Strategies to Sell in Today’s Market

General Robyn McLean 14 Jun

What to expect from a more balanced real estate market, from our friends at REW.

What are Balanced and Buyers’ Markets? 

A balanced market occurs when supply and demand are close to even. This is usually signaled by the sales-to-new-listings ratio (SNLR) which will land around 40-60%. In May, the SNLR in Toronto and the GTA was 39%, down -25% year-over-year. This falls just below balanced market territory, which could mean the market may favour buyers this summer.

A buyers’ market occurs when the supply of homes surpasses the number of active buyers. In this scenario, homes tend to sit longer and buyers have more negotiating power. This often causes downward pressure on home prices as well.

Strategies to Sell in Today’s Market

This change in the market does not mean that you won’t get a favourable price if you do decide to sell. However, it does mean that many sellers have to shift their strategy following years of having the upper hand in the real estate market.

Price Your Home Based on its Actual Value

In the past two years, many sellers were pricing their home under its market value to drive a bidding war. We are seeing fewer and fewer bidding wars, so the best strategy is to price your home based on its actual value. Your real estate agent should use your appraisal as well as recent comparables to determine your home’s current market value. Prices have fluctuated more significantly in certain areas and cities over the past few months, so the last 15-30 days of recently sold properties in your neighbourhood may be more representative of its current value versus the previous month or during this past winter.

Be Prepared for Conditions and Negotiations

Conditions are back and most sellers should expect to receive offers with conditions. Common conditions include home inspections, financing, and even sales that are conditional on the buyer selling their own property. There is always room to negotiate when conditions are on the table, but plan to work with your agent to decide what makes the most sense for your situation.

Plan for a Longer Listing Period

In the height of the pandemic, homes were selling practically overnight. In May 2022, the average listing days on market was 12 days. This is still quite low and only an increase of 9.1% year-over-year, but higher interest rates could lead to homes sitting on the market longer. More preparation to your home before hitting the market like decluttering, staging, small renovations and professional photos may make your home stand out versus your neighbour’s home that is also competing for a buyer.  Properly and professionally listing your home in a balanced or buyer’s market is essential when attempting to reduce the listing period.

Bank of Canada increases its benchmark interest rate to 1.50%

General Robyn McLean 1 Jun

Some valuable insight on today’s Bank of Canada rate hike from our friends at Fist National.

Bank of Canada increases its benchmark interest rate to 1.50%

Today, the Bank of Canada showed once again that it is seriously concerned about inflation by raising its overnight benchmark rate to 1.50%. This latest 50 basis point increase follows a similar-sized move in April and is considered the fastest rate hike cycle in over two decades.

With it, the Bank brings its policy rate closer to its pre-pandemic level. As a result, the Bank Rate rises to 1.75% and the deposit rate increases to 1.50%. The Bank is also continuing its policy of quantitative tightening and signalled that more rate hikes are likely.

In rationalizing its 3rd increase of 2022, the Bank cited several factors, most especially that “the risk of elevated inflation becoming entrenched has risen.” As a result, the BoC will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.

These are the highlights of today’s announcement.

Inflation at home and abroad

  • Largely driven by higher prices for food and energy, the Bank noted that CPI inflation reached 6.8% for the month of April, well above its forecast and “will likely move even higher in the near term before beginning to ease”
  • As “pervasive” input pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%
  • Almost 70% of CPI categories now show inflation above 3%
  • The increase in global inflation is occurring as the global economy slows
  • The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation
  • The war has increased uncertainty, is putting further upward pressure on prices for energy and agricultural commodities and “dampening the outlook, particularly in Europe”
  • U.S. labour market strength continues, with wage pressures intensifying, while private domestic U.S. demand remains robust despite the American economy “contracting in the first quarter of 2022”
  • Global financial conditions have tightened and markets have been volatile

Canadian economy and the housing market

  • Economic growth is strong and the economy is clearly “operating in excess demand,” a change in the language the Bank used in April when it said our economy was “moving into excess demand”
  • National accounts data for the first quarter of 2022 showed GDP growth of 3.1%, in line with the Bank’s April Monetary Policy Report projection
  • Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been “picking up and broadening across sectors”
  • Housing market activity is moderating from exceptionally high levels
  • With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be “solid”

Looking ahead

With inflation persisting well above target and “expected to move higher in the near term,” the Bank used today’s announcement to again forewarn that “interest rates will need to rise further.”

The pace of future increases in its policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation.

In case there was any doubt, the Bank’s message today was clear: it  is prepared to act more forcefully if needed to meet its commitment to achieve its 2% inflation target.

July 13, 2022 is the date of the BoC’s next scheduled policy announcement.

  • Jun 1, 2022
  • First National Financial LP