If you follow the real estate news, you may have heard that the market is finally cooling down in Ottawa. While this is partially true, it’s important to keep in mind that it’s very typical to see a seasonal slow-down, as many buyers pause their house-shopping in order to enjoy the summer. Still, it’s ok to be cautiously optimistic about the prospect of a balanced market!
In the last few weeks we have experienced a lot less frenzied bidding wars, lower list-to-sale-price ratios, more happy buyers and disappointed sellers. Mind you, the average sale prices are still higher compared with the same time last year (over 20 per cent higher), so most of these sellers still made out ok. Whether this downward trend continues or just plateaus, here are some things to keep in mind if you are a buyer looking for a property in a “cooling-off” market.
Last month we saw fewer active buyers having a larger selection of homes to choose from, which in turn has resulted in lots of bidding war fails. What we have been observing as a consequence to this is a shift in listing strategy. Sellers, having heard all about how red-hot the market has been, expect to receive a dozen of offers and a sale price of many tens of thousands of dollars above the asking price. If their expectations are not met on the offer presentation date, I have seen sellers reject the “low” offers they may have received and counter at a higher price or relist the home on the market at the price they were actually expecting. This can in turn lead to some bitter buyers, but oftentimes an eventual sale is eventually reached. Alternatively, some sellers forgo the strategy of under-listing in hopes of a bidding war altogether and just list the home at the price that they want from the beginning. The latter is becoming more prevalent recently, which has also led to a higher number of “conditional” sales.
Conditional sales are making a comeback! Buyers have been reclaiming some control and including conditions in their offers – common conditions would include financing, home inspection, status certificate review. Since purchasers no longer find themselves in demanding competitive situations and often have a plan B option to fall back on, the pressure to submit a risky firm offer has subsided. This is wonderful news for buyers, as it makes for a much more comfortable buying process and provides some peace of mind.
Another occurrence we haven’t seen a while – price negotiations! Instead of just forking out as much money as possible, homebuyers can now revert back to offering less than the asking price. Oh, how I’ve missed the thrill of the deal!
The question many of my clients ask me is whether they should wait to buy until prices go down lower. This FOMO, or fear-of-missing-out, on a potential future deal is a real mind block! And to be honest, I don’t have a good answer to this question — lost my crystal ball a while ago. The way I look at it is that if you plan to be in this home for 3 plus years, the total monthly expenses are in your comfort zone and the property has good resale potential then it’s worth a strong consideration! While the real estate market in Ottawa has been unpredictable, average sale prices have not seen a dip since 1996. And you know what they say about real estate – don’t wait to buy, buy and wait.