For more than a year, we’ve been talking about how hot the market is for everyone in real estate. We have discussed how the market favours sellers, how much prices are rising, and how supply is dwindling. Now that we’re nearing the halfway point of 2021 and into the summer season, it’s time to address those same issues once again. As usual, we have data pointing out how hot the market is this time of year in 2021.
Has anything changed about the market since the winter? What should future buyers and sellers expect, given the current situation? Read on for details about where you fit in!
How does the market look right now?
Stress test changes
Earlier this spring, the Office of the Superintendent of Financial Institutions proposed changes to what we know as the stress test. On June 1, those changes officially came into effect here in Canada.
Previously, buyers had to prove their borrowing abilities based on a 4.79 per cent interest rate, or their contract rate plus two per cent – whichever was higher. Now, that figure has risen to 5.25 per cent. It also applies to both insured and uninsured mortgages, meaning all buyers will be subject to these changes regardless of their down payments.
While this overall won’t have a huge impact on buyers, they could see their borrowing abilities cut up to five per cent. This means the maximum mortgage amount a buyer might qualify for could decrease. The stress test was designed to prepare buyers for interest rate increases, and this rise was intended to take some pressure off the market by reducing buying power.
Interest rates are still relatively low for all mortgage types, but fixed-rate mortgages are rising a bit. They aren’t increasing enough to be considered high, but the jump has made people either plunge into homeownership now or officially decide to wait.
If you’re a buyer…
If you’re a potential buyer, it’s still hard to break into the market. Everyone looking to buy right now is in a competitive mindset, so offers continue to go above and beyond what we’ve seen in the past. The Greater Toronto Area is still seeing price increases among a drop in sales. It’s also important to keep in mind that this “drop” in sales still leaves a much higher volume of sales numbers than previous years. We can see how hot the market is based on this fact alone.
Are you looking to buy a home this summer? While it will certainly be daunting, it’s not impossible, depending on your location and your budget. Most of all, preparation is key. If you’re serious about finding a home, it’s time to get pre-qualified and work out your budget. Once you have your pre-qualification in place and know what you can afford, get going! You can read more about your next steps after being pre-qualified here.
If you’re a seller…
Given how hot the market is, there’s no denying that we are still in a seller’s market across most of Canada, including here in Barrie. That knowledge, coupled with the fact that summer is usually the busiest time of year for real estate, means it might be a great time to sell. Odds are, you will get a good return on your home, since buyers are competitive and prices are on the upswing. Supply is still tight enough to create lots of interest in homes that go on the market as well.
However, don’t make the mistake of trying to sell your home by yourself without any help. Even when the market favours sellers, you need a professional to ensure you do it right. Find a real estate agent to help you see what your home is worth, and what you can expect for it. This will help you plan ahead for your future and how you want to spend your funds. An agent is also super helpful for handling offers and going through paperwork to keep things simple for you.
If you’re a homeowner…
So, what are your options if you’re an existing homeowner? The option for refinancing is still there and it presents many opportunities for homeowners this summer. Maybe you need to consolidate debt, access home equity, or do big renovation projects. In any case, a refinance might be right for you. You can read more about whether or not you should refinance your mortgage here. Given how hot the market is, you should talk to a professional now.
No matter what, act now
If you have any plans at all to be involved in the market this season, you need to act now. It’s important to understand buying will be tricky, so you must make a choice to either go all in or wait until the market cools down. Selling will also be an intense experience, but the payoff can be big if you do it right. Finally, as a homeowner, think about whether or not a refinance is worth it for yourself. You should also consult a broker to help you understand how hot the market is and guide you through your next steps!
It’s a pretty scorching market, and it’s best to enter it with a mortgage professional on your side. A broker is your best bet for getting a clear picture of what you can expect from the market this summer. If you have any questions about buying, selling, or refinancing, get in touch with me here!