Falling forward
As the fall market unfolds, a combination of factors will shape its trajectory
SEPTEMBER WAS JAMMED full of news ― looming elections, confidence votes, jobs, mortgage rule changes, inflation going cold, U.S. Federal Reserve dramatic interest rate cut, world wars, weather events, a summer that refused to end…where do we start?
Although the month has just ended, we don’t have comparative regional real estate stats as of yet ― that takes a few days to finalize and bring context. More on that next week. The weekly numbers, however, showed a doubling of activity in the final week of September compared to the first week ― perhaps a good omen for a strengthening fall market. We really have no where to go but up after an extremely slow summer, both locally and nationwide. Alberta (specifically Calgary) is a standout from the rest of the country at the moment, but it had a long and protracted decline, so it is perhaps the most ripe for a rebound of sorts.
The mortgage rule changes were the big news this past month. Amortization periods pushed out from 25 to 30 years for new home buyers and first-time buyers. On the heels of that announcement, the stress test was eliminated for renewals of mortgages, thus making it dramatically easier to renew at higher rates. The relaxing of the stress test (a required approval at two per cent above the borrowing rate) as a requirement means you may qualify, but that doesn’t mean the mortgage lenders are willing to take greater risks. Appraisals still must meet tightening restrictions on valuations. Be sure to get expert mortgage advice well in advance of your renewal coming due.
All markets are complicated, but we are living through a time where it is very difficult to plan ahead ― challenging for both buyers and sellers
We are being threatened by elections provincially and federally; we’re also having to watch the drama unfold in the presidential elections south of the border. These circumstances breed instability, creating a lack of confidence for making economic investments. When governments change, rules change, and thus the insecurity of not knowing our political or economic direction pushes us all to sit on our wallets.
Canada’s economic indicators are leading many to believe that our bank rate will fall faster than previously estimated. Only three months ago we were still wondering if the Bank of Canada would start cutting the overnight rate. Now, three small cuts later, we’re wondering how fast and aggressive the next cuts will be coming. Given the number of listings already in the market, and those sitting on the sidelines waiting to bring their homes to market, it’s unlikely lower rates will trigger a run up in values. There’s simply too much supply competing for each buyer.
The most uneasy situation in our market is a home sale that is conditional on another home sale, that is conditional on another home sale, and so on. The uncertainty for all those buyers and sellers is palpable, with each having different levels of urgency and therefore anxiety. In our team, we broke an internal record with four separate deals conditional on one house sale ― that’s four families with their finances and lives on hold pending a buyer surfacing for a home in another city, where listings are tending to sit for months at a time.
There is so much emotion in a real estate transaction. All markets are complicated, but we are living through a time where it is very difficult to plan ahead ― challenging for both buyers and sellers. Real estate is hard. Patience and perspective are absolutely necessary. Valuations cannot generally be manifested. Accepting that an asset is worth what someone is willing to pay for it may be the only path forward.
Market analysis provided by Marcus Plowright, Sales Representative, A Team London. Marcus can be reached at 519-872-8326 or [email protected].
High- and low-priced real estate listings around town this week
London East
Low
Address: 1784 Parkhurst Avenue
MLS number: X9372316
List price: $299,900
Days on market: 4
Size: 2 bedroom, 1 bathroom, 700-1,100 square feet
Listing agent: Ty Giles, Broker, Saker Realty Corporation
High
Address: 129 John Street
MLS number: X9234740
List price: $5,595,000
Days on market: 61
Size: 9 bedrooms, 19 bathrooms, 5,000+ square feet
Listing agent: Trent Forristal, Salesperson, Sutton Group – Select Realty, Brokerage
London North
Low
Address: 28 Ranchwood Crescent
MLS number: X9355009
List price: $400,000
Days on market: 13
Size: 4 bedroom, 3 bathroom
Listing agent: Patrick Lexima, Sales Representative, One Percent Realty Ltd.
High
Address: 864 Clearview Avenue
MLS number: X9298104
List price: $4,675,000
Days on market: 27
Size: 5 bedrooms, 6 bathrooms, 5,000-plus square feet
Listing agent: Michael Reis, Sales Representative, Sotheby’s International Realty Canada
London South & West
Low
Address: 294 Wharncliffe Road South
MLS number: X9346193
List price: $429,900
Days on market: 19
Size: 3 bedroom, 2 bathroom
Listing agent: Chris Howlett, Broker, PC275 Realty Inc.
High
Address: 1011 Cherrygrove Drive
MLS number: X9053822
List price: $4,250,000
Days on market: 69
Size: 4 bedrooms, 4 bathrooms, 5,000-plus square feet
Listing agent: James Smith, Sales Representative, Sutton Group – Select Realty
Disclaimer: London Inc. does not guarantee the accuracy of the statistical data on this page. The data does not represent the listings of any one agent or agency but represents the activity of the real estate community in the area. Any real estate agent’s ad appearing is separate from the statistical data provided, which is in no way a part of their advertisement.