Why real estate agents are urging Canadians not to wait until spring to sell their homes

Rising mortgage rates could mean a springtime slowdown in the Canadian housing market

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The pandemic-triggered housing boom has shattered a number of long-held assumptions Canadians have had about real estate.

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Distance, not proximity, to city centers is now a key buyer desire. Communities that were unpopular with buyers two years ago due to a lack of jobs or amenities are among the hottest markets today. Even taking out a gargantuan mortgage in the midst of a crushing global recession went from “undeniably risky” to “par for the course” seemingly overnight.

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And that big real estate overhaul continues: A new survey by real estate broker Royal LePage reveals that 79% of real estate professionals believe sellers should list their homes this winter rather than wait until spring 2022.

Winter is traditionally the slowest season for home sales in Canada. But buyers have already cast aside so many real estate traditions. What’s one more?

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The poll says…

Pro-winter sentiment is strong in all regions.

British Columbia real estate agents led the way, with 93% of respondents in the province saying they would advise their clients to sell this winter; 87% of agents in Quebec and 85% of those in Atlantic Canada shared the same view.

The proportion of agents in favor of winter listings was lower in Ontario (72%), Alberta (73%) and the other Prairie provinces, Manitoba and Saskatchewan (75%).

While those numbers are all high, many real estate agents surveyed — at least half in every region of the country — were advising their clients to list in the winter even before the pandemic hit. The reason then is the same as it is now: a painfully low number of homes for sale has created a seller’s market so rabid that the weather is the last thing desperate buyers worry about.

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“Generally, we see a seasonal adjustment in real estate activity,” says Adil Dinani of Royal LePage West Real Estate Services in Vancouver. “However, last year we saw one of the busiest winter markets in our history. Even if there are fewer buyers in the winter, there is unlikely to be enough inventory on the market to meet demand.

This could be especially true in Toronto, where there were only 7,750 homes left on the market at the end of October.

“That’s up from 17,000 last year,” says Cameron Forbes, managing director and broker at RE/MAX Realtron Realty in Toronto.

But Forbes still believes a spring listing is better for sellers, pointing out that since 1999 there have been, on average, more homes on the market in the GTA winter than in the spring. If the goal is to sell in a market where supply is low, why not wait until spring when the market will be even more exhausted?

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“All things being equal, now is a better time to sell your home,” he says. “That’s why agents generally recommend you wait to list on the spring market, when your home is looking good and, frankly, when buyers are looking to buy.”

Low supply compared to the harsh Canadian winter

You may have noticed that the regions with the lowest preference for winter ads are in parts of the country where winter can be particularly harsh. (Ontario’s ranking in this category may have more to do with fears about the effect three or four more months could have on the province’s already sky-high prices.)

And this one could be particularly messy. The Weather Network and Farmer’s Almanac are preparing Canadians for a potentially long and stormy winter.

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Can sellers in hard-hit markets really predict that buyers will be hungry enough to brave the elements and view properties when winter is at its most miserable?

Shayla Ackerman, a Royal LePage agent in Regina, who is no stranger to extreme winter conditions, says she wouldn’t recommend listing in the winter unless a salesperson has no other choice.

“Our winter market is slowing down,” she says.

But in Montreal, which also gets its fair share of colossal dumps, Century 21 Immo-Plus agent Angela Langtry expects buyers to come in droves.

“We’re still in a low inventory market, especially for homes,” Langtry says. “I always say serious buyers go out in snowstorms.”

A real estate slowdown in the spring?

Capitalizing on skyrocketing buyer demand isn’t the only reason to list your home this winter.

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The Bank of Canada announced in late October that it was ending a key emergency pandemic measure: the purchase of billions of dollars in bonds to keep interest rates low, including those tied to loans. mortgages.

If mortgage rates start to rise and mortgage amounts start to decline, buyers may have less buying power come spring. Listing now can give sellers one last chance to attract buyers when they have more money to gamble with.

But Paul Taylor, president and CEO of trade association Mortgage Professionals Canada, isn’t sure if rising interest rates will impact buyers’ budgets in the coming months.

“Almost everyone qualifies for a stress test rate of 5.25% today,” Taylor says, referring to the benchmark interest rate used by lenders to gauge mortgage applicants’ ability to repay their loans.

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Even if the Bank of Canada were to raise interest rates by 100 basis points, or 1%, over the next 12 months, Taylor says buyers who qualify at 5.25% would still have at least 200 basis points basis of breathing space, which means their mortgage budget “will effectively be unchanged”.

Taylor expects a 0.25% hike in the Bank of Canada’s overnight rate, which should trigger a rise in variable mortgage rates in the spring. He says two more increases could take place before the end of 2022.

“I expect the media coverage of the tiny rate increases to scare a lot of people and slow the market down, which is probably very good for everyone, but I don’t think we’ll see enough of a slowdown to erode prices. “, said Taylor.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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