The last four years have been a roller coaster for the real estate market. Thankfully, we may be seeing an end to the fl uctuations. As 2023 wound down and interest rates levelled off, the fourth quarter saw much less activity. Inventory was low, sellers held on as prices dropped, and buyers hesitated to takeon large mortgages with high interest rates. As many realtors described, it was a dismal fall.
When the Bank of Canada held the interest rate in January, people breathed a sigh of relief. Around mid-January, realtors began to see activity pick up again as buyers and sellers regained confi dence in the market.
“People who sat out the winter waiting to see what happened with the market are now becoming active again,” Michael Brejnik from Royal LePage Burloak Real Estate Services Ltd. explains. “The Bank of Canada holding the rate in January is a positive sign.” He explains that some buyers will try to get ahead of the curve before home prices increase, and we may start to see some competition again.
In some cases, agents see multiple offers, but it’s worth noting that this doesn’t mean over-infl ated bids. “A home could see three or four offers and still sell at the asking price,” says Michael. “Offers are coming in fi rm, and conditions on home inspections and financing are becoming a regular staple again.”
Buyers continue to be cautious about overpaying, and underpricing will not necessarily generate multiple offers like they did a year ago. The days of inflated prices are past, and it’s time to reset our expectations.
Hesitant buyers can now enter the market knowing prices are more reasonable and feel confi dent they won’t likely face interest rate hikes again. Sellers who postponed listing can feel good about a more active market and will see some competition in 2024. Buyers also need to keep in mind that interest rates are unlikely to return to the record lows we saw in 2020 and plan accordingly.
“With interest rates having gone up over the last few years, we entered a more traditional market,” says Michael. “Spring will be busy, followed by a slower summer as families vacation again. Fall is expected to pick up, and winter will be less active.” Michael also adds that if interest rates drop, we should see even more activity in the market.
The overall housing shortage is still a concern and will play a role in house prices over the coming years, but all indications point to modest growth for 2024 across the board. With inventory still low, prices will begin to climb again, but not in the ways we’ve been seeing.
Whether you’re considering buying or selling this year, ensure you’re working with a knowledgeable broker with a good track record of success regardless of market conditions. They should be familiar with the area and market trends and focus on pricing your home appropriately. Setting the right listing price is more important than ever. The market no longer favours pricing low and holding offers. Sellers should also have their homes decluttered and in top showing condition, even if they’re not planning to sell immediately.
“Buyers should talk to their bank or mortgage broker and get pre-approved, so they’re ready to go,” advises Michael. “They should also consider jumping in now before the spring market takes off. They may still get a ‘winter blues’ discount.”
