Back To Top

b-LOG: When the Market Winds Change Direction

b-LOG: When the Market Winds Change Direction
Date Posted: 20/05/2017

If there’s one thing we all know for sure is that all markets are temporary. As much as a serious sellers’ market feels like it will never go away, it will.

Whether it’s geo-political, macro-economic or some kind of other supply and demand factors, any market can speed up or slow down at any time. As much as people try to jump the market or buy/sell based on their own future forecast, it is equally (or more) important to react quickly to a new market.

The alternative approach of attempting to operate based on markets past will likely lead to wasted time or lost opportunities ($$). It is well documented that since the beginning of 2016 we have been knee-deep in a sellers’ market. Delayed presentation of multiple offers, single digit days on the market and double digit growth has become the norm.

Here is the big question though:

What happens when the winds change direction or lose their speed?

Here in the month of May we have felt a change already start to roll in. Depending on the price point, rather than 29 showings and 7 offers, the overall activity and offers we are seeing has dialed back.

And that is not just us…through our day to day conversations and interactions we have heard it repeatedly.

So what is happening?

In our opinion, we are seeing the effects of a few things:

1. Supply & Demand. It happens every May and June. Tulips bloom, grass gets cut, pools get open and listing counts boost across almost the entire market. As we all know from high school economics, increased supply equals reduced demand due to more available options.

2. News. We are inundated with news. Whether its social media, the 6 o’clock news or conversations at the salon, news good or bad spreads faster than ever. We have seen numerous reports in recent weeks discussing government regulations as well as the cooling of the Toronto market.

3. Psychology. It’s a strange ‘glass half empty’ side of humanity. When things go well for an extended period of time, people often wait for things to turn the other way. We hear repeatedly from people asking when the bubble is going to burst. That type of mentality is waiting for the smallest hint at a correction to either retreat or gain back some of the control they feel they had lost on the buying side of things.

So, is the market changing? From our experience combined with the word on the street, we may well be simply at the beginning of a softening of an over-heated market. Or a return to some form of normal. Is it a bad thing?

Not necessarily. It really comes down to what you are selling and whether or not you are buying and selling in the same or different markets.

Whenever there are shifts or changing market factors, it’s crucial to stay on top of the day-to-day events. Trends, statistics, days on market, new listing activity and several other pieces of data need to be watched. And that is what we are going to do.

If you’d like to chat about the market, your home or buying and selling in general, feel free to reach out to us at any time.

Thank-you for visiting. (photo credit belongs to Ivan Vranic)