The cost of market timing

Attempting to time the real estate market is usually a misguided strategy. Focusing on your personal needs and circumstances is a more prudent approach

THIS MORNING, THE Bank of Canada lowered its key lending rate a quarter point, bringing the central bank’s benchmark rate down to 2.5 per cent after three consecutive holds at 2.75 per cent. It’s a sign the bank deems the time is right to start to taking action to tackle Canada’s slowing economy, believing inflationary pressures will be more than offset by falling employment, high consumer debt loads and a near stagnant new construction housing market. A rate cut may not be too early, triggering additional inflation, and it may not be too late, whereby we dive into a prolonged recession. Let’s hope the timing is just right!

Yesterday, the August inflation numbers were released, and core inflation signalled it was slowing down, month over month. This is the key indicator the BoC needed to confidently cut the lending rate, thus providing a small impetus to help drive economic activity. Additionally, the growth in Canada’s M2 Money Supply is slowing, which the bank believes to be an indicator of lower future inflationary pressures. Simply imagine this as money, getting paid back to Canada’s lenders (mainly chartered banks), thus removing those funds from the economy where they would fuel spending and upward pricing pressure.

 In terms of real estate statistics since August, it appears the first two weeks of September showed a significant slowdown in the number of transactions. For the week from September 5 to 12, there were 82 sales, but 403 new listings. For each day that week, 11 houses sold while 52 more houses entered the market. Supply exceeding demand continues unabated.

What does all this mean for buyers and sellers in our local real estate market. If you’re buying and don’t have a house to sell, you have the golden ticket. You can negotiate hard, be patient and measured, and finally secure the house you’ve always wanted at a price, perhaps lower than you might have expected, even six months ago.

As a buyer with something to sell, tread carefully. Get your home prepared, on the market and priced competitively. The sooner you can know what your house is worth in this market (its worth what someone is currently willing to pay you for it), the sooner you can negotiate from strength in your next purchase. Buying with the condition of the sale of your home is expected in this market — so don’t be afraid to buy first, provided you’re ready to list quickly.

As a seller, my number one piece of advice is this: it’s a fool’s errand to believe you can wait out the market for better times. This is the third fall in row in which we’re hearing sellers talking about waiting for the spring market when demand returns. Spring is not eternal when it comes to real estate economics. Spring salvation may not be in the 2020s. We have lower immigration rates as a federal policy, thus reduced housing demand (purchases and rentals). We have declining employment numbers and weakening consumer sentiment. Businesses are borrowing less, making fewer investments in equipment and technology to fuel economic output. All this leads to slowing housing demand.

As a country we need to improve housing affordability. Part of that solution is the relative cost of housing. It’s generally falling, albeit at a very slow rate. Our government seems to be okay with that. It brings down inflation, improves affordability and reduces consumer debt levels. It may be inevitable.

So, sellers who are waiting for prices to improve — that patience may cost you rather than benefit you. I continue to believe the best time to sell a home in the London real estate market is yesterday.

Market analysis provided by Marcus Plowright, Partner, A Team London. Marcus can be reached at 519-872-8326 or marcus@ateamlondon.ca.

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High- and low-priced real estate listings around town this week

London East

Low

Address: 1824 Avalon Street
MLS number: X12216101
List price: $469,900
Days on market: 96
Size: 3 bedroom, 2 bathroom, 700-1,100 square feet
Listing agent: Stacey Dale, Re/Max Advantage Realty Ltd.

High

Address: 1839 Parkhurst Avenue
MLS number: X12250574
List price: $1,599,900
Days on market: 81
Size: 4 bedrooms, 4 bathrooms, 2,000-2,500 square feet
Listing agent: Carol Turnbull, Salesperson, Re/Max Centre City Realty Inc.

London North

Low

Address: 1451 Stoneybrook Crescent
MLS number: X12316567
List price: $589,000
Days on market: 48
Size: 3 bedroom, 2 bathroom, 1,100-1,500 square feet
Listing agent: Taylor Ivany, Salesperson, Blue Forest Realty Inc. Brokerage

High

Address: 1577 Gloucester Road
MLS number: 40745787
List price: $3,485,000
Days on market: 81
Size: 5 bedrooms, 3 bathrooms, 6,837 square feet
Listing agent: Steve Bailey, Broker, The Agency

London South & West

Low

Address: 55 Ashley Crescent
MLS number: X12362822
List price: $414,900
Days on market: 22
Size: 3 bedroom, 2 bathroom, 1,100-1,199 square feet
Listing agent: Hazim Elgwaily, Salesperson, Century 21 First Canadian Corp. Brokerage

High

Address: 20724 Denfield Road
MLS number: X12221123
List price: $3,599,000
Days on market: 94
Size: 3+2 bedrooms, 6 bathrooms, 3,500-5,000 square feet
Listing agent: Bobbi Maroney, Broker, StreetCity Realty Inc. Brokerage

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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.