A couple of weeks ago, an email from one of our prospective clients reached our inbox. It responded to an update of available homes for sale we had sent him in mid August.
In his message, he seemed stranged by the significantly fewer homes the MLS showcased this time around, in comparison to earlier months. He was also struck by the fact that, although he proactively screened for homes through alternate sources too, he found the market to be quiet there as well.
He lived in a townhouse complex and wondered then, why two neighbouring houses had been sitting with ¨For Sale¨ signs in their front lawns for some time now. As previous homes within his complex had sold within weeks, months earlier, this proved to be an unusual sight for him to see.
¨Is the market taking a turn?¨, he ventured asking, as no more words followed his kind goodbye.
As eager as I was to reply, I felt that sharing my response to him, would help others with the same perception, in understanding the nature of our Real Estate market and stand at ease.
Although homes are constantly sold, Toronto´s Real Estate market has peaks and valleys throughout the year, causing the intensity and volume of home sale transactions to vary. It would be safe to consider it as a ¨seasonal¨ market and it´s in fact referenced to, by the seasons:
1. Spring Market ( strongest between March - May ):
It's the part of the year that accounts for most of the home sales. Its the preferred time for owners to list their properties for sale, as weather tends to be appropriate for showcasing exterior areas of the house & eager buyers have awakened from their winter hibernation. It's also the time of the year where the likelihood of the number of buyers showing interest for the same property to go into the double digits.
2. Summer ( spans from June to late August ):
Tends to be the second slowest season for Real Estate in Toronto. School holidays give way to family vacations. Warmer weather triggers weekend migrations to the cottage, local beach or your choice of festivals and food fests. Attention is significantly diverted from shopping for that dream home. It is also usual for agents to take a break during this time, as the hectic Spring market starts to wind down.
3. Fall Market ( comprised by September and October ):
It's the revival of Real Estate life as we know it. It´s where the remainder of significant home sales for the year take place. Usually follows the long Labour day weekend. Kids are back to school and things at home seem to return back to normal. Unless your new normal is finding a new home.
4. Winter ( extends from November to February ): Activity during this time of the year is the slowest. Although it is fair to say that serious buyers will weather the elements ( rain, wind or snow, even hell, I mean hail) in their efforts to secure their dream home, it is rare to see a significant amount of new listings showing up during this time of the year. Happy Holidays and Happy New Year gives one year a merry ending and the next a cold welcome.
Although this market pattern is somewhat consistent, it can be intensified or diminished, when influenced by some of many factors:
1. Weather: Fair weather has helped winter months ( January and February ) see a surge of activity, not likely to take place that early into the year. Harsher winters can delay the market from swinging into full force at the beginning of Spring, either making competition in the market more active or extending activity further into the summer.
2. Variations in Mortgage Rates: Fears of hikes in mortgage rates have motivated buyers to act quickly when securing a home, just before the lower rates they secured through their pre-approvals months before, reach their expiry date. Increasing rates can curb buyer affordability and delay their purchase process into later in the year or the following year.
3. Government Tightening of Lending Rules: Since 2008, the federal government has made several changes to the rules of government-backed insured mortgages. These rules have reduced mortgage amortization periods and increased the down payment amounts required for a home purchase. When the last mortgage rules came into play in July 2012, they significantly disrupted the Real Estate market and its seasonal pattern altogether, only to recover later in 2013.
4. Closing Date: It is also important to consider that although home purchases take place during a given season, their actual closing date can range from 30 to 90 days into the future. It would then make sense that a Spring purchase would allow buyers to move into their new home in the summer and even get some renovations in place. A buyer in the Fall could perhaps move in before the end of the year and enjoy the festivities in the warmth of a new home.
As the summer winds down, September now knocks at our doors. If you´ve been reading along, you´ll now know that things are about to get hectic once again.
As one season ends, a new one begins. If you feel at home at your current place, by all means carry on. If you are dreaming of a new one to call your own, perhaps you're timing is just right. The Fall market is about to unfold.
Be sure to seek the right guidance when getting started. You will want to have the right professionals by your side.
Real Estate Sales Representative - RE/MAX Hallmark Ltd.
647 995 5440
Jose & Claudia
RE/MAX agents since 2001, avid negotiators and passionate for what we do. Buying, selling or renting your home with us has never been easier!