Is the real estate market slowing down? We are getting asked that question a lot these days. A summer slowdown is normal for the real estate market as we transition from the intensity of the spring market into the summer market, and this shift happens almost every year. Last year was different because we experienced the spring market in June and July because of the pandemic lockdown.
It’s still a seller’s market. There are still plenty of buyers out there and demand still outweighs supply. But we are seeing diversions, now that a majority of the population is vaccinated and buyer’s attention is focused on trips, events, and visiting friends and family rather than solely on their home search.
Homeowners planning to sell should not worry that the bottom is falling out of the market, but expectations should change compared to previous months. Here’s what the shift might look like:
• Fewer total offers on competitive homes
• Fewer properties selling within the first week
• Fewer homes being listed for sale
• Buyers being able to negotiate a better deal
• Less extreme price escalations
• Listing your home at market value – if you had an offer date set intentionally listing low and were hoping for a bidding war and you didn’t get what you hoped for, then re-listing at market value might be the right strategy
As markets stabilize and demand begins to moderate – something that was signalled in the data for May – one of the greatest challenges for agents in their role as trusted advisors is identifying those expectations and realigning them. Agents who play the long game will attest to the benefit of educating their clients with real-time data to manage expectations upfront, over dealing with disappointment and frustration down the road.
The more interesting trend we have been seeing is a month-over-month decline in home sales since the peak reached in March. March to May is typically a period when home sales are increasing from one month to the next, but the effects that COVID-19 has had on the real estate market continue to distort the traditional seasonal trends in the market. The average house price in May was $1,312,334 while the median was $1,140,000, up 32% and 33% respectively over last year.
There has been some cooling over the previous month, and a slight shift away from a tight seller’s market to a more balanced model was likely to emerge. Nobody ever thought that this frenzy could continue at this pace. A balanced market can make for great buying opportunities, especially for first-time buyers.