11 Jan Here’s What You Should Know If Selling In 2023
It’s early January and coming off a busy holiday season, perhaps you have New Year’s goals and resolutions. This is often an exciting time of year. But, for many, especially faced with big financial or family decisions, the decisions that lie ahead can be daunting.
What if as part of your plan you are in the throes of getting your house ready to sell? Or perhaps you will ponder the idea in the coming months. What should you consider and what do you need to know to set appropriate expectations for a sale?
The last interest rate announcement by the Bank of Canada on December 7 saw another 50 bps hike bringing the prime lending rate up to 6.45%. If the bank raises again on January 25, the prime lending rate would reach a 21-year-high. To put it simply, the cost for a buyer to borrow money to buy your home has not been this high in a long, long time.
I can hear my father chuckle at the last point. He would say yes, but historically, money is still cheap and people need places to live. This leads me to my next point.
Demand for housing is expected to increase as we roll through 2023. Consumers are adapting to the rapid pace of increased interest rates and have a much clearer picture of what they can afford. The rate of employment is high and millennials, many of whom are at peak first-time home buying ages, will increase demand.
Supply is expected to stay below the rate of demand as many homeowners hold onto the sub- 3% mortgage rates they locked into last year. This will have an interesting impact on pricing as interest rates regulate the imbalance of supply and demand. Many are predicting housing prices to creep up ever so slightly. Be careful what you read about home price predictions, as prices will be highly variable across local housing markets.
As a seller, depending on the type of home and the location you live in, don’t expect 40 showings in a weekend or multiple buyers with briefcases of cash being thrown at you frivolously—as happened at this time in 2022. Instead, expect a more “normal” transaction, where your home may take 30, 60, or even 90 days to sell. Think of it like the olden days of 2018.
Price is key to a successful sale. If you’re hoping for a price that would have been achieved in Q1 2022, please go buy a lottery ticket and close your eyes; do not hold your breath and let me know what the outcome is. The fact is the market has shifted like it has for the past century and will continue to shift as the months and years come and go. Price your home appropriately and it will sell for fair market value.
Remember, relativity is important. Everyone sells a home for different reasons. Some because they have to. Some for financial strategy. Others out of fear. Make sure you have a solid plan of where to go before selling. Going at this blindfolded can be like playing with fire. If you are buying and selling in the same market, prices will be relative. If you’re selling in Oakville and moving to the Yukon, well, let’s say your dollar will probably go a lot further.
The bottom line is, if you’re selling your home, selecting an agent who has experience in a historically balanced market will be a critical decision. Navigating the sale of a home in the best of times comes with a risk. Selling a home is easy. Selling a home with reduced risk, in a timely manner, and for the highest price the market will bear, well, that’s a different story.