I’m a first-time homebuyer. Do the recent changes in the market make this a good time to buy? – HOUSE HUNTING
DEAR HOUSE HUNTING: That’s the million-dollar question. People have been trying to time the real estate market since we first moved out of caves. It’s easy to look back and see what might have been had we purchased last week, last year or 20 years ago, but we can’t change history. Everyone needs a place to live, and for today’s buyers, the best time to start looking is when your financial ducks are in a row and you have a mortgage pre-approval.
Remember, real estate is a long-term investment. Unless you’re a flipper, you’ll likely hold on to your first home for three to five years, and sometimes even longer. Holding off buying as you try to analyze whether the market is going up or down can leave you too hesitant to make a move at all. Over the years, I’ve seen well-intentioned buyers get trapped in a “failure to launch” cycle where fear leaves them sitting on the sidelines — and eventually priced out of the market.
A recent lack of consistency in the marketplace has made things even harder for those who are nervous. While market conditions were quite predictable in Kitchener-Waterloo (and across much of Canada) prior to 2016, we’ve seen a greater rate of flux in the last five or six years.
Today’s buyers have an advantage they didn’t have a few months ago. As I write this column (June 2022), we have over 1,100 homes listed for sale in Kitchener-Waterloo, compared to the meager 104 listings we saw on January 5 of this year, and these inventory levels appear to represent the extremes of the market. Three weeks ago, we were seeing three new listings hit the market each day for every listing that sold. Today’s ratio is closer to 1.5 new listings for every one that sells. We’re getting closer to that 1:1 ratio that indicates a more stable market.
This is the first time since the pandemic began that buyers have seen a balancing of the market, but it doesn’t mean that property values are in free fall. People tend to think that whatever is happening in the market today is the new normal, but remember two months ago, when people were talking about how Canada stands to be about 1.5 million houses short in the next ten years? That problem hasn’t disappeared, and neither has the demand in our region.
Today’s market pattern is a lot like the TP (toilet paper) shortage of 2020. In the early days of the pandemic, frenzied buying led to toilet paper scarcity. The shelves are restocked now, but that doesn’t mean the demand has vanished. We are still consuming at a steady rate and will continue to do so.
PRO TIP: I think this is an excellent time to buy. We currently have a greater supply of listings than we’ve seen in about five years, interest rates remain relatively low, and today’s buyers have time to do their research and consider their choices. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.