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Weekly Wrap Up...Could this be the Start of the Shift Back to a Balanced Marketplace?

David Kurt

What made you decide to get into real estate? I was one year into working a “real job”; the type you study hard and go to University for when I re...

What made you decide to get into real estate? I was one year into working a “real job”; the type you study hard and go to University for when I re...

Aug 14 5 minutes read

August 7st - 13th


Sales

49

Pending

21

Multiple Offers

27

New Listings

74

What a week it was for the lending markets on a national scale. It was a mud-slinging contest between Evan Siddal (the head of CMHC) and every other lender and mortgage broker in the media. Siddal accused other mortgage insurers of pandering to high-risk clients; pushing the market to a value that he sees as 20% over-inflated. CMHC % of mortgages have dropped in the last few years to 90% of the insured mortgages to the current numbers around 40%; it could be that the tougher standards have shifted business to their competitors, or it could be that they are out of line with the current lenders in the market.  

From a numbers standpoint, I’ve been hyping for weeks that we are starting to see the signs of a gradual slow down in market activity. Numbers I thought would be reflected in the sales data in the last few weeks. But every week, I was continuously proven wrong. Well, it finally happened this week! We have more listings than sales; sales actually dropped to the lowest point they have been in months and we hit the second-highest point of new listings we have seen in all of 2020. Good signs that we are shifting to a more balanced marketplace.  


  • I’ve been following Sales + Pending Deals versus New Listings for months now and this is the first week the new listings won out. What that means is that there are more listings this Friday for buyers to review than there was last week. It may seem like a small thing but its a big deal; it’s the first step to taking some of the “FOMO (Fear of Missing Out) out of the market.


  • Sales were the lowest number in the last 4 months. That was a bit surprising to see how much that number fell. It can be blamed on a lot of different factors (families enjoying their time before going back to some version of school in a few weeks); but ultimately I’ve been expecting this number to drop for the last few weeks, even saying that I expected more of a gradual slow down than the drop we saw this week. 


  • Buyers are still paying big premiums on certain homes, places that I thought would be even in this market overpriced; but the biggest caveat to go with that point is that buyers will pay the premium for places that they truly fall head over heels in love with. If its a house that is functional or works on a few fronts, buyers aren’t willing to pay the same kind of premiums. 


  • Newest listings were the second-highest number in 2020. It was a few weeks ago that I thought we would start to see new listings start to climb, and we had multiple weeks in a row where that just didn’t happen. I chalked it up to the thought that we peaked with our version of a post-COVID spring market early in the summer and listings were going to normalize. Again the numbers proved that assumption wrong this week; hitting numbers I didn’t expect to see again in 2020; a good sign if your a buyer waiting for listings!


  • The biggest shift I have seen in the market has been in listings that are more premium price. These are listings in the step upmarket (depending on price point this changes) generally let’s say 500k plus listings would be step-up homes. The sellers hear how crazy the market is and look to get the premium on their homes, but ultimately the buyers have to pay the premium, and in this price range the buyers are becoming pickier than ever. We still see chaos in the first time buyer price range but as things cool off in the higher-priced homes, I expect that in future weeks (maybe months) we’ll see this calming work its way down into all price ranges.  [While I make this statement I still fully expect prices to stay strong but maybe remain constant with smaller growth, I truly believe we are not in line for a price reduction in our house values].  


Could this be the start of the market shift back to a balanced marketplace? I think we are starting to see the signs that I thought would be happening translate into the numbers.  Again realize that I do believe prices will continue to be strong, but the overall market won't be as chaotic with bidding wars decreasing and the buyers FOMO (fear of missing out on their next home) subsiding. Will this ultimately come true, only time will tell!

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