Let’s jump back in time, say to 1997. This was an amazing year for Real Estate. In fact, it was the best year for sales in a decade. Detached homes had been increasing in value since a correction in 1990 and the future looked rosy.
One other component of the market in the late 1990s was predictability. It was a given that year after year the values would increase, Sellers would ask “X” and take a little less to get sold and the natural cycles of when homes sold would repeat year after year. Let’s look at the cycles we could count on, back then and compare them to our current market.
Mostly, home sales cycled around the school year ending. This was a trend that existed from when I started my career to the mid-2010s. The busy selling months were February – May, with closing dates happening in June, July, and August. This allowed the kids to be settled before the new school year. Now, before you think, “what about a couple with grey hair selling and moving to an apartment” how do school kids affect them? The older couple was still affected by the school year cycle. If you think of Real Estate as a linear movement, where homes sold have a home in front and behind them that need to be sold creating a chain, it makes sense. When a luxury home sells the Buyers typically have sold a home to move up to their new home. Behind them, another Buyer has either sold and purchased or started out with a first-time purchase. It really is the first time Buyers are the key to the cycle.
The second cycle began in early September, once the kids are settled for the school year. Sales become brisk from September until mid-November when things slow for the Christmas season.
Over the past few years, the cycles that we have relied on have been turned upside down. A good example can be seen this year. We are in the 4th week of January and Whitby for example has had 3 weeks of 100% of all homes selling for full price or over asking. This is not a cycle we are used to seeing. This is more common in late February or March, but not something we experience at the first of the year.
If our cycles are completely different than previous years, what are the things that have not changed when it comes to deciding when to make a move or when to sell?
Let’s take a look.
- First-time buyers: many first-time buyers buy in the springtime. This has not changed. Many use their income tax refunds as part of their down-payments and wait until they know what they are receiving or until they get the cheque.
- Pools: common sense would lead you to believe that the time to put a home on the market that has a pool, is when the pool is open, the flowers are blooming, and the yard looks beautiful. However, by this time Buyers who are looking for a home with a pool have already purchased. Pool buyers are out looking in February, hoping to move in when the pool is opened in late May.
- Pre-approved mortgages: this is part of a cycle, however, it is triggered when the mortgage rates increase. We have (from what I have learned) 4 mortgage rate increases planned for 2022. When a lender issues a pre-approval to a Buyer, typically it has a “rate guarantee” that lasts for 90 days. If the rates rise during that period, the Buyer gets the rate they have locked in. When rates rise it starts a cycle of buying in order to lock into lower rates.
- Flowers up blooming: This was covered, however, it needs to be mentioned again. Many feel that the time to list a home is in May when the flowers start to come up. The times have changed shifting the start of the selling season from Feb/March into January.
Cycles offer amazing data to help plan when considering a sale or a purchase. One thing we have been shown over the past few years is that the cycles that we have come to know are no longer in place. This makes planning a bit trickier, however, with the help of a good agent, planning becomes easier.
One thing we have seen over the past 2 years is that even a pandemic cannot get in the way of a Buyer wanting to buy. The last pre-pandemic year was 2019 and for the entire year, Durham Region saw 10,634 sales. By 2022, the number of homes sold rose to 14,717. When Buyers want to buy… it has been shown that little can get in their way of buying.