Up until February of this year, Peterborough headlines proclaimed one “record-breaking” month after another in the real estate market. Low inventory coupled with non-stop demand from Toronto residents drove the prices higher and higher until they reached their peak earlier this year at $885,153.
A series of interest rate hikes from April to June helped balance the scales, although the market still highly favoured sellers.
However, conditions are still changing as interest rates rise and inflation continues. By all accounts, it seems that the mad real estate rush of the last two years might be at an end. Now, two different words are circulating in the news – “buyer’s remorse.”
How Significant Is This Change?
May is almost always one of the busiest months in real estate, but this year saw the number of home sales fall 17.7% below the 10-year average.
More inventory and falling prices make it an exciting time for buyers! Want to know more? Check out some of our other helpful articles:
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Kate Kidd, the president of the Peterborough and the Kawarthas Association of Realtors® reports, “New listings are beginning to return to the market, which is lifting overall inventories from their historically low levels. However, it’s going to take more than a few months of stronger supply to have any meaningful impact on the market balance in the long term. We expect further moderation in demand in response to interest rate increases, which is something we will continue to monitor over the second half of the year.”
Everyone is waiting on pins and needles to see what will happen next. As more “For Sale” signs pop up and houses take longer to sell, some analysts predict a buyer’s market may be on the horizon. A few short weeks ago, sellers were still getting their list price, even if they were no longer getting multiple offers.
A Temporary Lull or A New Trend?
Now, for the first time in two years, we are seeing a drop in housing prices. Is this a temporary lull in the market before things pick up again, or are we on the cusp of a whole new market trend?
To get an idea of what we can expect, let’s look at what is going on in Toronto now. The numbers technically still support a seller’s market, but barely, and conditions are changing rapidly.
BMO Chief Economist Douglas Porter states that the GTA is approaching buyer’s market terrain. More listings are available, and many areas are reporting a drop in prices.
A buyer’s market means that there are more people trying to sell a home than there are people searching to buy one. It’s the total opposite of what we have seen for the last two years! Homes stay on the market longer, and prices can fall as a result.
Currently, prices all over the province are down nearly 10% from their peak but are still higher than this time last year.
It is incredible to see how quickly the real estate market can change. If these trends continue, we could very well find ourselves in the first true buyer’s market in years.
How Will A Changing Market Affect Peterborough?
What happens in Toronto will always affect us. Home sales in Peterborough are driven largely by people trying to escape the competition and higher prices in Toronto. However, if Toronto goes into a balanced or buyer’s market, fewer people will be looking to relocate. Demand for housing in Peterborough could fall, and the prices would soon follow.
Is it time for you to pack your bags for Peterborough? These other posts might just convince you:
What Happens If You’re A Current Homeowner?
Current homeowners will be affected the least, even if prices drop dramatically. The equity in your home will protect you from the shifting market. If you decide to sell, you’ll receive less now than you would have if you sold in January or February. But keep in mind that you will also pay less when buying your new home, and you’ll have more options to choose from.
What First-Time Buyers Can Expect
As a first-time buyer, you will need a substantial down payment to help break into the market. You can expect the stress test to be more stringent and you’ll need a high enough income to cover fluctuating monthly payments. Investing more upfront will save you on interest costs and help lower your monthly payments. The first step is to obtain a pre-approval before you start searching for your new home so you know what you will be able to afford.
The larger your down payment, the easier it will be to buy your first house. These 5 tips will help you save.
Should You Invest in A Shifting Market?
As an investor, you should take stock of your resources and analyze your risk tolerance carefully before buying an income property. If prices drop after your purchase, your equity will take a hit in the short term. In addition, you should have a significant emergency fund available to cover you if it takes a while to find the right tenant.
Now is an excellent time to invest if you have enough to cover the lean times. The market may be in a temporary lull, which gives you a rare opportunity to get in at a lower price. However, property values almost always appreciate in the long term.
Regardless of your situation, it’s always a good idea to talk to an experienced local real estate agent before deciding to buy or sell a home.
How do you get started as a real estate investor? Here is our complete guide to help you.
