You most likely have heard people talking about the real estate market lately, asking whether you’re in a seller’s or buyer’s market. Predicting what will happen in the new year in real estate is tricky. The average home price in Barrie in November 2022 was $721,000, as opposed to $760,000 a month ago. Compared to a year ago, houses are sitting on the market for longer than double the amount of time. With rising interest rates, and a shift from a seller’s market to a buyer’s market you might be wondering ‘what does this mean for your mortgage?’ Do you buy a house now? Or wait for the market to “cool off?” In this article, we will go through what impact a buyer’s or seller’s market has on your mortgage and what you need to know to make sound financial decisions along the way.
SPOILER ALERT; if you’re worried about mortgage costs and interest rates rising, it’s best to get pre-approved ASAP before rates go up again because you can lock in today’s rate for a 90-day period. You might find the perfect home when driving down the road and when that happens you’ll want to act fast. Let’s make sure you’ve got everything you need to be lined up ahead of time so you can slide that offer in right away.
What is a buyer’s market? And, should I buy a home now or wait?
A buyer’s market means that there is more supply than demand. Real estate prices will decrease, and homes will linger on the market longer. There are a lot of houses up for sale with fewer buyers, meaning the buyer has more time to negotiate closing conditions, prices, home inspections, and so on. You have less competition and more time to discover the ins and outs of the property. There is also a low probability that someone will come with cash in hand an hour later and scoop up the listing or that you would end up in a bidding war over the home you’re looking at. This market is beneficial for a first-time home buyer, or investor looking into buying a home. Generally, mortgage rates are more favourable for buyers in this type of market as well, giving you more buying power and opportunity.
What is a seller’s market? And what does it mean for my mortgage?
A seller’s market is when more people are looking for houses than the number of places listed for sale on the market. This instance was typical during the pandemic when buyers had to act fast, putting in an offer on a home before it sold in a couple of days. The scarcity mixed with hasty purchases made housing costs soar and led to many bidding wars that further increased the prices.
In a seller’s market, the last thing you want is someone offering an unrealistic bid that falls through and having to put your home back on the market after you thought it has been sold already. Listing again is a big stressor for homeowners and you may have lost out on a high offer because you accepted one that fell through instead. How can you avoid this disappointment? Ensure the person putting in an offer has a mortgage pre-approval before you accept it. Pre-approval requires that buyers’ finances and credit history are verified ahead of time, which makes it far more likely the buyer will be able to obtain a loan for a specific amount of money needed to go through with the purchase.
As a buyer, you want to ensure you’re pre-approved for a mortgage so you don’t go through the entire process of bidding on a home and getting your hopes up just to find out you actually can’t buy it after all. You should also know that if you make an offer and can’t act on finalizing the purchase you could end up in court slapped with steep fines. So be 100% confident you have the money lined up to make your purchase before even thinking about house hunting.
So, given all this information, when should I buy or sell a home?
When buying or selling property it helps to know where the market stands. As a buyer, you’ll want to purchase a home in a buyer’s market, as there will be an influx of available homes and less competition. But as a seller, you hope you list your house in a seller’s market, so there are fewer properties for sale and a substantial number of buyers interested in buying your home quickly and for top dollar.
The most important thing to think about though is when is the best time for YOU specifically to buy a home.
Everyone is different and has goals as to where they want to live, what type of housing or property they want to buy, and even when and where they want to retire. The best bet before making any decision is to talk to a professional real estate agent and a mortgage broker to help you create a game plan on when you should list and when you should buy. Time is precious, so sometimes waiting for the “perfect time” will just drag out your adventure. It’s not possible to time the market, you just have to jump in and try and make smart decisions. Regardless, when you’re ready to buy a home, contact me, Darren Robinson, to help you get pre-approved for the mortgage you need with the best interest rates and options out there. Whether it’s a buyer’s or seller’s market, I’m here to help with a free consultation. I’m only a phone call away when you need me 705-315-0516! Let’s talk.