Contrary to popular belief, a housing market where pricing is declining has considerable benefits for most sellers, and here’s why.
Most sellers are upsizers, and a declining price market is the best time upsizer to move. On top of that, this declining market will not last long, now is one of the best markets we have ever had to upsize to a more expensive home. I know many people are saying no way but hear me out.
We have moved into a more balanced market. Every market has its benefits and its challenges. In the last market, it was easy to sell your home but tough to buy.
There are new opportunities and some challenges in this new market. The opportunity is that the seller can now find a larger house and pay close to what is listed and not be in crazy bidding wars.
The challenge is they have to wrap their head around that their home will sell for a lot less than it did in February. As crazy as it may sound, it is a benefit in disguise.
Here are the benefits of this changing market for upsizers: So let’s say in February, your house would have sold for 1 million dollars, and you want to buy a home for 1.5 million dollars. The market has declined 20%, so your home would only sell for $800,000. But you could now purchase that 1.5-million-dollar home for 1.2 million. In February, the spread between the two houses was $500,000; today, it is only $400,000, so that is $100,000 less you will have to pay for your dream home.
The 2nd part is why I believe this declining market isn’t going to last long, and prices will start going up again. It is a case of supply and demand. Our supply is still deficient; the number of houses for sale is half what it was in 2007, and housing starts are significantly down as well. The paused demand is because of rising interest rates and fear of a recession. But these people havn’t disappeared. More than 4 million Millenials are at a prime age to enter the housing market. We have over 432,000 immigrants anticipated to enter Canada this year, and the numbers for 2023 and 2024 are greater.
When interest rates level off or if we do go into recession, they will start decreasing, and the demand will pick up. Demand could pick up as early as this fall or perhaps next year. But I don’t anticipate it will remain low for too long.
If you are considering selling your home and purchasing a more expensive home, this is a great market to do so!
