Time the Market??  I've been in business for 18 years so I've seen Buyers in particular, try to do just that.  About 15 years ago I heard Buyers say that prices were too high & couldn't go any higher so they were going to wait.  I think we know how that turned out. Cry

Then there were those who thought they could spreadsheet their way to success but the only logic in the market is supply & demand.  Eventually they threw their hands in the air & jumped in.

If someone has ever "timed"it, I would bet money it was pure luck.  None of us have a crystal ball & there are too many external forces that influence our market.

Here's what I would tell a Buyer now. Supply is notoriously low in Vancouver so you must decide which is most important-finding a home you want to buy or waiting to see if the price will come down & possibly missing out.  I'm finding currently that Sellers are pricing sharply & sales are then fairly close to list price.

For Sellers I would tell them that all we know to be true is what's happening right now. The risk is prices going up or down in the future. If you're selling to buy, you're staying in the same market.  Why are you selling?  Those reasons could dictate whether you sell now or wait a while.

Speak with an experienced realtor who can provide you with the facts to guide your decision.

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Summer is summer you would think.  Real estate patterns will repeat themselves each year, but...not this year, or will they??

Typically July is slower than August which is busier than you might think.  People tend to add on to the July long weekend after school is out, to take their vacations.  

With pent up demand for travel & visiting family & friends & relaxed restrictions, people are busy.  Add higher interest rates & it could be a much slower summer in real estate.  Both Buyers & Sellers are away so fewer Buyers but also, fewer listings.  That's what's happening now, but August is just a week away.

August- will you be the August we know?  or a version we haven't seen before?

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Here we go again!  This week it's "Canadian houses now selling at $200K discounts". accompanied by some variation of the "foam" or "froth" is off the market.

Yes, you can find homes that have sold well below their list price, but...what does that really mean?  Without context we don't know if the Seller was desperate to sell because they had purchased another home, the home was priced to negotiate down, the home was located in an area with a lot of homes on the market, etc.  You get the idea

When I see healdines, I want to know more to better understand what is being said.  Media want headlines that readers will click on-that's how they measure their success.

These healines are unfair as they are very general although the information is specific to certain homes which may have or have nothing to do with you.  It sets up Buyer expectations & may deter Sellers from listing their homes.

Lesson: Dig deeper-real estate is always local.

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Another interest rate increase today & it's all that we'll be talking about, that & how it will impact real estate.  

Many Buyers & Sellers have never experienced rates like we currently have but these used to be the norm.  What was also the norm were PORTABLE & ASSUMABLE Mortgages.  What are those?

Portable mortgages can be moved with the mortgagee to a new property.  They are attached to the borrower so that lower interest rate can be applied to a new property.  Check with your lender to see if this applies to you, & what additional costs or conditions might apply with a new property.

Assumable mortgages are ones that run with the property & could be assumed by the new owner if they meet the lender's requirements.  That would be a selling feature for Buyers who could assume the mortgage for the balance of the term.  Again, check with your lender to see if that's a feature of your mortgage and if so, what they would require from that purchaser to approve their assumption of the mortgage.

 There are many mortgage products available to Buyers & to offer a lower rate, some mortgages may not include either of these options so very important to check on your specific mortgage & any flexibility it may offer.

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What does that mean in real estate???

I posed the questions on my IG stories to see if people would buy or list their homes during the summer.  I mean, in Vancouver, summer is short so evryone wants to enjoy it but...finding a home is tough at any time of the year.  So what did they say??

Sellers were 50/50 on selling during summer & may assume there are fewer Buyers.  Buyers on the other hand, while they might not be actively looking, are definitely keeping an eye on the market, just in case. We all know how hard it is to find the right home in Vancouver!

What I know, based on my experience, is that most Buyers & Sellers out there in the summer, are serious.

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  • Interest rates are rising +
  • prices are coming down in some locations =
  • similar mortgage payment at a lower interest rate

Buyers talk about interest rates going up.  Buyers talk about prices possibly coming down.  Buyers just don't talk about them together!

