When considering selling your house in 2023, caution is advised due to a volatile market.
The Canadian housing market experienced a steady increase in prices during the pandemic, driven by low interest rates. However, as the Bank of Canada raised interest rates to control inflation, housing prices started to stagnate in many markets. Although the rate of increase has slowed, home values are still generally rising.
Despite concerns about high inflation, rising rates, and the possibility of a recession, public sentiment suggests that 2023 may still be an excellent time to sell. The Canadian property market could soon be experiencing a downturn, with declines in house sales and prices expected in the next 18 months.
So, acting now to sell your home could be a wise decision. However, you should carefully consider all factors before making a decision. Read the full article:
Over the course of the pandemic, housing prices in Canada maintained an upward trend, fueled by low rates from the Bank of Canada. There were also a significant number of migrations among the Canadian population as citizens leveraged government allowances like CERB and CRB in order to relocate away from major population centres.
However, as the Bank of Canada continues to ramp up their rate hikes in order to slow inflation, prices have begun to stagnate in many markets across Canada. However, price predictions from major real estate firms seem to retain some confidence for metropolitan areas like Toronto and Vancouver.
Keep reading to find details on whether or not you should think about selling your house now, or whether it may be a better idea to wait until later in 2023 to do so.
Is It A Good Time To Sell A House?
Moving and selling your house are major life decisions, so you should proceed with caution at this time. Timing is everything in a volatile real estate market, regardless of how anxious you are to relocate to greener pastures or get rid of unwanted property.
Prices have skyrocketed over the last two years as a result of strong demand fueled by low-interest rates. As demand slows, the tide of home sales is now beginning to shift. But even though the rate of increase is a little slower now, home values are still rising generally.
You undoubtedly have concerns about attempting to sell your home while facing 8% inflation and steadily rising rates. Additionally, prospective homebuyers are being cautious due to worries about a recession in 2023.
The Housing Market In Light Of Rising Mortgage Rates
If public real estate investor opinion is any indication, despite the shifting market dynamics, 2023 might still be a good moment to sell your house. Fannie Mae's January 2023 Home Purchase Sentiment Index shows that 59 percent of real estate agents now believe that it is a good moment to sell, up from 51 percent previously.
A real estate agent with TXR Homes in San Diego, Jade Lee-Duffy, asserts that the present is unquestionably a good moment to sell. The demand for housing may have increased in the previous 30 days, depending on where you reside. Demand has increased by a reasonable amount in certain markets across Canada. Additionally, the number of homes for sale is still extremely low — only about half as many are available now as there were before COVID.
Housing Inventory Levels Are Still Low Despite Falling Home Prices
The RE/MAX Canada Housing Inventory Report examined housing supply and current listings in eight significant Canadian cities from July 2013 to 2022 and discovered that in seven of those markets, inventory levels were below the 10-year average in that year.
This means that in major metropolitan areas like Toronto and Vancouver, real estate remains a seller's market with buyer demand down — at least for the time being. If you've been on the fence about selling your home in this economy, this may be your sign that the time is right. However, it is always important to consider all of the factors at play before making any significant decisions.
Pros and Cons Of Selling A Home Amid Rising Interest Rates
Even if a recession is on the horizon, there are certain advantages to be had. Home prices decrease during a recession, so getting out before the drop-off can be advantageous for people with significant real estate assets or those willing to pay cash for homes.
On the other hand, a possible recession means that you and cash buyers may not be prepared for what you're getting into. Purchasing a new home during a recession can be difficult since people holding on to their real estate will likely want to wait for a recovery before they sell their homes.
Then there's also the issue of mortgage interest rates. The Bank of Canada seems to be staying the course with further rate hikes, which could mean that fewer qualified buyers might lock themselves into prohibitively expensive monthly mortgage payments if they purchase homes in this economic climate.
If You Are Ready To Downsize
Instead of keeping a bigger, more expensive house, downsizing might be more cost-effective. Downsizing might even be necessary for elderly homeowners. According to Rick Albert, a broker with Lamerica Real Estate in Los Angeles, "it may be a good time to sell if you can't handle the steps any longer or if there are more repairs than you can handle."
Downsizing can end up saving you money in the long run, which also makes sense because it is more realistic to sell your current home even if the real estate market seems volatile. You might end up with more favourable mortgages or capital gains taxes if you play your cards right. The important thing to remember is to do your research and be careful to read up on terms and conditions before signing anything.
If You're Happy With Your Primary Residence
If you enjoy living where you live, and your financial position in today's market is not prohibitively unfavourable, then it might be a good idea to just stay put for the time being. Even if you expect home prices to go down significantly in the coming years, being comfortable where you are only means that you're in a decent position to weather the coming storm.
Besides that, if you own investment property in a major metropolitan area like Toronto or Vancouver, then price activity might end up swinging in your favour as populations shift across Canada in the years to come. Housing inventory is not expected to improve, so housing will remain a seller's market rather than a buyer's market in these major population centres.
Families are impacted by the property market downturn in Canada. In the coming 18 months, house sales and prices will undoubtedly decline even further. Without minimising the struggles some Canadian home sellers are facing, this change is aiding in the return of reason to the country's home sale process.
Affordability is increasing as costs fall and many markets are rebalancing. The Bank of Canada uses the property market to fight inflation. Many real estate agents anticipate that the downturn will reduce inflationary pressures to the point where the Bank will be able to roll back some mortgage rates next year. When Canada's housing market stabilises the following year, this will make homes more affordable. Such occurrences ought to pave the way with local market conditions for a lasting revival.