The Toronto Regional Real Estate Board’s May report signaled that we are moving into a more balanced market where buyers will have more negotiating power compared to the past two years. With mortgage rates increasing steadily this year and expected to continue to grow, many sellers are unsure of whether they should sell or hold, and what to expect in the market today. Here’s what you need to know if you are considering listing your home.
What are Balanced and Buyers’ Markets?
A balanced market occurs when supply and demand are close to even. This is usually signaled by the sales-to-new-listings ratio (SNLR) which will land around 40-60%. In May, the SNLR in Toronto and the GTA was 39%, down -25% year-over-year. This falls just below balanced market territory, which could mean the market may favour buyers this summer.
A buyers’ market occurs when the supply of homes surpasses the number of active buyers. In this scenario, homes tend to sit longer and buyers have more negotiating power. This often causes downward pressure on home prices as well.
Strategies to Sell in Today’s Market
This change in the market does not mean that you won’t get a favourable price if you do decide to sell. However, it does mean that many sellers have to shift their strategy following years of having the upper hand in the real estate market.
Price Your Home Based on its Actual Value
In the past two years, many sellers were pricing their home under its market value to drive a bidding war. We are seeing fewer and fewer bidding wars, so the best strategy is to price your home based on its actual value. Your real estate agent should use your appraisal as well as recent comparables to determine your home’s current market value. Prices have fluctuated more significantly in certain areas and cities over the past few months, so the last 15-30 days of recently sold properties in your neighbourhood may be more representative of its current value versus the previous month or during this past winter.
Be Prepared for Conditions and Negotiations
Conditions are back and most sellers should expect to receive offers with conditions. Common conditions include home inspections, financing, and even sales that are conditional on the buyer selling their own property. There is always room to negotiate when conditions are on the table, but plan to work with your agent to decide what makes the most sense for your situation.
Plan for a Longer Listing Period
In the height of the pandemic, homes were selling practically overnight. In May 2022, the average listing days on market was 12 days. This is still quite low and only an increase of 9.1% year-over-year, but higher interest rates could lead to homes sitting on the market longer. More preparation to your home before hitting the market like decluttering, staging, small renovations and professional photos may make your home stand out versus your neighbour’s home that is also competing for a buyer. Properly and professionally listing your home in a balanced or buyer’s market is essential when attempting to reduce the listing period.
Prices in Some Markets are Holding Strong
In May, the average sale price for all residential properties in Kitchener-Waterloo was $875,194. This is an increase of 18.3% year-over-year, and only a 3.5% decrease from April 2022. In the region, apartment-style condos have seen the most price growth year-over-year, up by 19.7% from May 2021, for an average sale price of $545,825.
Barrie and Greater Simcoe Region
The May 2022 statistics from Barrie and District Association of REALTORS show that in Orillia, the average home price in May 2022 was $725,854, an increase of 1.3% month-over-month. Although some of the larger cities in the region including Collingwood and Barrie are seeing price dips from April, many of the smaller cities including Clearview and Penetanguishene are still growing.
This region has seen lots of growth year-over-year and isn’t slowing down yet. The benchmark price for single-family homes was $1,205,900 in May, up by 28.25% year-over-year. The Composite Benchmark price for all home types in Durham is in line with April at $1,128,900. Brock has seen an increase of 23% in average price month-over-month from April, making it $1,054,917 in May.
If you’re considering selling this summer, contact a Zoocasa agent today to discuss the value of your home and strategies to sell it in today’s market.