It's very possible that a Buyer's costs for mortgage payments may not change much if we look at it as a whole rather than independent of each other.

Success in real estate depends on flexibility & creativity.  Look for all the ways a deal can be done.

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During our Sellers' market, Buyers often were in many multiple offers before 1 was accepted.  That gets expensive when doing due diligence like home inspections before submitting an offer.  What to do?

Many Buyers were skipping a proper home inspection altogether or brought in friends with some construction knowledge, & younger buyers often brought their parents!!!

A proper home inspection is not a supperficial one.  We're not so worried about turning the taps on & off or checking the kitchen appliances as those are relatively small fixes, if needed.  What we do care about is the condition of the building in condos & in homes, it's the roof, the foundation, the windows, & more  Those are all expensive fixes.

An experienced professional Home Inspector who has spent time in construction or related fields is an investment in a future home with few or no surprises once the Buyer moves in.

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If you are a serious seller, as most are, you need to pay attention to what Buyers are saying.  There are fewer of them so what are they looking for in a potential home?

I've been listening to Buyers & ran a quick poll in my Instagram Stories which confirmed what I've been hearing.

Almost 70% of Buyers want a home that is move in ready, that doesn't need much work at all..  Only about 1/3 are up for a reno & really want a space to make their own.

What should a seller do to appeal to the largest part of the Buyer market?  You might think that these suggestions have  always been true but Sellers have been getting away with doing less in the busy Sellers' market for the last few years.  Others may not have sold for many years so it's new territory.

It varies with each property but creating a home that is clean, uncluttered, has everything in good working order, & generally have eliminated any obvious obstacles for a Buyer, will appeal.  Your realtor will be a great source for suggestions-obviously!  You should assume an inspection will be done when not in a multiple offer situation as there is now time for subjects.  

Smart sellers will respond to this market & do what's necessary to make the sale. 

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"The New Normal" is a phrase I try not to use, mostly beause it's overused but does seem appropriate now, both for good & bad.  There is a generation of home buyers & sellers who've only known very low interest rates that make home buying much more affordable (good) & a high pressure atmosphere for buying & selling homes (bad)

Now, Buyers are feeling no pressure to make a decision, can actually go on home tours with a few homes that meet their home buying criteria, & write subject offers.  All good.

However, they can't believe they have to pay a 5% interest rate on their mortgage (the old normal). Bad. Those of us who bought & sold real estate before 2000 only knew 5% interest, or even higher.

Looking like a few years of this new, but old way of doing real estate.  What's that phrase?  "everything old is new again"

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People pay too much attention to the headlines but that's why they're there.  Clickbait.

It's far more helpful & reliable to get your real estate information directly from someone who's on the ground, working with Buyers & Sellers, & speaking with other realtors.

What am I hearing?

  • Lots of action under $1million, & with properties in the suburbs where you get more bang for your buck, it can mean multiple offers.  Over $1million means 20% downpayment  so more Buyers under.
  • Sellers aren't always waiting & are willing to take offers as they come, as fast offers are usually strong offers. It's about risk tolerance
  • For those of us who've been in the business for some time, we're used to Buyers taking a time out after a news event, like higher interest rates, the financial collapse, or even CoVid.  That often lasts weeks or even a few months & then,,,many, if not most, jump back into the market.  When we're asked "what's going to happen", we can only go by our historical experience.  Interest rate hikes aren't a 1 off this time, but are being sustained over months, so only time will tell what its effect on the market will be.  We've all become used to cheap money!
  • With more expensive properties, Buyers feel they can wait a bit before making an offer.  Sellers might be more flexible after a week or 2 on the market.
  • Pricing is important to draw Buyers in.  They'll sit out an overpriced listing until the Seller is ready to be realistic.
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it's the tipping point for the amount of down payment required by the lenders.

