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Selling your home when you still need to shop for a new one can feel daunting to even the most seasoned homeowner. You're not alone either if you're already feeling drained by the complex logistics of trying to sell and buy a new home all at once.


Searching for a new home can be exciting, but many homebuyers admit that it can also be stressful, especially if you live in an unpredictable market with plenty of competitors. Unfortunately, waiting out a competitive housing market isn’t always the best idea either since homes can continue to remain in short supply in many areas, while demand can remain strong in others. 


That doesn't mean, though, that you should just throw up your hands and give up on moving altogether.  In fact, planning ahead and mapping out all your options will put you in a much better position to make a smooth transition from your old home to a new one.


We can help you prepare for the road ahead and answer any questions you have about the real estate market.  For example, here are some of the most frequent concerns we hear from clients who are trying to buy and sell at the same time.


“WHAT WILL I DO IF I SELL MY HOUSE BEFORE I CAN BUY A NEW ONE?”


This is an understandable concern for many sellers but chances are, you will still have plenty of options if you do sell your home quickly. It may just take some creativity and compromise.


Here are some ideas to make sure you're in the best possible position when you decide to list your home:


Tip #1: Be open to a leaseback.

Buyers may be willing to make concessions in order to get the home they want. In some cases, a buyer may agree to a sell and lease back agreement (also known as a "sell house and rent back" option) that allows the seller to continue living in the home after closing for a set period of time and a negotiated fee.


This can be a great option for sellers who need to tap into their home equity for a downpayment or who aren’t logistically ready to move into their next home. If you're dealing with an investor rather than a traditional buyer, you may even be able to negotiate a lengthy lease and lower rent payment than your current mortgage.1


However, leaseback agreements can be complex, with important legal, financial and tax issues to consider. At minimum, a carefully-worded contract and security deposit should be in place in case of any property damage or unexpected repairs that may be needed during the leaseback period.


Tip #2: Open your mind to short-term housing options.

While it can be a hassle to move out of your old home before you’re ready to move into your new one, it’s a common scenario. If you’re lucky enough to have family or generous friends who offer to take you in, that may be ideal. If not, you’ll need to find temporary housing. Check out furnished apartments, vacation rentals and month-to-month leases. If space is an issue, consider putting some of your furniture and possessions in storage.


You may even find that a short-term rental arrangement can offer you an opportunity to get to know your new neighbourhood better—and lead to a more informed decision about your upcoming purchase.


Tip #3: Embrace the idea of selling now and buying later.

Instead of stressing about timing your home sale and purchase perfectly, consider making a plan to focus on one at a time. Selling before you’re ready to buy your next home can offer a lot of advantages.


For one, you’ll have cash on hand from the sale of your current home. This will put you in a much better position when it comes to buying your next home. From budgeting to mortgage approval to submitting a competitive offer, cash is king. And by focusing on one step at a time, you can alleviate some of the pressure and uncertainty.


“WHAT IF I GET STUCK WITH TWO MORTGAGES AT THE SAME TIME?”


This is one of the most common concerns that we hear from buyers who are selling a home while shopping for a new one, and it’s realistic to expect at least some overlap in mortgage payments. But unless you have a large enough income to comfortably carry two mortgages, you may not pass Canada's beefed-up mortgage stress test until you have a contract on your first home. (You can use the Financial Consumer Agency of Canada's Mortgage Qualifier Tool to check your odds.2)


Assuming you can secure financing, however, it's still a good idea to examine your budget and calculate the maximum number of months you can afford to pay two mortgages before you jump on a new home. Potential stopgap solutions, such as bridge financing, can also help tide you over if you qualify.


If you simply can’t afford to carry both mortgages for any amount of time, or if you are concerned about passing the mortgage stress test, then selling before you buy may be your best option. (See Tip #3 above.) But if you have some flexibility in your budget, it is possible to manage both a home sale and purchase simultaneously. Here are some steps you can take to help streamline the process:


Tip #4: As you get ready to sell, simplify.

You can condense your sales timeline if you only focus on the home renovations and tasks that matter most for selling your home quickly. For example, clean and declutter all of your common areas, refresh your outdoor paint and curb appeal and fix any outstanding maintenance issues as quickly as possible.


But don't drain unnecessary time and money into pricey renovations and major home projects that could quickly bog you down for an unpredictable amount of time. We can advise you on the repairs and upgrades that are worth your time and investment.


Tip #5: Prep your paperwork.

