If you have been watching the News or just driving down your street you have noticed a change in the Real Estate Market, homes that used to be sold it seemed just as soon as the sign went up, are now taking weeks and sometimes months to sell. You may check Realtor.ca and see the same home come up time and time again with different prices and if the home does sell, you may be shocked to find out it sold for wait for it… UNDER ASKING!
Yes the market has changed we are no longer getting the 50k-100k above asking with 7 offers and home prices have dipped if you compare it to the height of the market in April 2017 but it is important to keep things in perspective. If we were to compare April 2017 to June 2016 you would see an increase in value of over 29% which is astronomical if consider that home prices had risen over $168,000 in less than 12 months. Now compare values between June ’17 and June ’16 you will see an increase of 15.3% which if you would compare to old standards you would say was another amazing year.
What has been the cause of the drop off in Home values in Ajax? Well to put it simply an increase in supply and a decrease in demand. New listings in June increased by over 41% compared to ’16 to 447 new homes on the market and at the same time sales dropped by 43% to 156. Sales to New Listing Ratio also dropped to 64.2% which shows a strong move towards a more balanced market when you consider that last June 79.1% of new listings in Ajax sold within the same month it was listed.
The increase in listings can be attributed partially to the new proposals by the Ontario Government which you can read about here http://bit.ly/2ouVwli but it was mostly due to Seller’s sensing that we have reached the top of the market and wanting to cash out mean while Home Buyers who would have been in the market saw the introduction of the fair housing plan and decided to step back and see how things would shake out. I do predict that things will return back to normal within 6-8 months as they had in Vancouver when they instituted similar regulations as Buyers try to take advantage of the drop in prices and at the same time try to get in the market before interest rates increase and Sellers who do not necessarily have to Sell decide to take their home off the market because they aren’t getting their price. This will cause inventory to shrink and demand to begin to rise again.
To put things simply, this new Real Estate market can be considered either a blessing or a curse depending on how you choose to look at it. You can curse the fact that your home values have dropped 10.7% since April causing you to miss out on the top of the market, or we can consider the fact that you can buy your next home for $80,000 less than you would have paid in April. A 15.3% increase what other investment can give that type of return in 12 months let’s look at the cup as half full here.