Once the price is $1 million or more, the downpayment increases to 20%.  Monthly payments aren't the problem but the downpayment is for many Buyers.

This helps to explain why we are seeing more activity in sub $1million price range-it's still doable for many Buyers who don't have the $200K or more for the down payment..

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With rates on the rise, it's time to get creative with mortgages.  We've been conditioned to think that the only options are a Variable mortgage or a 5 year Fixed...but there's more.

What happens if you lock in for 5 years & in 3 years time, rates are dropping again, leaving you with higher costs & a mortgage no Buyer would assume?  Of course that means putting some thought into what might happen over the next few years & assessing your risk tolerance.

Good information again in the Globe and Mail from Robert McLister that is worth a read.  3 economists weigh in

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in the new market (since interest rates went up) what should you do if you already own a home & want to move??

It really depends on what youre selling & where you're selling.  That's always been the case but it's especially true now.  In the city, I see over ask sales primarily for homes under $1million & for homes that sold in March.  In suburbs like Burnaby, I'm seeing over list sales for townhomes over $1million, just as an example of how types of homes & areas make a difference.

I've also heard from mortgage brokers that Buyers who bought before the interest rate increases & then listed their homes to sell, were surprised that they only received one offer.  If you've bought then the pressure is on to fulfill your obligation & your ability to negotiate or wait for a better offer is limited.

If you're thinking of moving, ensure that you're getting current information from a professional & experienced realtor who can advise you as to what's happening in your neighbourhood, what the risks might be with both choices, & what makes the most sense for you.  Get informed to make the right decisions for you!

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City of Vancouver is pushing through a lot of planning decisions but you have a chance to get more information & offer your opinion.  It is our city after all!

Currently we are in Phase 4, so if you haven't been paying attention, now is the time.  You can find out a lot more here & even take the survey which closes on April 24th.

We should care about topics like the infrastucture to support the building plans.  Areas of the City already struggle to service the needs of the residents.  Many schools are at capacity, roads can't handle current traffic levels, parking to support small businesses has been removed in favour of bike lanes, & the list goes on.

Are these plans about improving the quality of life with thoughtful planning or just clickbait for housing that doesn't meet our needs?.  Take a look & decide for yourself.

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Rate holds are keeping Buyers happy while they search for a new home but they're due to expire in the coming weeks.  There will be a push from Buyers to buy & complete in the next 6 weeks or so but what comes next??

Some Sellers have already experienced some surprises when instead of multiple offers, they have received just 1.  If they'd already bought, like most Sellers today, that means they'd be forced to work with that offer.

Buyers who are more conservative or risk averse are beginning to take a wait & see approach between increasing interest rates & world events that do have an impact on us all in some way.

I'm expecting changes ahead but how long they take to show up we don't know.  Prices always go up a lot faster than they come down.

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Yes, even in a Sellers' market, it's possible not to sell at anything close to list price or to sell quickly. Here are the top 5 mistakes that some Sellers are making:

  1. Incorrect pricing-the market sets the price NOT the Seller so listing too high will turn Buyers off, not on.  There is an art & a strategy to pricing to get the best possible result.
  2. Failing to market the property effectively-is it easy for Buyers to view, has sufficient time been set aside to get all interested parties in, is the description accurate & focusing on key features for Buyers, etc?
  3. Not staging the property-if a property is vacant, staging will make a big difference to speed of sale & sale price.  Staging makes a home look larger & shows Buyers how a space can be used. I've even used partial staging, editing & adding to existing furniture.  Professional stagers know how to stage for the target market.
  4. Hiring the wrong agent-hiring a professional & experienced agent will eliminate a lot of potential problems. The property should be ready the day it's listed complete with all necessary documentation.  I've experienced too many listings where strata docs aren't available, the agent doesn't know the area or the type of property &...don't hire your brotherinlaw who just got his licence Surprised, at least not without another experienced agent.
  5. Not aligning on goals-have an honest discussion with everyone involved in the listing, from the agent to partners about availability for showings, timing of offers, list price, needs & timing for next property, & more.  Your agent has a fiduciary duty to you so all conversations are confidential & goals must be clear to all parties.