You'll also save valuable time by filing as much paperwork as possible early in the process. For example, if you know you'll need a mortgage to buy your next home, get pre-approved right away so that you can shorten the amount of time it takes to process your loan.3


Similarly, set your home sale up for a fast and smooth transition by pulling together any relevant documentation about your current home, including appliance warranties, renovation permits, and repair records. That way, you're ready to provide quick answers to buyers' questions should they arise.


Tip #6: Ask us about other conditions that can be included in your contracts.

Part of our job as agents is to negotiate on your behalf and help you win favourable terms. For example, it’s possible to add a contract condition known as a "subject to sale" or "sale of property" (SOP) condition to your purchase offer that lets you cancel the contract if you haven't sold your previous home. This tactic could backfire, though, if you're competing with other buyers. We can discuss the pros and cons of these types of tactics and what’s realistic given the current market dynamics.


“WHAT IF I MESS UP MY TIMING OR BURN OUT FROM ALL THE STRESS?”


When you're in the pressure cooker of a home sale or have been shopping for a home for a while, it's easy to get carried away by stress and emotions. To make sure you're in the right headspace for your home buying and selling journey, take the time to slow down, breathe and delegate as much as possible. In addition:


Tip #7: Relax and accept that compromise is inevitable.

Rather than worry about getting every detail right with your housing search and home sale, trust that things will work out eventually––even if it doesn't look like your Plan A. Perfecting every detail with your home decor or timing your home sale perfectly isn't necessary for a successful home sale and compromise will almost always be necessary. Luckily, if you've got a good team of professionals, you can relax knowing that others have your back and are monitoring the details behind the scenes.


Tip #8: Don't worry too much if your path is straying from convention.

Remember that rules-of-thumb and home-buying trends are just that: they are estimates, not facts. So if your home search or sale isn't going exactly like your neighbours' experience, it doesn't mean that you are doomed to fail.


It's possible, for example, that seasonality trends may affect sales in your neighbourhood. So a delayed sale in the summer or fall could affect your journey––but not necessarily. According to the Canadian Real Estate Association, the housing market used to be more competitive during the fall and spring and less competitive during the winter. But it's not a hard and fast rule and real estate markets across Canada have seen major shifts in recent years.4 Every real estate transaction is different. That's why it's important to talk to a local agent about your specific situation.


Tip #9: Enlist help early.

If possible, call us early in the process. We'll not only provide you with key guidance on what you should do ahead of time to prepare your current home for sale, we'll also help you narrow down your list of must-haves and wants for your next one. That way, you'll be prepared to act quickly and confidently when you spot a great house and are ready to make an offer.


It's our job to guide you and advocate on your behalf. So don't be afraid to lean on us throughout the process. We’re here to ease your burden and make your move as seamless and stress-free as possible.


COLLABORATE WITH A REAL ESTATE PROFESSIONAL TO GET TAILORED ADVICE THAT WORKS FOR YOU


Buying and selling a home at the same time is challenging. But it doesn't have to be a nightmare, and it can even be fun. The key is to educate yourself about the market and prepare yourself for multiple scenarios. One of the best and easiest ways to do so is to partner with a knowledgeable and trustworthy agent.


A good agent will not only help you evaluate your situation, we will also provide you with honest and individually tailored advice that addresses your unique needs and challenges. Depending on your circumstances, now may be a great time to sell your home and buy a new one. But a thorough assessment may instead show you that you're better off pausing your search for a while longer.


Contact us for a free consultation so that we can help you review your options and decide the best way forward.


Sources


1. CBC

https://www.cbc.ca/news/canada/toronto/housing-real-estate-toronto-market-sell-stay-rent-1.4075093


2. Financial Consumer Agency of Canada

https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQ-EAPH-eng.aspx


3. Government of Canada 

https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preapproval-qualify-mortgage.htm


4. Canadian Real Estate Association

https://www.realtor.ca/blog/are-spring-and-fall-housing-markets-a-thing-of-the-past/20405/1361



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The Greater Vancouver Estate Market has been shifting over the last couple of months.


Traffic at open houses and the number of showings, for many properties, has dropped.


The total number of offers have declined significantly from the recent feverish levels, when there was a lineup of buyers at almost every property, submitting conditionless offers with prices well above the most recent market values.


Many listings are receiving just a single offer now and that offer has subjects(conditions). Buyers are being able to get offers with conditions accepted since many are no longer competing. There has been a substantial rise in the number of accepted offers that have subjects.


We’ve been seeing more and more listings start to advertise that offers will be reviewed on a first-come first-serve basis.


There are still listings coming up that are using the offers to be reviewed on a certain date strategy. Some of those listings are doing it based on the hope that the market hasn't shifted, some are doing it because they are listing it well below market value and as a result will receive more offers, while the remaining are doing it because they are still experiencing a strong level of demand.


