My oh my…
To say that our Real Estate Sales Associates, Brokers and Staff are literally run off their feet
is not an exaggeration these days. I know that you have heard it in the news, but it is truly something
to behold up close and personal as it were.
What was an over-heated market in 2020 is looking closer to a bonfire from what we can tell here on the ground…. and it is only the first week of March with Q2 upon the horizon which is typically the busiest 3 months of the entire year. It’s kind of like Boxing Day in on steroids but stretched out over a few months because there is more geography to cover.
Unfortunately, there are no signs of the market slowing anytime soon as the home buyers who are working from home and need more space hit the streets, along with retirees needing to downsize, and first-time home buyers who have been saving and waiting for awhile now… all collide in a search of that perfect place to call home.
As an industry professional, I did select the word “unfortunately” knowingly and with aforethought.
I did so because too much of anything is not necessarily a good thing. Yes, our Seller clients are ecstatic when they receive 5-10 offers, many of which are over list price, until they too become Buyers and face the same challenges of their counterparts.
Another product of an over-heated market is that it attracts investors, adding yet another party to the buying pool when the pool is kind of over-crowded already.
No offense investors! We love you!
And these buyers are by their very nature – in it to win it!
They are not going to live in their property but rather buy and hold, buy and rent, or buy and sell – and we know it will be for a profit….
because after all…they are in it to win it…
You’ve got it!
Additionally, it does not look like the Mounties are coming any time soon to save the day as the Bank of Canada and other policy makers seem to agree… the economy is too fragile to sustain an Interest Rate hike at this time as many are still unemployed or only back at work with reduced hours.
Continued low interest rates are the gasoline on the fire as low interest rates translate to increased borrowing power from buyers.
Consider the increased borrowing power historically/artificially that low interest rates create:
Mortgage of $500,000
2.24% – 5 Year Fixed Fantastic Rate – Payments $2,175.61
4.5% – Payments $2,767
5.6% – 10 Year Rate – Payments $3,081
That is almost $1,000 more borrowing power per month this buyer has now that the rates are low
versus traditonally normal rates! And if you have seen a few rate increases over your lifetime, 5.6%
is not that high.
This buyer is now in the pool.
We would all prefer the buyer take that extra $1000 per month and go with bi-weekly payments, pay off their mortgage faster or even save the money.
This looks unlikely because this buyer is without a home or needs to downsize, so they will take that
ADDITIONAL BUYING POWER AND PUT IT TO WORK FOR THEM
to secure a property by paying more for it than they might normally because they can now afford to do so.
Have I mentioned how crowded the pool is?
Mother of Dragons
RE/MAX Penticton Realty
RE/MAX Orchard Country
RE/MAX Realty Solutions