It’s a well-known fact among realtors – and real estate market watchers – that the recent boom is well behind us.
With several factors at play causing the slow-down, including inflation and the highest interest rates in decades, the situation has flipped from a hot sellers’ market to a cool buyers’ market.
“There are not a lot of people moving forward on things,” explains Bob Clarke, owner of Royal LePage Lakes of Muskoka Clarke Muskoka Realty. “Sales are pretty sparse.”
It’s happening throughout Ontario: Bob notes that Muskoka, Collingwood, the GTA and the surrounding areas are all exceptionally quiet in both the recreational and residential market segments.
With the extended forecast for interest rates to remain high, the indicators are that this market could be around for a little while. That’s the best-case scenario, with the worst-case scenario being that a lot more inventory starts showing up along with significant price reductions.
“Early this year, things were starting better than expected and predictions were more optimistic in the spring than they had been late 2022,” says Bob. “Then a few interest rate hikes hit, and the market saw a pause each time.”
This won’t last forever, of course. “Though it may take a little while, eventually the rates will start going down again and we’ll see a more balanced market at that time.”
Does this mean everyone should stand pat? Not necessarily. Property values are still well ahead of their pre-pandemic worth, so anyone who purchased prior to 2020 is still going to be making money on the sale.
As Bob notes, when comparing February 2022 to February 2019, typical property values soared by around 60 percent – an unprecedented jump in such a short time. And though that’s come back to earth a little bit with around a 15 percent drop since then, the reality is that most property values are still 30 to 40 percent higher than they were pre-pandemic.
Those who are in the upper echelon market – with a value of $5 million or up – are seeing even less erosion in the values of their properties.
“So, the sky is not falling,” says Bob. “Even if the values drop another 10 to 15 percent over the next few months, they are still ahead of what the typical increases would be.”
For anyone who purchased at the height of the pandemic boom – either as a way to escape the city, or as a rental property (that market has slowed a bit too with the state of the economy) – now may not be the best time to list.
No matter what, though, it’s essential to get advice from a trusted and experienced realtor on your property’s real value in the current market, whether it would be the right time to sell, and what potential improvements could be made before listing.
“It’s a good time to sit down with a professional and experienced realtor and discuss your options,” advises Bob. “At the very least, figure out what a real value of your property is today compared to when you bought it.”
Price to sell
Anything that is not listed at the right price will be sitting for months on end, but those that are priced right will have interest and likely an offer – or two – once the appropriate conditions such as home inspections are met.
Bob saw this happen a couple of times this year: a seller insisted on pricing their property higher than Bob advised, and it languished. Eventually, with price reductions, it was listed at his advised value and the property sold.
Experienced realtors who know the market will give you honest listing prices to get interest and sell your property. This is especially true in a buyers’ market like this.
Clarke Muskoka Realty brings over 35 years of experience selling and buying everything from in-town residential properties to high-end recreational waterfront.
When working with buyers, a quality realtor will remind them of their checklist of needs and wants during tours and before making offers. It’s especially prudent now where the opportunity again exists to carefully review everything in a given price range and then add conditions to an offer.
“With each property, we’ll go over the buyer’s checklist with them to see what’s missing and what’s there,” explains Bob. “Part of being a trusted advisor is ensuring that our clients’ wants and needs are being met. That’s why it’s important to work with a realtor you trust.”
Having all the information you need is important whether you’re buying or selling a property at any time; in a cool market, it’s absolutely essential.
TEXT CHRIS OCCHIUZZI