Changing of Real Estate Pricing Strategy: Fall Market
Multiple bids, overnight sales, and unconditional offers was the reality of the real estate market this past Spring. It wasn’t uncommon to see houses under listed to draw in multiple offers and no conditions offered to gain the home of your dreams. This strategy frustrated home buyers and many found it impossible to achieve a home in the aggressive market. However, we have seen some swift changes as we enter the Fall season.
Home buyers are now able to negotiate and the realtors who have kept pace with the market have adjusted their pricing strategy the issue at the moment is that not all realtors followed suit. Leaving some buyers still frustrated with these strategies; listing below value and not receiving an offer then pricing based on comparable sales from the craze of February and March.
According to Phil Sopher, President and CEO of Royal LePage, home buyers and sellers have not experienced a ‘normal’ real estate market since the early 2000’s and may need to adjust their strategies and expectations. “It has and will continue to be for the rest of the year, a much better market for buyers. It’s not that homes have suddenly gone on sale, that’s a misconception. Home prices continue to rise,” says Sopher.
Now we can’t just blame the realtors, as sellers also need to adjust their expectations. Many home sellers are expecting the same prices from this past Spring which is unrealistic in today’s market. For fear of leaving money on the table, sellers are asking to list the property with a cushion for negotiation. This misplaced greed has homes sitting on the market for far longer than the average at above fair market value. This in turn creates the downturn in “sales year-over-year” we are constantly reminded of in the news.
What is a “Normal” Market?
The real estate market is returning to normal where a property may be on the market for quite some time before they are sold. The home selling overnight will not be something happening as often. In a typical market, one-to-two months is not an unreasonable time to have an asset as expensive as a Toronto home. It could take weeks or months and that’s normal.
Overall, a drop in sales activity may well signal a more sustainable, healthy market that will be better for buyers. And while there will not be a double-digit increase in prices. Soper, expects prices will still increase yearly in the two-to-five per cent range and not depreciate, which is great for sellers.
Predictions for the Fall Market
Recently, I have been continuously asked to bring out the crystal ball on the market and while I tend to steer clear from predictions, I thought I would provide my two cents this season. But what do I know really…Here are my predictions for what is essentially our busiest market of the year.
- Prices will Rise
- Rental Market BONANZA
- Government Intervention
With the “Ontario Fair Housing Plan” being overlooked and not having the impact they were hoping, expect the government to continue to implement regulations. In this case, I would not be surprised if the light was shined on the industry, meaning possibly looking at multiple representation, foreign-ownership, real estate as an income and so forth.
Those are my four prediction points of the changing real estate landscape for this Fall and we never really know how things will turn. That being said, patience is a virtue in today’s real estate market and it is a great time to buy now that inventory has levelled. Please feel free to contact me if you have any questions on buying or selling in this adjusted ‘normal’ real estate market. I would be happy to help.