Market Update – How Much Should You Offer?

If Wiarton Willie predicted the real estate market, the famous ground hog would have called for an early spring market this year. Buyers were out in droves in February, creating spring-like conditions in the Quad Cities (Kitchener-Waterloo, Cambridge & Guelph). Most homes attracted multiple offers and virtually every property that hit the market sold well over asking price. You may have heard of the now famous semi-detached home in Kitchener that sold for $300,000 over asking price!

There were 958 sales for February in The Quad and the average selling price soared to an impressive $730,000. Let that sink in for a minute….. The average home in this area of South Western Ontario is now worth over $700K! The average time on market for February sales was 12 days and the sale to list price ratio was 116% which means that virtually every listing sold quickly and well over asking price.

A Key indicator as we move forward into March is the number of active listings (611).  Based on February’s sales volume that would represent less than a month’s worth of inventory so the extreme seller’s market will continue until either a bunch of new listings hit the market or the demand for homes starts to dissipate. I’m not going to hold my breathe on either but an injection of inventory would be nice!

What To Offer in Multiple Offer Situations

The number one question that I get from buyers is how much to offer in a multiple offer situation and without a crystal ball this is can be a challenging question to answer. There are several factors to consider. The asking price carries little relevance except for how many buyers will be attracted to the property. There is market value, which is difficult to estimate in a strong sellers’ market because it is rapidly changing. There is the price that you can pay based on your financial situation, and there is the price that you would like to pay.

Since you can’t pay more than you can afford, your offering price will fall somewhere between the last two numbers. Several factors will influence your decision: How badly do you want the property? Do you need a home, and do you believe that values will continue to rise? Only you can answer these questions and ultimately make an offer that you are comfortable with, win or lose. I would find it difficult to counsel a buyer to pay $300K over the asking price for any property, in any market but the value is truly in the eyes of the beholder.

How much to offer should be based on how many other offers you are competing with. You likely won’t know how many other offers there are until the last minute on the “offer day”. A rule of thumb that I find to be surprisingly accurate is $10,000 per offer. So, if there are 4 offers, the property will sell $40,000 over the asking price. Of course, in scenarios where there are 10, 20 or more offers, what the winning buyer is willing to pay, is anyone’s guess.

I think it’s important to remember that there will always be other homes so try to not get caught up in the craziness make the best offer that you are comfortable with and let the chips fall where they may.

Are you thinking of buying or selling this year? Call/text/email/DM me for a free market evaluation (in person or online). Put RE/MAX, the #1 brand in real estate and my 20+ years of experience to work for you!

The Quad Cities, Real Estate Update February 2021

Low inventory and high demand were the story for January’s real estate market. The number of new listings that hit the market was actually typical for January but when added to the already depleted inventory, there just wasn’t enough to satisfy demand. The demand however was anything but typical. The real estate market usually cools down in December when buyers and seller’s alike, take a break for the holidays and then gradually heats up in the first month or two of the new year.  That didn’t happen in December 2020. The blistering hot market continued right through the holidays and when January arrived, we were already waist deep in a spring real estate market. Buyers competed fiercely for homes in January. Selling prices of $100k over asking price became an everyday occurrence and selling $200k over asking became a new benchmark for real estate in Southwestern Ontario.

The average days on market for the Quad Cities (Kitchener-Waterloo, Cambridge & Guelph) was 6. Yes, that’s right, I said 6! To put that in perspective, historically HOT seller’s markets have had average DOMs of around 30 days. The average sale price in The Quad was approximately $625,000 and the sale to list price ratio was 114%. This means that practically every home that sold in January went for full price or more. Remember the crazy hot markets of 2016/2017? At that time 50% of homes were selling for full price or more.

So, what’s driving this crazy market? A combination of factors has created a perfect storm of market conditions. Low interest rates, inventory down 40% from the previous year, millennials (27% of the population) entering the market and a covid-19 related migration to the suburbs as working from home becomes more popular/necessary.

Going into February, spring market conditions will continue. There are currently 400 active listings in the Quad Cities. That number is ridiculously low and represents less than a month’s worth of inventory. One month of inventory is an extreme seller’s market. A balanced market would have approximately 4 months of inventory and a buyer’s market, 6 months.

Buyers: This can be a difficult and frustrating market to buy in but stay patient. While most homes are selling at full price or more, not every home is selling $100k over asking.

Sellers: This is without a doubt the hottest seller’s market in Ontario EVER! How long it will last is anyone’s guess but now couldn’t be a better time to sell. If you’re planning to buy and sell, I suggest buying first. Selling will be the easy part.

