Homes are hanging around a bit longer than they have for the last few months before we see sold signs placed in the yards. Prices are softening a little and the number of home Buyers touring is dropping. Is this the effect of the mortgage rates going up last week?

Having worked the past 37 summers selling Real Estate I have found some similarities to activity in the summer months. Typically, by the end of June, when kids are finished school, we head into a few months of “holiday Real Estate activity.” Meaning, that when Buyers would be excited about touring new listings, they are hanging out on patios or at the beach. We see fewer sales most summers and a softening of values. This summer is progressing like most have. Activity has dropped with Oshawa, Whitby and Clarington looking like July will be at about 75% of the sales we saw in June, and homes for sale up about 10%. When you compare where we are to the last “normal” year, (2019) the numbers are dramatically different. In 2019 we had 50% more homes for sale than we currently have on the market and with regards to sales, we are seeing about 40% fewer homes sold. All in all, the market is acting like a normal summer market.

It would make sense to determine that with rates increasing, the activity would drop off due to higher borrowing costs. With the rate increase last week, the market has responded to in somewhat predictable and some unusual ways. For starters, variable rate mortgages have increased as they are based solely on the prime rate, and any lines of credit and credit cards have increased as well. What is a bit unusual is that the fixed-rate mortgages have not increased.

Currently variable rate mortgages are between 6.3% – 6.95% and 5 year fixed rate mortgages are between 5.14% – 5.84%. (Differences in rates are when Buyers have a downpayment of 20% or more. With less than 20% as a downpayment, the Buyer gets the lowest mortgage rates.)

The rate change has not caused much of a difference in activity. The Bank of Canada increased the lending rate last Wednesday, and in Clarington the average sale price of a home last week was 12% over asking, with 5 selling for over $1,000,000. We are seeing homes in desirable neighbourhoods, priced competitively and in good condition are selling, whilst others are lagging on the market. The saying “price war and beauty contest” applies to the market currently.

One of the metrics that shows us how easy or challenging it is to sell is what we call “terminated listings.” What a termination is, is a property currently listed for sale that is removed and placed back on the MLS system. This refreshes the listing, so the home appears as a brand-new property for sale. In the past week, 114 homes were terminated and most came back on the market. This does skew the optics of the market when such a large number of homes are terminated. Over the past week, we had 249 homes listed for sale, which is a huge number of homes, however, if you take out the homes terminated and relisted there were really only 135 newly listed homes.

I have covered terminated listings in a previous blog post, but really, they happen when a homeowner does not get the response they had hoped for. In some cases, the Agent held offers to a certain date and when they did not get the response they had expected they terminate and relist the home hoping to capture new interest. In the end, it shows the market slowing or an Agents strategy did not work out.

Summertime is an excellent time to sell a property. What we see are Buyers who are more motivated to purchase homes than sip cocktails at a cottage. Every showing is viewed as a potential sale. We recently had a condo we listed for sale and in less than a week we had 8 showings, of which 2 Buyers had a bidding contest with the Condo selling for $1,000,000. This was $25,000 over the asking price. There are serious Buyers looking for homes and one might be looking for a home like your property.

If you have any questions or are interested in making a summer move, I can be reached at lindsay@buyselllove.ca or 905-743-5555.
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