Here is what the Chairman of the Real Estate Board of Greater Vancouver, Daniel John, recently said about the market:


“So far this spring, we’ve seen home sales ease down from the record-breaking pace of last year. While a small sample size, the return to a more traditional pace of home sales that we’ve experienced over the last two months provides hopeful home buyers more time to make decisions…”1


The President of the Fraser Valley Board, Sandra Benz, provided a similar insight:


“We would typically see a flurry of activity around this time of the year, however that’s not been the case so far. While it’s still too early to say whether this trend will endure, the slowing of sales combined with an increase in active listings is helping to restore a semblance of balance to the market, which is encouraging for homebuyers.”2


What’s led to the shift?


This is a tough one to quantify but in my opinion it's most likely a combination of; many buyers being priced out due to the significant rise in pricing, a good portion of the precovid pent up demand being satisfied, buyer’s fatigue/perception/sentiment of the market, higher inventory*(in some areas), and higher interest rates leading to investors leaving the market.


The reason why I link the higher interest rates to only investors leaving the market is because even though the 5 year fixed rates have risen significantly, and the variable rates are also on the rise, the mortgage amount that buyers can qualify for has not really changed significantly.


This is due to the stress test rules which state that the mortgage amount that a buyer can qualify for will be based on either the benchmark rate, which is 5.25%, or the rate offered by their lender plus 2%3, whichever is higher.


Buyer’s have been qualifying under 5.25% since June of 2021 and that hasn't really changed over the last few months during the shift. Even though the five year fixed rates for the 5 big banks of Canada are currently ranging between 4.29 to 4.42%4, the variable rates are still under 3%4, allowing buyers to still qualify using 5.25%.


Although investors can also qualify for the same amount as they had prior to the rise in rates, they are much more focused on the rates than they are about the mortgage amount. Their decision to buy is based purely on cost benefit whereas the decisions of buyers who are looking for a place to live is based on lifestyle and life stage changes.


In a country where about one-third of all residential properties are owned as investments (based on data released by the Canadian Housing Statistics Program of Statistics Canada)5 the entrance and exit of investors from the market can have a strong impact.


Has the market shifted equally for all areas and property types?


One of the questions that I always get asked is, “Hey Manny what's the market like?” My answer is always the same, “It depends on property type and location.”


The Greater Vancouver Real Estate Market is essentially a collection of many different micro-markets, depending on property type and location. At any given time there can be differences in demand, pricing, and activity between these micro markets.


For example, not only can there be differences between the cities of Vancouver and New Westminster but there can also be differences between the neighbourhoods within Vancouver.


The same holds true for this current shift.


Although sales and number of offers are down overall, not all areas and properties are experiencing the same level of decline.


Generally speaking the condo and townhome markets are more active than the detached home markets. But within the condo and townhome markets there are areas that are also seeing a decline. And while the detached home markets have seen more of a decline than the condo and townhome markets there are still areas where activity remains strong.


What's going on with prices?


The strong upward pressure on pricing over the last couple of years started to subside a couple of months ago and based on the majority of recent sales, the prices are still stable for many markets.


However, there have also been a number of recent sales that sold for below the most recent market values.


Some of these lower priced sales were considerably lower than recent market values while others were somewhat lower. There isn't a large number of these types of sales yet, but prices have definitely come down for some property types and areas and there is another key observation worth noting that may have a further effect.


That observation is - some of the active listings on the market. There are some properties that are starting to sit on the market at prices that are both at, and below, the recent market values.


Is a correction on the horizon?


If you’ve been living in the Greater Vancouver area over the last 15 to 20 years, you’ve probably seen this question as a popular headline from time to time.


Although the long term pricing trend for the Greater Vancouver Real Estate Market has been upward over that time, the market has also been through a few, short term, downward cycles.


Is the market beginning to move through one of those downward cycles now? Will the price decrease spread across all the micro markets? Will prices decline at a higher rate?


Here are some forecasts that have been cycling through the news:


Royal Bank of Canada is predicting the aggregate benchmark price will decline 2.2% nationwide in 2023, with the downward price pressure to be more intense in Vancouver at 3.8%.6


Oxford economics are predicting a much more aggressive decline of 24%.7 (this one seems too over the top and would require either a massive surplus of inventory, a major rise in interest rates, or a combination of the two)


Instead of relying on forecasts, which have been incorrect in the past, here are few things that I will be monitoring that can influence cycles and pricing:


Inventory


Inventory has moved up in some areas but remains low in others, Most of the inventory is also overpriced. But as I mentioned earlier there are properties that are starting to sit on the market at prices that are at, and below, the recent market values. If that number continues to rise then it could contribute to downward pressure on pricing.


