Where have all the multiple offers gone?

The listings are piling up.

It’s incredible the difference a couple months can make in the market. In April, the market was the hottest its probably been in a decade. In June, the listings are piling up.

So, what’s the Hamilton market look like today?

Well, we’re seeing a record number of new listings coming on the market – 3,208 were listed in the month of May. At the same time, sales were less than one-per-cent lower than the same month last year. However, the average price of freehold properties showed an increase of 24.3 per cent compared to May of last year.

But, what brought about this change?

Well, one explanation could be that the provincial government’s package of housing reforms introduced earlier this spring had its intended effect – taking some of the heat out of the scorching housing market. While many measures were targeted at Toronto, such as the proposed foreign buyer tax, its possible that other elements, such as the further skewing of residential tenancies laws in favour of the tenant was enough to make some investors park their money elsewhere.

Presentable homes always have a better chance of getting the right attention.

It’s possible that all the competition in the market – which includes the media’s sensationalized coverage of it – made many would-be buyers take a break from the home search until things normalized a bit. At the same time, however, many consecutive months of sale price gains has likely encouraged many would-be sellers to pretty up their properties and get them listed.

It could also just be that kids are getting out of school in a couple weeks and some families have checked out a little early for the summer.

So, what does this mean on the ground?

First, as is usually the case, solid properties are still selling, many still receiving multiple offers. By solid, I mean homes that have a nice balance of upgrades and a history of appropriate maintenance. Presentable homes always have a better chance of getting the right attention.

Second, homes that are not in tip-top shape should be listed as such. For many months I’ve shown houses to clients that need anywhere from a cosmetic clean up to a full gut reno, many of which are holding offers with an unrealistic list price.

Finally, we agents need to educate our clients and work harder to manage their expectations. It’s expected and understandable at this stage of a market transition that sellers would still have notions that the market has the same amount of heat it did a few weeks ago. But when new listings are breaking records and many sitting on the market for weeks, multiple offers are harder to come by. And on the flip side, buyers need to know that just because their offer isn’t in competition, it doesn’t mean you’re going to reach a deal at ask. Sellers still reserve the right to refuse.

Long story short, from my viewpoint, we haven’t changed from a seller’s to buyer’s market. But the market has softened and it will be interesting to see what the June numbers bring.

 

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