Rates are up. Inflation is up. Uncertainty is up. Why would anyone consider buying now? This could be the best opportunity for a Buyer in the past year to buy a home.
Let’s dig in and find out why.
In February, the average home in Durham was selling for $1,209,000 and as of the end of August, that average has dropped to $854,000! If that is not enough to get some “market watchers” off the fence how about this – in February the average home in Oshawa, Whitby and Clarington was selling for 30% over the asking price, and in many cases with 10 – 30 Buyers bidding for the same home. Currently, homes are selling for the asking price in Durham Region.
In February the 5-year mortgage rates were around 3% and currently, they are around 5.25%. Some might suggest “yeah the values are down, but the rates are up.” This is true, however, an average-priced home in February with a 20% down payment would carry for $5,700/mth and with the drop in value and increased mortgage rates, the average home now would carry for $4,100/mth. That is a monthly savings of $1,600! Not only that, the down payment today, at 20% down is $170,800 as opposed to $241,800 back in February.
Simply put, it costs less to buy a home than it did earlier in the year, costs less to carry and you are buying it at a discount. What could get better? Well, it can get better when we dig a bit deeper.
In February, Durham Region had 467 detached homes for sale. This sounds like quite a few but when you take in how large Durham is, this number appears on the light side. Currently, as of the end of August, Durham had 731 homes for sale. With inventory being as high as it is the Buyer has options that they have not had for a few years. Firstly, they can take their time, knowing that the home will not sell a few hours after it hit the market. Secondly, the Buyer can negotiate, including conditions for home inspections and financing. Thirdly, (if thirdly is even a word) a Buyer knows that they can negotiate from the asking price, rather than attempt to guess how much over asking they need to go to win the auction.
One more attractive element to today’s market is not only can the Buyer take time to think about the home they viewed, but they can also spend enough time in the home to form an educated decision. Earlier in the year, it was not uncommon for a showing to be inside a 15-minute window. Imagine, trying to determine if this is the perfect home for you and your family in 15 minutes, with a price tag of over a million dollars.
The market today is very “Buyer friendly.” It has slowed to the point where both Buyers and Sellers have time to make sound decisions on offers to purchase that come in, counteroffers and the conversations that come before an offer is signed.
The definition of a Balance market is one where it takes 3 – 4 months of inventory of homes for sale. This means that if there are 40 homes on the market and they are selling at 10 homes a month, we would have 4 months of inventory. Currently, we have 1.4 months of inventory which means it is still a Sellers’ market, however, this is the first time we have seen in a few years that Buyers have more control than they have had.
If you are a Buyer, and a fence sitter, consider getting your butt off the fence and finding a home. The Bank of Canada has indicated that rates will rise again next month so it will get more expensive to buy a home. Also, if you are waiting for the market to bottom out, in August Clarington prices jumped $100,000. It’s time.
If you feel it is your time to buy a home, I would be thrilled to help you through the process. I can be reached at email@example.com
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