Many homeowners had plans to buy and sell properties this spring, and COVID-19 has delayed the moving decision for many.
As we begin to reopen our economy the number one question that we’re hearing is – should I sell now or hold off until next year?
What impacts real estate home prices?
Timing is a big factor in real estate prices. Prices don’t continually move in one direction. Most homeowners would like to sell when prices peak. Prices move based on supply and demand, and the formula is quite simple. When there are more buyers in the market than sellers, prices increase. When there are more sellers than buyers pricing fall.
Supply and demand is impacted by mortgage rates, gov’t imposed lending rules, the general health of the economy, and employment. However, the single largest factor is fear and uncertainly. Homeowners are more inclined to stay put and delay any major decisions is they are uncertain about the future.
With so many factors at play, no one can perfectly time the market. Here are a few facts about what we do know about the present that will impact the real estate market and the way prices move.
Changes in the housing market since COVID-19
- Mortgage rates have declined to historical lows
- Many homeowners have taken advantage of the gov’t supported mortgage deferral and gov’t income assistance programs
- CMHC has made it a bit tougher for buyers to qualify for a mortgage with less than a 20% down payment
- After a market pause in April, things are picking up in May. The number of showings, new listings and SOLD properties is increasing. Volumes are still down from pre-COVID but are increasing each week.
- Selling Prices have remained relatively constant
What’s the Potential Impact of These Changes?
- Low mortgage rates mean borrowing money is cheaper than we have seen in the past. This could make it more economical for homeowners to upgrade to a bigger home. It also means that there may be an opportunity for more first-time homeowners to enter the market.
- If gov’t supported mortgage deferrals end as scheduled & gov’t income assistance terminates more homeowners that have lost their jobs may be forced to put their homes on the market increasing supply. This could cause prices to come down.
- The changes that CMCH recently introduced could have a negative impact on first-time buyers and investors that typically need an insured mortgage. This could reduce the number of buyers and investors able to purchase a home.
- The increase of showings and new listings are promising indicators of our market picking up steam from where it was a month ago. Buyers are back ready to buy. The low inventory of homes available for sale is making it difficult for buyers to find the right home.
- Selling prices are driven by the supply of homes for sale relative to the demand of buyers in the market. An overall increase in the supply of listings on the market could cause prices to drop. An overall decrease of listings on the market could cause to increase.
Thinking of selling your home in 2020?
Get in touch and find out how we can help.