I’m hearing thoughts with Meatloaf’s voice in my head lately.
In my blog dated November 15th, 2021, I made some forecasts. Looking at the inventory and Buyer demand I came up with predictions for Real Estate prices in our area for the winter market. I refer to my “crystal ball” quite often, sharing how it really is not that accurate, however, this time it seems to be on the correct track for predictions. Let’s look at what I predicted – remember this prediction was made mid-November and was what Real Estate prices would be by the end of March:
Area Nov 1st Avg. Detached home Prediction end Mar/22
Oshawa $933,000 $1,160,000
Whitby $1,230,000 $1,446.000
Clarington $1,032,000 $1,250,000
Lofty predictions to say the least. Oshawa at a 24% increase, Whitby at 18% and Clarington to increase 21%. Let’s take a look at where we are at the end of January/22.
Area Average Detached Home Prices
Oshawa $1,116,000
Whitby $1,482,000
Clarington $1,280,000
Two out of three predictions ain’t bad, even when they are 2 months earlier than expected. Oshawa has increased 20% since the beginning of Nov/21. Whitby has increased 21% and Clarington has jumped up 24%. I am posting these numbers, not to “jump up and down” in glee saying I was right, but just to show that being immersed in Real Estate on a daily basis, and using 37 years of pattern recognition, it is pretty obvious what the future holds. Obvious until it’s not.
We have some disruption coming in March. We have been warned that the Bank of Canada will be starting to increase mortgage rates as a way of combating inflation and rising home prices. How will this disruption affect Real Estate activity and prices? Well, like the patterns that forecast where the prices will move to if you follow the patterns of Buyer activity when rates are on the increase, the reverse happens.
When mortgage rates are set to increase, Buyers tend to get pre-approved with a lender with a 90-day lock on the current rates. This allows them to buy knowing they are protected with the current rates, even if rates increase. What follows is even more pandemonium. Now we have Buyers who “have” to buy and close within 3 months to capture the lower rates. This can take an overheated market and add more fuel to the flames. By the time the 3 months comes to pass, the new rates, similar to gas prices going up, become normalized and Buyers just buy accepting the higher rates as the new normal. When you observe the patterns, forecasting trends is more accurate than one would imagine.
My advice to both Buyers and Sellers has never changed over the years:
- Interview agents and chose one based on skills and experience. If a client uses the cost of services as the main criterion for selection, they may not get the outcome they are looking for. Experience is worth its weight in fees.
- If you are a Seller, make certain that you know exactly where you are going when you start the process of selling. A Seller becomes much more confident when all of the stress points have been discussed and dealt with.
- Use a local agent. Recently an older semi-detached home sold and almost cracked $1,000,000. I will leave it up to your imagination if the agent who brought the winning bid was local. Local agents understand value, neighbourhoods and the community.
I post these predictions and typically get people a bit furious, saying that the market cannot keep increasing or that I am giddy about how out of control things are. My goal has always been to inform the local community and help them to understand what is happening with Real Estate. The media today is viewed at as having an agenda, my only agenda is to help people in Durham Region to be better equipped to make decisions if they are planning on making a move.
Let’s see where the next few months take Real Estate in Oshawa, Whitby and Clarington.
If you have any questions, I can be reached at 905-743-5555 or lindsay@buyselllove.ca
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