Sell or Hold? Here's What You Can Expect in Today's Market
I think it’s safe to say that these past few years have created a lot of wealth for most homeowners, unlike anything we’ve ever experienced. But, home sales have been trending downward in the past few months.
The Toronto Regional Real Estate Board’s May report signaled that we are moving into a more balanced market where buyers will have more negotiating power compared to the past two years.
With mortgage rates increasing steadily this year and expected to continue to grow, many sellers are unsure of whether they should sell or hold, and what to expect in the market today.
Here’s what you need to know if you are considering listing your home.
What are Balanced and Buyers’ Markets?
A balanced market occurs when supply and demand are close to even. This is usually signaled by the sales-to-new-listings ratio (SNLR) which will land around 40-60%. In May, the SNLR in Toronto and the GTA was 39%, down -25% year-over-year. This falls just below balanced market territory, which could mean the market may favour buyers this summer.
A buyers’ market occurs when the supply of homes surpasses the number of active buyers. In this scenario, homes tend to sit longer and buyers have more negotiating power. This often causes downward pressure on home prices as well.
Strategies to Sell in Today’s Market
Due to escalating home prices and mortgage rates, many buyers have postponed their homeownership dreams and stepped out of the market for now. That doesn’t mean sales are non-existent and that you won't get a favourable price if you decide to sell—it just means the bidding war season is kaput. It also means that many sellers have to shift their strategy following years of having the upper hand in the real estate market.
Price Your Home Based on its Actual Value
In the past two years, many sellers were pricing their home under its market value to drive a bidding war. We are seeing fewer and fewer bidding wars, so the best strategy for most is to price your home based on its actual value. There are some exceptions to this and your Realtor can advise if your home falls into this category.
(Read: Keeping an Eye on Your Best Asset)
Prices have fluctuated more significantly in certain areas and cities over the past few months, so the last 15-30 days of recently sold properties in your neighbourhood will be more representative of its current value versus the previous month or during this past winter.
Be Prepared for Conditions and Negotiations
Conditions are back and most sellers should expect to receive offers with conditions. Common conditions include home inspections, financing, and even sales that are conditional on the buyer selling their own property. There is always room to negotiate when conditions are on the table, but plan to work with your agent to decide what makes the most sense for your situation.
Plan for a Longer Listing Period
In the height of the pandemic, homes were selling practically overnight. In May 2022, the average listing days on market was 12 days. This is still quite low and only an increase of 9.1% year-over-year, but higher interest rates could lead to homes sitting on the market longer. Sellers have been spoiled over the past several years with relatively quick sales. However, it wasn't that long ago when houses took on average 30 days to sell which was the norm back then.
To reduce the time on market, more preparation to your home like decluttering, staging, small renovations and professional photos may make your home stand out versus your neighbour’s home that is also competing for a buyer. Properly and professionally listing your home in a balanced or buyer’s market is essential when attempting to reduce the listing period.
If you’re considering selling this summer, please contact us today to discuss what to do to maximize your profit and have as little disruption to your life as possible. We are experts in this area and can get any home prepped and on the market in 30 days or less (many times in 14 days or less). Let's chat!
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