Sellers' Market Ends, According to Reports

If the seller’s market is over for the Toronto real estate market, what does that mean for the average homeowner?
The real estate boards in Toronto and Vancouver have just released their August reports, and the news is not particularly good for anyone selling their house.
CTV News reports that Vancouver sales August, 2010 over August 2009 were down 36%, while Toronto’s market was down 22%. While Vancouver’s prices are down 2.8% from April’s peak, Toronto prices are down 8.6% from May.
This data sounds ominous, if you are a homeowner selling your home. However, since 1953, Toronto home prices have risen more than 440%, after factoring in the impact of inflation. Since 1970, the increase has been approximately 280%, while since 1995, prices have risen 185%. Like the stock market, long term prospects for a natural increase in your home value are better than excellent.
On the other hand, in the short term, if the sellers’ market is over, then the converse is true: The buyers’ market is here! Fewer buyers tend to make sellers more eager to be flexible. Flexibility most often equates to negotiable prices or terms.
At the same time, mortgage requirements and the new HST have impacted on home sales in July, and now, August. This new cost may make buyers somewhat shy about submitting an offer to purchase, but the reality is that the HST is here to stay, as likely are the new regulations on mortgage eligibility. So, buyers ultimately will have to deal with these new realities.
This month, the Bank of Canada will contemplate raising the prime interest rate, again. Upward will be the new normal direction, it appears. So, the longer a buyer waits, the more likely that she/he will see higher mortgage rates.
This puts the emphasis back on the sellers’ situation. In truth, as the Toronto population ages, and baby boomers divest themselves of their home equity investment, smaller homes, condominiums or apartments will be required for them. At the same time, those boomers’ homes will enter the market.
So, is the end of the sellers’ market the precursor to a housing bust? Highly unlikely. In fact, houses will continue to be put on the market, and houses will continue to be bought and sold. The primary shift will be a more cautious approach to either buying or selling. Is that a really a “bad news” scenario? No.