Seasonality in Real Estate: How Weather and the Time of Year Affect Housing!
Weather and the time of year have a big impact housing activity, and in every housing market there are times of the year when fewer homes sell. For most, that time of year coincides with the winter months, and in much of the GTA, that’s the case right now.
But no matter where you live, it’s important to know how seasonality affects the housing market. So let’s look at the current housing numbers, how seasonality affects them, and what it means for you if you’re looking to buy or sell.
With few homes available, sellers are in a great position
Last year, limited inventory dominated the headlines for the real estate industry, and that trend looks to continue this year. According to the Toronto Real Estate Board (TREB) inventory is now at a record low with no end in sight.
Generally speaking, a 6-month supply of homes (meaning it would take six months at the current sales pace to sell all the homes on the market) represents a balanced market, one in which there are enough homes to meet demand. For much of 2015, inventory remained well below a 2-month supply, and will likely remain so for 2016.
Why is inventory so constrained? Part of the reason is that with ever increasing prices, many homeowners are simply not moving. Business at Home Depot is brisk as people renovate and expand their homes and stay put. Cold weather and holidays keep many buyers out of the market and many sellers waiting for demand to pick back up. A combination of factors, such as locked-in low interest rates and a sense that home prices will continue to increase, are keeping current homeowners from listing their homes.
If you’re thinking of selling, this market is very much a seller’s market. When inventory is scarce, buyers are forced to compete over the few homes for sale. Homes are selling faster, and in most markets bidding wars drive home prices up well above asking. At the very least, you’ll be in a strong negotiating position.
Mortgage Rates & Increasing Finance Accessibility
As of today’s date, mortgage rates remain near record lows. According to ratehub.ca , the best 5 year fixed mortgage rate sits at a staggering 2.39%. Despite tough market conditions, these rates present an excellent opportunity if you’re thinking of buying.
If You’re Thinking of Buying, Act Sooner Rather Than Later
If you’re thinking of buying a home, it’s important to act sooner rather than later. As the year goes on, affordability will continue to suffer. With home prices expected to increased around 7 – 9 percent this year, the longer you wait to buy, the less home you’ll be able to afford. Even small increases in mortgage rates and home prices can have a large impact on your future monthly mortgage payment!
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