for a few years now and this has already attracted many people out of the rental market. To a large extent, pent-up demand for housing has now been satisfied as renters wanting to step up into home ownership have already made their move. Further proof of this situation is the fact that rental vacancy rates are now on the rise in many urban centers across the country. Just a few years ago, it was very difficult to find good rental housing, but now it’s becoming commonplace to the see the ‘vacancy’ sign posted again.

Secondly, interest rates have begun to inch upwards. The Bank of Canada recently raised its Bank rate by a quarter of a percentage point and has hinted that another modest rate may be coming in early September. As mortgage rates start to rise, homes will tend to become less affordable for prospective buyers.

Eventually, these factors can result in there being fewer buyers in the market. This in turn may result in fewer homes being sold, which would gradually create an increase in the inventory of homes available for sale. It also means what has been a sellers market will start to cycle into a more buyer-friendly environment. That’s good news for buyers, because there’s more to choose from and perhaps even a little less competition for available listings. But if you’re a buyer, don’t be too confident of capitalizing on this shift. Smartly priced homes in desirable locations will continue to be snapped up quickly. As the cycle starts to swing from the frenzied buying of recent times towards a more moderate market, home values are still projected to climb in the coming year, just at a more modest pace. One bit of good news for buyers is that this moderating market cycle will probably see fewer multiple offer scenarios and the bidding wars that can sometimes characterize a sellers’ market.

A larger inventory of listings tends to extend the length of time a property is on the market before it sells. That may not come as good news if you’re a seller. However, while it may take your home a little longer to sell than in the height of the boom, the good news is that homes will continue to command good prices. In fact, most economic indicators predict further increases in average home values over last year’s record-breaking levels. Just be prepared to give it time!

Of course, these general predictions don’t take into account any local factors that exist within our own community. If you’re thinking of buying or selling a home, why not call us to discuss your options?. As real estate professionals, we have ‘insider’ information about local properties, extensive market knowledge and creative financing solutions to help make things happen. Why not take advantage of our expert advice? You’ll be glad you called us first!

Posted on Friday, August 3, 2007 at 10:05AM by Registered CommenterElaine in | Comments3 Comments

Reader Comments (3)

I am jealous of your booming real estate market. Why don't you pass on the luck to us in the U.S? :)
August 11, 2007 | Unregistered CommenterAlbuquerque realtor
Its still somewhat a buyer's market at present, but I've noticed the market turning in Kentucky as well. I think things will be somewhat back to normal after the 1st of the year.
August 17, 2007 | Unregistered CommenterMalok
I wish we could pass some good real estate fortune over to you in Albuquerque, but it's not luck we have here... it's the lack of a sub-prime mortgage market!
August 20, 2007 | Registered CommenterElaine

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