Before we talk about how challenging this market is for home Buyers, let's talk about what is causing this unprecedented demand.  The number of sales year over year are only up by 8% and that alone would not cause a substantial price jump.  However, prices have risen by 12% in the last twelve months and it is almost entirely down to a lack of supply. The number of listings available in September 2020 is down by a whopping 51% from 2019. It is down an even more alarming 64% from 2018.  There are simply not enough homes for sale to satisfy demand and this is causing an extremely competitive environment for home Buyers in and around Halifax.

The Landscape

Almost all homes that hit the market in Halifax are being put on a "program" by Real Estate Agents.  This means that a property might be listed on a Monday but a Seller will only look at offers on the following Friday.  This gives the Seller maximum exposure and allows for multiple viewings in the days leading up to offer presentation.  When that day comes, it is not uncommon for a Seller to be looking at 8+ offers to select the best price and terms.  This can be extremely stressful for Buyers as they face the prospect of multiple failed bids when trying to locate a home to move into.  There are several strategies available to make your offer stand out and it is important you select a Realtor who will fight to get your offer accepted. 

The Frustration

An expensive home today is a cheap home in 12 months.  Being a Buyer in a Seller's market is extremely frustrating.  This is exactly why you need to focus on why you are trying to buy a home in the first place.  You want to be a Seller in a Seller's market.  If prices continue to increase in the same manner, a $300,000 house today will be worth $336,000 in 12 months.  Couple that with a rent payment of $1200 per month, your extra expense would be in excess of $50,000 over the course of a year ($14,400 in rent + $36,000 in property value).  Sellers in this market hold all the cards and your number one goal is to make them choose your offer.  Even if you pay more than you want to today, it will save you money in the long run.

The Inventory

I've spoken to countless people who are afraid to sell their home because they do not think they'll be able to afford to up-size in the current environment.  However, it's good to remember that while prices are going up, your equity is as well.  Even though you might be purchasing a more expensive property, it does not mean your mortgage amount will increase.  By rolling your equity (value you have in your property) into a new mortgage, you could purchase a more expensive house without taking on a massive increase in monthly payments.  

For example, you purchased a property in 2015 where a good interest rate was 3%. You bought for $300,000 and wanted to sell in 2020.  Your home would be worth 32% more today or $396,000.  This would be on top of what you've paid down on your mortgage which would total in the realm of $66,000.  So, five years later you would have $162,000 in equity to put towards a new home. 

In 2015 at 5% down on $300,000 at a 3% interest rate - Your monthly payment would have been approximately $1,350 per month. 

In 2020 on a $500,000 mortgage with $162,000 down and a 1.84% interest rate - Your monthly payment would be $1,405 per month. 

I'm not here to convince you to spend more on a house.  However, if you have the need for more space, I want to demonstrate that it is entirely feasible without having to greatly increase your monthly expenses.  You can also insert a Seller's condition in your contract stating that it is subject to you finding a suitable home to move into.  That would not work in many markets, but remember that you are a Seller in a Seller's market which puts you in a position of strength. 

How do I navigate this?

Buying or selling a home is a massive decision regardless of what the market is doing.  The choices you make have a direct impact on your family and because of that, it is important you select a Realtor who is equipped to help you navigate the entire process.  Let your agent worry about the best strategy, so that you can focus on finding the perfect home.  HaliPad offers free consultations to home Buyers and Sellers so that we can customize a plan to suit your unique needs. 

Contact us today to make the most of your next move

Provide a valid email address.
Newsletter consent

 

 

Posted by Chris Perkins on

Tags

Email Send a link to post via Email

Leave A Comment

e.g. yourwebsitename.com
Please note that your email address is kept private upon posting.