Two-thirds of the country’s housing markets, according to a new analysis from the Canadian Real Estate Association (CREA), are skewed in favour of buyers. Due to a lack of supply in comparison to demand, this might be the most prominent trend for the foreseeable future.
Over the past many years, housing building has been slow, resulting in a supply of homes that falls short of demand levels. Despite the fact that this imbalance may be more extreme in more crowded cities like as Toronto and Vancouver, this pattern is pervasive across the country, resulting in rising housing prices across the country.
Sellers who purchased even five years ago would gain from the present tight home market, according to current conditions. Here’s how to win when there is a shortage of available housing.
When there is a shortage of available housing, sellers have an advantage.
A few of years ago, the real estate markets in Prince Edward Island and Alberta would have been termed buyer’s markets. Prices are rising in the Maritimes and Prairies right now, which is a bonus for property owners who are putting their houses on the market right now.
Let’s look at why sellers gain when there is a shortage of available houses.
The number one reason for higher prices in a tight market
As of February 2020, the average home price in Canada was less than $500,000 per square foot. Fast forward two years, and the CREA reports that the national average has hit $796,000 in March of 2022. Even when the high-priced markets of Toronto and Vancouver are excluded from the equation, prices remain at $633,000 per square foot.
As a result of the coronavirus epidemic, home-buying patterns were completely flipped upside down, and supplies were depleted. This may have been expected in big urban areas, but it came as a surprise to the real estate industry in small towns and rural villages, where inventory was already at a premium due to the low demand.
It goes without saying that this was advantageous to the homeowners who were putting up For Sale signs on their front lawns.
2 You will receive a substantial return on your investment.
The chances are good that if you purchased a single-family home, a townhouse, or a condominium apartment during the bottom of the housing slump in January 2009, you have already realised a considerable return on your investment.
Given that the average home price was less than $300,000 at the time of purchase, a rise of more than $520,000 is remarkable. Indeed, some properties and marketplaces are breaking the norm, making your return on investment even more important in a market where prospective homeowners are eager to get one of the limited number of available properties for sale.
Better Terms & Conditions (No. 3)
Many homebuyers are experiencing desperation as a result of the fierce bidding wars that have erupted recently. There are many families who are going above and above in an effort to guarantee that their bid is accepted by the seller. A rising number of families are attempting to improve their chances of success by foregoing key portions of the house-buying process, such as home inspections, which can be a dangerous decision.
In a strong seller’s market, on the other hand, the seller has complete control over the situation, and buyers are willing to work and abide by the seller’s terms and conditions.
4 There are a large number of prospective homebuyers bidding on your property.
A single listing might attract dozens of purchasers at the height of the pandemic-era property craze in some regions across the country — if not to make an offer, then at the very least to evaluate it as a potential purchase. We’d be in a bidding battle even if only a third of those people were genuine purchasers. Despite the negative coverage that this technique has received in the mainstream media, it is advantageous to both sellers and their bank accounts in the long run.
Indeed, the greater the number of individuals interested in purchasing your three-bedroom property in a desirable neighbourhood, the higher the price will rise.
5 Consistent Demand Outstrips Supply
According to a study note from Scotiabank, the provincial real estate market would require 650,000 units to stay up with national levels and 1.2 million units to match international equivalents in order to maintain competitiveness. According to the bank, the same problems are common in other provinces as well.
Approximately 23,000 units would be necessary in Manitoba to close the deficit with Alberta, which is 138,000 units. Note that this is not a bottom-up analysis of housing requirements.”
As a result, it is clear that the housing scarcity will not be rectified quickly, and demand levels will continue to be high for the foreseeable future. After several years, supply will catch up with demand, which is good news for sellers who are taking their time with their real estate agents before putting their properties on the open market.
In a recent report, Scotiabank analysts stated that the persistent lack of housing relative to the population’s demands will continue to exert upward pressure on prices and limit affordability in the coming years.
According to the available completion and population figures for 2021, for example, there will be an improvement in the homes to population ratios throughout the nation.” “However, there remains a significant void to be filled.”
According to statistics, demand for housing continues to grow, with 1.2 million newcomers coming in Canada over the course of three years and more young people attempting to get their foot in the door of the real estate market.