The real estate market is nothing if not fascinating to watch right now.
But for those wanting to be more than a spectator, we’ve asked some of our real estate partners how the market has adapted in the past 15 months, and what advice they might have for homebuyers and sellers in this new normal.
Who: Vanessa Jeffery and Joe Baglieri
Where: Re/Max Property Shop
Area: Eastern Greater Toronto Area (Scarborough to Durham Region and north to Markham)
Specialty: A high-level, client-centred experience developed through a combined four decades in real estate.
What are some of the changes or precautions that we’re seeing taken in the home-buying and selling process at this point in the pandemic?
Vanessa: We were well prepared to pivot to virtual consultations as we were doing them for the last year with many clients who were not able to meet in person. For buyers, our preliminary consultations were done by video, to determine their needs, their criteria, and talking about the buying whole process. For our sellers, we gave them the option of taking a walk through their home virtually and being able to have that initial meeting (virtually), including the consultation with our stager to get a head start. With showing homes, because we were an essential service from the beginning of the pandemic, we were still allowed to do in-person visits. A lot of our clients still opted to do in-person showings but we had a COVID screening protocol. We also encouraged our buyers to explore options like virtual and 3D tours to make sure that it was a right fit before we actually went and met in person.
In the news we often hear the term “seller’s market” or “buyer’s market.” Can you tell us a little bit what that means?
Joe: When they refer to buyer’s market or seller’s market, one thing they’re missing is a balanced market.
We are basically looking at the rate that homes are selling, or months of inventory (MOI). This ratio represents the number of months it would take to completely sell all the homes that are currently for sale, based on the area’s current rate of sales activity, assuming no new listings were added.
A seller’s market occurs when the MOI falls at or below four months; in a balanced market it falls between four and six months, and a buyer’s market is when the MOI is more than six months, where buyers can have more selection and negotiation power because there’s this constant supply of properties coming on the market.
Has one type of market in particular dominated during the pandemic?
Joe: It’s been a seller’s market for a while now. In the pandemic, a lot of people squatted in the real estate market at first to see what would happen. However, there was a lot of necessity purchase and sales — people that sold and had to buy, or people that were just given notice from their landlord and needed to buy. Inventory levels were at an all-time low, and there were many people that needed to buy. It’s been like that until now.
Vanessa: Another major factor why there’s been a seller’s market is that interest rates have been record-breaking low. People have realized instead of us renting, it’s time for us to jump into home ownership. So from the beginning of the pandemic to now, we’ve been in a seller’s market.
What are some words of wisdom or advice that you have for a first time home buyer?
Joe: Finding a good realtor and finding a good mortgage broker is really imperative to having a smooth transaction. For many years, people didn’t use the same realtor twice because of the overall experience and feeling at the end of it all. The Property Shop’s mission is to give an exceptional experience from start to finish. It’s about getting them where they need to go and getting a proper informative session together where they can calculate budget, closing costs, comfort zone attributes, and tapering to a neighbourhood. And then, more importantly is, ‘Do I like the person that I’m talking to right now? Am I going to enjoy spending 30-40 minutes in 10 homes (with them) today.’
Vanessa: Joe and I are very much about the planning process of it. So get a good handle on your finances. You can get pre-qualified for a much higher amount than where your comfort level is. Budget and understand what your monthlies look like. Does that work for your lifestyle? Do you still want to have a restaurant and social budget? Do you want to be able to travel and still have that extra flex money there?
The other thing is to help manage expectations. A lot of buyers can easily get discouraged in a seller’s market. So we always try to put our clients in the frame of mind of knowing and understanding the market conditions, how competitive it is, and how to really be resilient in it. I’ve had many times where buyers have come to us and said, I was looking before for like six months, I decided to put it on hold, and I’ve seen how much house prices have increased from when we started looking to now. And we wish we had found the right fit of a realtor beforehand, because it would have saved a lot of money and heartache.
What are your thoughts on the post pandemic real estate market?
Because we often hear about pent-up demand. So are we going to see a correction, or will it be full steam ahead with what’s happening now?
Joe: Real estate’s a game you stay in. And as long as you’re in it, you’ll be OK. Real estate appreciates. It always goes up. Over-leveraging, going outside of your comfort zone, not falling within the ratios that are allotted by the banks and financial institutions is never a safe bet when it comes to real estate. Be smart with your money and get into investments that you can sustain. The government doing their stress testing is positive because the sale on money at X per cent right now is not something that’s sustainable long-term.
As long as you can stay in the real estate game, a correction is something that may or may not happen, but it’s not as relevant over that 10-20-year period that you’re going to be in that home.