Interest Rates - Especially the Variable


As I mentioned earlier, so far buyers have not had the amount of mortgage they can qualify for reduced as long as they choose to go with the variable rate.


But that variable rate will continue to rise in response to the Bank of Canada raising its policy rate. Variable-rates offered by banks are typically expressed as “prime plus or minus” a percentage.When the Bank of Canada increases or slashes its overnight rate, prime rates typically adjust by a similar amount.8


The Bank of Canada has already stated that they will continue to forcefully raise the rate, if needed, to battle inflation.9 If, as a result, the variable rate moves to 4% or above, then there will be a notable decrease in the mortgage amount that a buyer can qualify for, leading to reduced purchasing power which could contribute to downward pressure on pricing.


Buyers Sentiment/Perception


Unlike inventory and rates, sentiment is hard to quantify but it can be gauged by those working in the frontline, namely real estate agents and mortgage brokers.


Ever heard of the term perception is reality?


I have seen buyer perception influence decisions in the past. In 2019 the market had hit the bottom of its downward cycle. Prices had dropped by a percentage that was equal to the percentage drop in the mortgage amount that buyers were able to qualify for, due to the stress test. Despite this, the majority of buyers did not enter the market because they perceived that the market may drop further.


If buyers perceive that we are in a downward cycle, and start to believe the forecasts mentioned, many of them may put their buying plans on hold. This would reduce the number of active buyers in the market, which could contribute to downward pressure on pricing.


Should you sell now? Should you buy now? Should you wait?


The Greater Vancouver Real Estate Market is a collection of micro markets(depending on property type and location), each with its own level of supply, demand, activity, and price changes.


Which is why the answer to these questions depends on the micro markets in which someone is considering buying and/or selling.


For those that would prefer to maximize their sale price in the short term, selling now should be considered since the majority of the overall market has stabilized while some micro markets have come down in price from their peak.


For those looking to buy in areas where inventory is rising and prices have come down from their peak, it may make sense to wait and see if prices come down further.


For those that are looking to buy in areas where supply is historically low, it may be better to move forward now because the opportunity to buy without having to compete, may be more advantageous than waiting for a possible decline in pricing.


For those that are looking to sell and buy, now could be a good time to make the move because even though the buying frenzy has subsided, thereby reducing the number of offers and over market sale prices, sellers are still getting good prices for their homes and once they sell and become buyers, they no longer have to deal with the stresses of being involved in multiple offers in many areas.


Please note though, that the Greater Vanocuver Real Estate Market is also very dynamic, activity and sentiment can change quickly.


Although the market has been shifting and some signs point to a downward cycle, inflation may subside or decline and as a result the interest rates may no longer rise or they may decline. Also, many sellers may remove their listings from the market if they feel that prices are going to come down and inventory may decline. Both of these changes would reduce downward pressure on pricing.


This is why the most important piece of advice I can provide, and stress, is that you should not rely on general stats, general consensus, and headlines when making a decision to buy, sell, or wait.


You should watch the micro markets that you are living in along with the ones that you are interested in moving to. By monitoring the most relevant markets you can put yourself in a position to move forward when you see shifts in the market that are either favourable to you or to avoid shifts in the market that may not be favourable.


Be market wise


Monitor what matters


Make informed decisions


If you have any questions about specific markets or if you would like to be up to date with and monitor specific markets, please call, text, or email me. I promise to provide an informative, pressure free conversation.



Please click here for a free consultation. 



1. Real Estate Board of Greater Vancouver

https://www.rebgv.org/market-watch/monthly-market-report/april-2022.html


2. Fraser Valley Real Estate Board

http://www.fvreb.bc.ca/statistics/fvreb-posts-record-volume-of-new-listings-in-february-2-2/


3. Bank of Montreal

https://www.bmo.com/main/personal/mortgages/new-mortgage-rules-stress-test/


4. Rate Hub

https://www.ratehub.ca/best-mortgage-rates


5. Statistics Canada

https://www150.statcan.gc.ca/n1/daily-quotidien/220412/dq220412a-eng.html


6. CTV News

https://bc.ctvnews.ca/b-c-homes-prices-forecast-to-dip-3-8-next-year-following-interest-rate-hikes-1.5872989


7. Daily Hive

https://dailyhive.com/vancouver/canada-home-prices-forecast


8. Money Sense

https://www.moneysense.ca/save/financial-planning/financial-literacy-financial-planning/bank-of-canada-interest-rate/


9. Bank of Canada

https://www.bankofcanada.ca/2022/04/opening-statement-270422/

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The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.