So much has changed in the past year, and this spring’s market will be different from those we’ve witnessed in recent years.
We may be in the middle of winter, but the West Island’s spring real estate market has kicked into gear.
The market conditions that buyers and sellers saw in 2021 and 2022 have shifted dramatically. There are more houses on the market and prices are declining, says Marc Dessureault, a real estate broker with RE/MAX ROYAL (JORDAN) in Beaconsfield. “We have almost enough inventory of properties for the next six months without any new listings,” he said during an interview with West Island Home & Life.
A case in point: Beaconsfield had 83 single-family homes listed on January 9 this year, compared with 10 on the same day in 2022. On Feburary 9 of this year, there were 110 homes listed on the Beaconsfield market. Throughout the six months prior to that, some 108 homes were sold in that market.
Mr. Dessureault says there’s been a shift within six months to a buyers’ market from a sellers’ market. “As we move into a buyers’ market, sellers will be competing with each other for sales. As a result, prices will decline,” he said.
Several factors are having an impact on the shifting market, including inflation, rising interest rates, and an increase in property valuations, he says.
“Inflation is affecting new construction because the increased cost of goods is affecting the cost of new buildings,” Mr. Dessureault says. “If you’re considering new construction, inflationary pressure will inflate the price.”
Another factor affecting the resale market is the increase in home assessments because of the higher cost of homes in the past few years. Increased valuations affect municipal taxes. And then there’s the increase in the cost of so-called “welcome” tax that homebuyers must pay. “The welcome tax is part of the cost of buying a home,” Mr. Dessureault says.
Climbing interest rates that affect mortgages are also having an impact, he says. “Higher interest rates devalue your leverage power. You can’t borrow as much money. Higher interest rates give buyers less purchasing power than they had last spring.”
The current state of the market is also affecting people who bought homes in recent years when prices were elevated. “Those who need to renew their mortgages may not be able to afford them,” Mr. Dessureault says. “A possible outcome of that is bank repossessions.”
Another phenomenon that real estate brokers are observing is something that was absent during the frenzied market of the past three years. “We’re seeing houses being sold below asking price,” Mr. Dessureault says, adding that he encourages those who “have to sell” to list now before prices drop precipitously. While listing prices are decreasing, they’re not yet “down a lot,” he adds. “But prices could drop by 30 to 40 per cent by the autumn.”
One metric to bear in mind for anyone planning to sell to upgrade to a larger property, he says, is the fact that higher-priced houses will decrease in price proportionally more than their lower-priced counterparts.
The move from sellers’ to buyers’ market is underway, Mr. Dessureault says. “It’s a dramatic shift that started at the end of spring 2022.”
Marc Dessureault is a real estate broker in the Beaconsfield office of RE/MAX ROYAL (JORDAN).