The Fall selling season is fast approaching, bringing with it a host of unknowns.
A couple of things we know with certainty are:
1: It will in no way resemble the fall-selling seasons of 2020 and 2021.
2: The buyer pool is smaller, but those still in the market are well-qualified, both from the home buying experience point of view and financial.
The Bank of Canada’s overnight rate increases have had the desired effect, pouring cold water on red-hot housing markets, in particular, the Greater Toronto/Golden Horseshoe area and the Greater Vancouver/Lower Mainland area.
The rate soared from .25% in February to the current 2.5%. We believe the bank will move the rate to the range of 3.25% to 3.75%, if not at the end of 2022, then by early 2023. The Bank has three rate announcements scheduled over the balance of 2022. Addressing the declines in sales and prices in Ontario and BC, the demand of the past two years was artificially created by the Bank of Canada’s .25% rate.
The demand, at a time of low supply, pushed prices up, no doubt higher than they should have been because of FOMO – the buyers’ Fear Of Missing Out. With demand lower, prices are returning to a more balanced territory.
Most housing market statistics focus on market-wide conditions, which don’t take into consideration the composition of homes being bought and sold. For example, focusing on the market-wide average price is not indicative of what is truly happening in any given market.
The average market-wide price will change with the composition of what’s being sold from month to month. If single-family homes outsell condos one month and that trend is reversed the next month, the the average price will fall because single-family homes are usually more expensive than condos. Another factor affecting prices is the size of the mortgage a buyer is qualified to receive.
When the size of the mortgage available is smaller, sales prices will decline because the mix of housing types being purchased will change. Canadians don’t buy the ‘average’ house. A buyer who wants a condo will buy a condo, so that buyer cares only about how the price of condos has changed, not the market-wide average. Obviously, the same is true with all housing types.
Uncertainty about current conditions has buyers moving to the sidelines, taking a ’wait-and-see’ attitude. They’re waiting to see when prices will flatten out, selection will improve, and better deals and amenities emerge. They are waiting for the moment they perceive the market is close to bottoming out, price-wise.
The buyers are still out there, but any sense of urgency, which really drove markets to the heights they achieved, has been removed from purchasing decisions. History shows real estate to be one of the best investments in the long term, regardless of interest rates.
Above all else, in today’s environment, buyers must be confident and comfortable with their purchasing decisions, and your customer relationship management strategies must be fine-tuned. More than at any time in the last three years, your marketing and sales teams must be in lockstep to provide solutions to your customers’ concerns and fears.
And that’s what we do. We are Cityblock. We bring sales and marketing teams together to understand market dynamics within market knowledge to ease customers’ concerns.
We’re a national marketing & sales firm that only offers one service: We sell out projects. Our approach to sales and marketing for real estate projects is different because we know revolutionizing sells out projects faster than the status quo.