2023 Could Get Really Interesting

    Here we are at the start of 2023 and the question is, “What is going to happen with the Real Estate market this year?" The truth is, nobody really knows for sure, especially after the turbulent year we just experienced.

    Let’s do a quick high-level overview and recall the big factors experienced over the past frenzied year.

·        The year started with prices at nearly record-breaking highs
·        Supply was low and demand was high
·        Multiple offers on properties were making the reality of owning a home almost unreal for many buyers
·        Conditions such as financing and home inspection added to offers were a sure-fire way of NOT getting the home
·        Prices started to level off towards the end of the first quarter
·        Buyer demand started to decline
·        Interest rates were on the rise
·        Prices started to fall
·        Interest rates continued to rise to levels not seen in many years
·        Overall, the housing prices dropped by approximately 20%
·        Sellers were confused and buyers remain fatigued

    The 180 degree turn that the market took in a relatively short period of time was mind blowing.

    Where does all of this leave us for 2023, this upcoming year?
The reality is, people still have lives and their needs are often tied to real estate. People get married, divorced, upsize and downsize as a result. Employment situations change, babies come and older children move on.

    Well, the big (unanswered) questions right now can be taken directly from the 2022 turmoil.

- Where will interest rates go?
- Will the market continue to decline?
- What will happen with the economy and inflation?

 When is the best time to sell or buy a home?  

 The best we can do at this point is to try to break it down and   speculate as to what MIGHT happen. Bear in mind that the   market has shown us time and time again that it will recover,   eventually. The market today is certainly different than it was 5   or even 3 years ago. Suffice to say that selling now will still   yield relatively good returns based on purchase prices and   buying today offers “deals” compared to recent market. Starting   to sound like a “win-win.”

 Some industry “experts” are suggesting that prices may drop   between 1 and 3% for the spring market. In more normal times,   this may be regarded as significant. The off-setting factor here is   the interest rates that could accompany these prices changes.   Save a dollar in one pocket but take it from the other.

It is important to consider location, timing and type of property. Condo price fluctuations may not be the same as detached and Toronto may have a different experience than Sudbury. High(er) interest rates today may adjust downward or at least remain stagnant for the near future. As prices reach their bottoming out point and then start the upward trend (albeit not likely at the pace of 2022) two things will result:

1.      Payments will be more effective (principle versus interest)
2.      Equity will increase

A house is a long-term investment. Let’s take a look at both a possible Seller’s strategy AND a Buyer’s strategy for 2023.

SELLERS:

Focus on the reality of what has happened with the value of your home. Compare today's anticipated market price against what you paid for the home.
Unlike stocks, bonds and other paper investments, you have lived in your home and have realized a significant gain from that investment over the past number of years.
Don’t worry for a second about what your neighbour got for their home in early 2022, even if your home is superior. Much of that was luck and that horse has now finished its race and is enjoying retirement. It is not likely that you will be able to get what your neighbour did. However – you will not pay what your neighbour did a year ago to buy your next home.
Take a look at your personal needs. Does making a move enhance your lifestyle, does it help you achieve some of your goals or does moving allow you some financial freedom to enjoy other things in life that you could not do over the past number of years?
If moving makes sense, consider making a move.

BUYERS:

There are “deals” to be had. Trying to time the market to where prices hit rock bottom and interest rates are low is a nearly impossible task. Making a purchase where the trend is sloping downward is a win. Making a purchase when interest rates are still manageable within your budget is a win. Making a purchase that gets you into the market and sets you up for equity gains over the next 3 to 5 years is a win. Making a purchase that supports your lifestyle is a win.

Bottom line, buy now while the prices are so much better at lease compared to a year ago. Take the interest rates at today's rates and refinance in a year or two when things settle. Remember, if you wait a year or two to buy, you continue to pay someone else’s mortgage and build their equity. In a couple of years, the prices are most likely going to go back up again.

 Buy now and refinance in a year or two. Short term pain in payments will bring long term gain.

 And now, a final plug!

I would be ecstatic to explore YOUR real estate needs and to be YOUR REALTOR® with you whether you are buying or selling. Together and transparently, we can work together and build out a plan that works in your favour.
Please consider giving me a call and setting up a time to chat.

Thanks for reading,

Andrew Hertel
Sales Representative, Century 21 Heritage Group
416-276-5453