We have just come off of a crazy spring market here in Hamilton. We saw a lack of inventory in homes create an abundance of demand, which pushed up prices beyond what most local buyers could afford. With that push came a very solid and somewhat scary sellers’ market situation. This created some chaos, as we saw the logistics of buying and selling change drastically, which had properties selling hundreds, and more often, many thousands of dollars over the asking price. It was a perfect time to sell your home, fast and for lots of money!
So what became the norm for people preparing to sell? Buying first. Not only searching and buying homes before listing their home for sale, but buying in a heated rush, in most cases, foregoing conditions in their offers, firming up sales literally day that offer would be presented, creating a dangerous situation of potentially owning two homes. (conditions such as financing, gives you the days necessary to go to your bank or mortgage broker and firm up your mortgage details, inspection conditions help you learn about the home you plan to buy and find out if there are any issues present)
People were almost fooled into believing the “chaos” of overpriced sales, (swift ones at that!) would remain. I counseled numerous clients to be cautious, and at very least, list their homes as we forged ahead searching and eventually making offers on other homes. But, understandably, people were caught up in the excitement of making more money off their home quickly (we call that “cashing out”) and remained focused on “winning” their next home in, more often than not, heartbreaking bidding war scenarios. The afterthought of what would occur should the market shift, didn’t seem to come into play.
In my almost decade in real estate, I hadn’t seen this side of a sudden sellers’ market. It became more of a guessing/strategic game when preparing offers, instead of a proper comparison of local sales, home condition or upgrades, and neighbourhood locations. My research skills and training basically were not necessary, but my strategic skills and ongoing experience as we moved forward, became vital. A home listed for $499K would be sold for above $600K. No conditions. If your strategy “won”, your client won. So buyers became used to buying being a razor-edged focused fast moving situation, and selling was no more difficult than placing a sign on a lawn and stepping back to watch the chaos blow in, leaving you breathless!
Many folks did just that. Bought before selling. And unfortunately as I warned prior to anyone buying, and along the way as we moved ahead, I continued to warn that such markets aren’t long lasting. Buyers were being kicked out of the market, especially after new mortgage rules tightened their ability to obtain a mortgage. Most now were not able to afford what previously would have easily been a home they would have looked at. And no sooner did the market sweep them up, it spit them out.
In May, literally, it all shifted. The Liberal government stepping in to make announcements on rental housing rules (to slow the market) started everything, and perceptions halted everything. Buyers (seemingly overnight) paused. Homes that sold overnight, sat for sale. And it continues. And those who bought first, and held off selling, missed the market. Homes now are taking over a month to sell, for nowhere near asking price, if they sell at all. Price reductions are the new normal again. Conditions are back in offers. It’s a normal almost balanced market again, but it feels like it crashed.
It’s upsetting to witness, especially when I have spent everyday working the markets (as all agents do) and saw it coming. Warned, prepared, warned again. While I understand the excitement of such a market that swept everyone up, I also knew it wouldn’t last. I also understand it’s easier for a professional to grasp that, while buyers and sellers unfortunately have to learn as it happens.
The biggest mistake, in my opinion, in any market, is to buy a home first, while still owning one. No matter how good your agent is, how hard they work, how much they do, how awesome the current market seems to be, we don’t have crystal balls, we can’t force a sale. We also can’t foresee such shifts in markets. And it only gets worse if your home isn’t “perfect” in the eyes of buyers. If it needs even a small amount of updates, it won’t sell quickly or for top dollar. Especially coming off a market like we just did. It’s fine if you have time to sell and are patient, firmly understand what you’re facing. But for most now, that is almost impossible.
Listen to your agent. We know what is happening. Our job is to prepare and assist, to read the market and place you into it, or help you sell within it, with that information. We can only do so much. And trust me when I say, while there are a small percentage who aren’t up to snuff, the majority of agents truly know our jobs, know the market and are working in your best interest.
I’m off to continue my work to get these homes sold now. Yet another price reduction, some more “prettying up” of another, and facing pulling one off the market for a year because my clients bought first and missed the market, and now must reshuffle finances and hold off, likely renting out in the interim.