Dean Manton is your real estate expert! Put RE/MAX, the most powerful real estate brand in the world and Dean’s 20+ years of experience to work for you!

Dean Manton  Broker

RE/MAX Real Estate Centre Inc

519-716-4663

dean@mantonteam.com

reasonstohiredean.com

Kitchener Waterloo (& Guelph) Housing Market Outlook (2021)

Kitchener Waterloo housing market to favour sellers in 2021, prices expected to rise 7%

The Kitchener Waterloo housing market is expected to remain in seller’s market territory in 2021, characterized by a continued lack of housing supply that impacted the market in 2020. Low inventory has been a common trend across many Ontario housing markets, putting prices on an upward trajectory. Indeed, the average price in the Kitchener-Waterloo housing market increased to $630,820 in 2020 (Jan. 1 – Oct. 31), up from $530,376 in 2019 (Jan. 1 – Dec. 31). With similar conditions expected to continue next year, the RE/MAX outlook for Kitchener Waterloo residential real estate in 2021 is an increase in average price of 7%, to approximately $674,977 across all property types.

Who’s driving the Kitchener Waterloo housing market?

Kitchener Waterloo’s current seller’s market should persist in 2021. Given the continued increase in average home prices over the course of 2020, it is expected that fewer buyers in 2021 will be able to afford and purchase at the same rate they did in 2020. The region experienced an influx of buyers coming from large cities such as Toronto, many of whom are looking for more outdoor space and backyards.

This has been a common trend across many Canadian housing markets as well as regions abroad, as homebuyers seek more square footage and green space outside of urban areas in the wake of COVID-19. Factors impacting this broader trend include the rise in remote work, the desire for more space and less density, as well as lower housing prices.

Most first-time homebuyers in Kitchener Waterloo are young couples in search of condominiums. Next year, the dramatic decrease in inventory, and increase in demand and home prices may cause some difficulty for first-time homebuyers looking to get into the market. Similarly, move-up buyers are also facing higher prices and limited supply, which will make purchasing a new home difficult in 2021.

The demand for luxury properties continues to grow, along with the demand for the new construction market.

The top neighbourhoods in 2020 and prospectively in 2021 in Kitchener Waterloo are Pioneer Park/Doon, Laurentian Hills/Country Hills West, and Uptown Waterloo.

Canadian Housing Market in 2021

Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.

Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:

Additional report findings include:

• 35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
• 45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
• Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
• 52% of Canadians believe real estate will remain one of the best investment options in 2021

“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”

Dean Manton is your real estate expert! Put Dean’s 20+ years of experience to work for you!

To my friends and clients,

I’ve been wanting to reach out to you for a while regarding what’s happening with real estate and COVID_19 but things have been changing so rapidly, it’s been difficult to pick the right moment. These last couple of weeks I’ve been staying at home with my family and trying to stay safe. I hope you have too!

Recently real estate was designated as an essential service. This is because we need to be able to close deals that are already firm as well as help people who still need to buy or sell real estate. This could be because of a job transfer, relocation, financial challenges or any number of other reasons. It has also recently become clear that COVID-19 isn’t likely to blow over in a couple of weeks. While most of us will be able to stay safe in our homes until life returns to something closer to normal, there will be others that have to sell, rent or find a home. As a Realtor, it’s my job to help these people if I can.

Keeping buyers, sellers, the general public, and myself safe while carrying out my duties will be my number one concern. Using technology, it’s possible to do many things remotely and should physical meetings be necessary, my brokerage has developed strict protocols to keep people safe.

The worldwide COVID-19 spread has some people questioning whether now is a good time to buy or sell a home. My answer is that it may be, depending on your immediate needs. If you need to sell now this may be a good time because of the low housing inventory we are experiencing in our market. As for Buyers, interest rates are at an all time low. While we are seeing an overall slowdown in the economy due to the virus, the real estate market has continued to be resilient. If you need to sell now, there are still many buyers in the market that need to purchase a home. The health concerns may reduce home inventory even more – this may be a good thing for people who need to sell.

If you don’t need to sell now and are concerned with potential health risks, then please exercise your option to wait and I will be in regular contact as to market conditions and, more importantly, health conditions. In an effort to protect our clients and the public as a whole, we are implementing new safety protocols that I would be happy to discuss with you and customize to satisfy any concerns that you have.

I recommend that you and all members of the public go to Canada.ca to receive updates on COVID-19 and to understand the health risks to all.

If needed, I look forward to helping you while taking every precaution available to protect your safety. Please don’t hesitate to contact me if you need some advice or just want to chat. In the meantime, stay safe.

Sincerely,

Dean

Dean Manton is your local real estate expert. Put Dean’s 22 years of experience and market knowledge to work for you!