Dear David,

Our house was on the market for a few months in 2022, but didn’t sell. We’re getting older and need to be close to family, so we listed it again. Showing traffic has been slow. The one offer we received was about $50 thousand below our 2022 expectations. We’re having trouble reconciling this. Should we hold off selling for a year or so in case the market bounces back? – WONDERING

DEAR WONDERING: Moving close to those you love is not something to put off. Aging with a support system in place is ideal, and better still when that support system is family. 

Hopefully a little background can put things into perspective. In the years before the pandemic, homeowners in Waterloo Region could reasonably expect a healthy 3.5 to 4 percent growth in their property values each year. When plotted on a graph, the line was somewhat predictable. Then a combination of factors led to things going crazy in 2022: people got cabin fever during lockdown and wanted a change of scenery, interest rates were historically low, and FOMO (Fear of Missing Out) set off bidding wars and added fuel to the fire. When we first emerged from lockdown, the average sale price in Waterloo Region was around $600-thousand. From there, prices shot up exponentially for a year and a half until KW’s average sale price peaked at $1 million in February 2022.

The high was short-lived and started turning around almost immediately. House prices dropped by up to 25 percent through the remainder of 2022. If you put your home on the market after February, you could pretty much count on its value dropping daily, until the market finally bottomed out in December.

But here’s the take-away: the meteoric rise and immediate fall of local real estate prices was a blip on our otherwise healthy growth trajectory. The market hasn’t crashed. You may be surprised to hear that home values currently sit about 35 percent higher than they were before the pandemic, which based on our historic growth rate, is actually better than expected. 

Today’s average sale price is probably lower than it was the last time you listed your home for sale. The cost of borrowing has also increased to the point where a $500 thousand mortgage costs about $1200 more to carry each month than it did a couple of years ago. Buying power is being eroded by today’s high interest rates, and historically high inventory levels are creating a buyers market. You may feel like your home has lost $50 thousand of value, but if no one is stepping up to buy it at that price, you’re setting an artificial target (based on a blip) that the market is unable to meet.

PRO TIP: It’s time to reset. Take the chance to be close to family, instead of wasting a year without them. I don’t expect real estate prices will “bounce back” to record highs anytime soon, especially while interest rate reductions are being metered out to prevent this from happening. #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.