Chances are, you’ve been following along with the news and the real estate updates. If so, you know we are currently in a soft market. This is typically a recovery period where home prices return to a more sustainable level.
We have some information we thought might help – if you are selling in your in this market.
Who Loses Out When the Market Softens
The Canadian Market probably won’t crash light the USA housing market in 2008 – but, it will experience what’s called a ‘price correction’, where the market softens and property values return to a more sustainable level, which occurs in every property cycle.
Contrary to popular opinion, this does not mean that people stop buying and selling property altogether — which would actually result in a depression. No, a soft market just means there are fewer buyers.
This type of market also means the housing prices have also decreased. However, if you bought in a soft market and you are selling in a soft market – the new home you purchase is also being bought in the soft market.
Isn’t Fewer Buyers a Bad Thing?
It’s true that more buyers means higher property prices — a basic tenet of supply and demand — but just because there are fewer buyers doesn’t always mean a substantial decrease in property values. However, a soft market does mean you need to price your house accordingly if you want to sell it in a soft market.
In a soft market, there are typically fewer buyers, yes, but there are also fewer sellers, as all those vendors who don’t really want to sell their home unless they get an offer they can’t refuse, tend to stay put.
If you’re planning to buy and sell at the same time, then it’s usually smarter to do so in a softer market than a hard one. If you buy in a hard market — that is, where buyer demand outpaces supply — you’re likely to spend more on your property than you would do in a soft market. The only reason people buy in a hard market is because there’s some other driving force that makes it an attractive option — low interest rates, for example.
Buyers and Sellers Both Do Well In A Soft Market
If you’re planning to buy and sell at the same time, a soft market is the time to do it. Generally, property values go backward by about 5-10 percent in a soft market. So buying and selling at the same time in a soft market is a non-important aspect. Selling in a soft market, however, and then waiting for more properties to come on the market when it picks up again is a mistake.
Most people who sell in a hard market, but don’t have to buy right away, end up renting until the market cools a little bit, and then they buy. If you didn’t sell when the market peaked, selling while it’s on its way down is the next best time, as you’ll capture some of those cashed-up buyers who sold when the market was hot, giving you time to find somewhere to buy, as well.
Is There A Loss in a Soft Market?
There can be a loss. If you bought your home in a hard market 5 -6 years ago in Saskatoon, changes are, you will be taking a loss. So, if you don’t have to sell your home right now, don’t. However, if you bought in a soft market years ago, or even if you bough in a hard market years ago, your home would be worth more now and selling and buying in the current market would not be a loss.
Before Selling in a Soft Market
Always do your research – in any market – in any city.
If you don’t have to sell, then don’t. If you’re in a capital city or major area that’s close to sought-after amenities and you can afford to wait until the market bounces back, do. Otherwise, if you have to sell, then ensure you research your local area thoroughly.
As always, if you need help buying or selling a home contact us at anytime.