On a recent scan of sales over the last month, some took over a year & discounts were up to 30% from list price.  Not necessary!

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This is a question many of us have.  How can there be so little available when so many are looking for homes??

In a recent Redfin report, we discovered that people are simply choosing not to sell.  They compared 2021 to 2012 & found that 31% more owners are just staying put.  In addition 33% of homes are owned by those who are 65+, up from 28% in 2012.  I look around my neighbourhood & I have to agree.

Looking ahead, what are the trends?  People are living longer & often healthier lives & are able to stay in their homes.  Increases in interest rates could mean staying put is more appealing.  I find that many of my neighbours are creatures of habit & want to stay close to where they currently live, so if there aren't any good options, it's easier not to move at all.

In other words these low listing levels could be here to stay for a while.  What can you do about it?  Like so many other things, not all areas are the same.  Younger people tend to more more frequently for instance, as their needs change.  An experienced & professional realtor can show you areas where you might have a better chance of finding a home so don't give up before checking out your options.

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Win/win renovations are the ones that bring value to the owner while living in their home & also add value if & when they decide to sell.

When I'm working with Buyers now I hear them talk about homes being "move in ready".  Since CoVid, costs for building & renovations have skyrocketed, & in combination with long lead times or unavailability of everything from appliances to construction materials, Buyers would prefer to not deal with those problems.

When I say "move in ready", Buyers aren't being overly demanding either.  They want functional & worry free, & feel they can make cosmetic changes over time if necessary.  They'll even tackle more signicant alterations at a later date.

The key areas for Buyers are kitchens, bathrooms, & often storage.  With other parts of the home, it's often mostly cosmetic, ie paint, wallpaper, or carpet which are easy fixes.

I posted some photos on my IG page @karinsmithrealtor if you're looking for some inspiration

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Just this week I heard an American housing expert say that the most important thing to Buyers is the monthly mortgage payment, not the cost of the home in response to a questions about rising interest rates.

It got me thinking.  It's a tricky question as the 2 are definitely related so I ran a questionnaire in my IG stories & 2/3 of respondents agreed.

I agree too & here's why based on my experience.  When interest rates are low, Buyers realize that they're able to pay more (important in our multiple offer real estate world) without a big impact to their mortgage payment.  They are focused on that monthly figure more than the big one-the cost of the home.

When interest rates begin to rise, Buyers once again look to what that rising cost will do to their monthly payment, Because so many Buyers are stretched to their limit, expecially in large urban centres, that increase in payment could take Buyers out of the running.

So, yes, the major cost of a home is important but it's all about the regular mortgage payments for Buyers.

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I spent part of the long weekend reading strata documents along with my clients.  We did this prior to viewing the property.

Why is it important to do this each time you consider buying a Strata property?

In this case we found the documents to be very revelatory & influenced our assessment of the property when we did see it,  & the subsequent decision not to move forward with an offer, even though there was lots to love in this home.

What important information is in those Strata documents?:

  • the usual financial information which indicates how healthy the Strata is financially
  • Depreciation Report as an asset management tool.  If they don't have 1 or something similar, it's a red flag as to how well the building is being maintained without that information
  • Depreciation Report next steps-are they following recommendations or did they just tick off that box?
  • The dynamics of the Strata.  Some have many rules & Bylaws, some have very few, & most fall in the middle.  What's your comfort level?  
  • AGM's & SGM's say a lot about overall plans & spending & how current owners vote to support them
  • Insurance deductibles can vary a lot & may add unexpected costs to Buyers
  • What's the dynamic with the owners?  There can be a pattern of behaviour, unresolved issues, unwillingness or inability to support proper maintenance or...just the opposite in a well run & maintained building.
Real estate is expensive & not reading these documents could make it a lot more expensive down the road
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