It’s official: we’re in a seller’s housing market. The clues certainly were not subtle. First there was the declaration that this is "the strongest seller's market ever", that home inventory is at historic low as sellers hold on to their homes and refuse to sell. We even learned it has become standard practice for buyers in hot housing markets to waive home inspection and other contingencies in their offers, while participating in heated bidding wars. A seller’s market appears to be the new normal, but will it last?
San Francisco – the poster child for a scorching housing market – is one of the first top markets showing signs of buyers’ fatigue, with home prices dropping last quarter for the first time since 2011. New York City and Miami are also reporting signs of cooling. As home closings and prices are typically reported with a few months of lag time, it is still premature to know if other markets will follow based on real home sales data.
Local homeowners often could be the first to notice signs of market shifts. According to ValueInsured’s latest Modern Homebuyer Survey, homeowners tend to agree we are in a seller’s market.
- 7 in 10 (71%) homeowners who want to sell say the current housing market is headed to a good direction “for people like me”. In sharp contrast, only 39% of renters who want to buy say the same.
- 74% of all homeowners – and 79% of all Millennial homeowners – say now is a good time to sell a home.
- In comparison, only 42% of all interested homebuyers – and 38% of all Millennial homebuyers – say now is a good time to buy a home.
The current market conditions definitely seem to favor home sellers, based on both homeowners and buyers’ sentiment. However, homeowners’ confidence does not seem to extend equally to the near short term. They are more hesitant to bet on a continued seller’s market six months from now:
- While 74% of all homeowners say now is a good time to sell, only 50% say 6 months from now will be an equally good or a better time to sell.
- Interestingly, homeowners seem to have sympathy for buyers in this current seller’s market, and have advice for prospective buyers. Slightly more than half of all homeowners (52%) – and 74% of all Millennial homeowners – say they think home buyers would be smart to wait to buy later this year or early next year, as they expect home prices to correct from the current high.
It would be curious to see if what happens in the Toronto real estate market north of the border could happen in the U.S. Seemingly overnight, after breaking all records in March of this year, the red hot Toronto real estate market began to cool with little prior warning. Home sales this month have dropped by half and listings rose by 22%; suddenly, previously unimaginable contingency requests such as home inspection by buyers seem reasonable to sellers again. We all hope for a soft landing, as it appears the 24% of all homeowners who believe the best-time-to-sell window could be short-lived would too.