Lately I find myself watching the real estate market like a hawk – our mandate at the Personal Mortgage Group is always to stay current on the driving forces in the real estate market – but right now I have a personal stake in what’s happening. My wife and I just did a series of renovations on our house and we’re looking to refinance the cost of the renos back into our mortgage.
You may be reading that the market is fairly flat in the Golden Horseshoe. For those of you who have been renovating like us, that means you may find it harder to refinance those renovations back into your mortgage.
The fact is that this Spring is slower than last Spring and with a number of factors at play, buyers and sellers are reacting to the changes we have seen in the last year.
Mortgage Professionals Canada (our national mortgage industry association) said it best in this excellent summary of Ontario real estate:
“Resale activity has slowed sharply in Ontario, for several reasons. Potential home buyers (and sellers) have become much more cautious in the wake of the excess exuberance that was seen during late 2016 and early 2017; higher interest rates are weighing on affordability; and government policies are suppressing housing demand, chiefly the duo of mortgage stress tests, with a minor contribution from the provincial policies that were announced last spring.”
If you are a seller in the GTHA you know what they are talking about.
The Realtors Association of Hamilton-Burlington reported that the number of sales in April 2018 were down 34% from April 2017. Average sale price also dropped by 8% from April 2017. Those statistics are regional, so it’s difficult to know what to expect for your own home when everyone is talking in such broad terms.
In fact, the average sale price in some areas are almost the exact same as 2017. For example, the average sale in Ancaster has been steady at $822,000. The number of sales are down, but the average price remains the same. Take a few seconds to check out your area and see what’s happening HERE (the chart is near the bottom of the report).
Everything south of Hamilton/Stoney Creek on the QEW has seen an INCREASE for average sale price. Grimsby, Glanbrook, Dunnville and Caledonia all went up and now Brantford is seeing speculation as the next destination for real estate investors. What they all have in common is that the average sale price is below $600,000.
In other words, buyers are either hesitant or unable to buy upwards of $600,000. It makes sense when you consider the changes we have seen made to the mortgage industry.
So what does it all mean?
2017 was a hundred yard dash with folks scrambling to get into the market and overpaying in some cases. It was a seller’s market and we have returned to sanity. A balanced market means slow growth for the time being.
If you were planning to buy in the $600k+ market, then now is a great time to make your move. Properties pushing $600k are sitting on the market longer than sellers want and so there are some great opportunities out there to go in with a low offer. If you were planning to sell in that $600k+ range, perhaps you may consider renting out your home and waiting to see what happens.
In any event, give us a call and we can talk through your plans. There are so many factors that it can be hard to make sense of it all and that’s precisely what we are here for.
Written by: Steve McKay