Sitting at a recent dinner party, I wasn’t surprised to hear virtually all the table talk focused on our housing market. Where will prices go? When will there be government intervention? Will prices start to come down? How will my kids afford a house? Is this the time to sell?
There are no right answers to any of these questions. Looking at statistics though, doesn’t tell us the whole story. The segment of the market that is “ family homes”, entry level or the second move up the property ladder, are seeing huge demand with limited inventory to support the number of buyers. The entry level condo market, meaning $400,000 – $700,000 is suffering from the same issue. While the prices look affordable, there are multiple offers on this product, driving prices higher. Could it be a bit of panic buying….in other words young purchasers and investors feeling if they do not get into the market now they may be priced out of the market later? There is certainly some of that, combined with interest rates that have become the norm at under 4%. The current generation buying has only known low interest rates ,and prepared to rake on much greater debt than the generation previously as a result of record low carrying costs.
It is also a demographic shift as baby boomers consider selling large family homes and look to condos or smaller houses as their next stop, and their children look to condos or smaller homes as their first stop.
Regardless, the luxury end of the market does not share the same pressures or push. While it is true there is not a lot of inventory available, it is also true that the average days on market for property over four million dollars is over 45 days, and much higher than that for properties over five million dollars.
Condominiums over ten million dollars are looking at over six months to find a qualifies bona fide purchaser.
Contrary to some media reports, the majority of luxury purchasers in the condominium market are not foreign buyers, but are local purchasers. At a recent global real estate conference in Europe, I met with Brokers from literally all over the world. These are super star Brokers who service the luxury market. Interestingly, they had limited interest in our market, and had very little knowledge about our growth curve. A surprise to those of us who think we are the centre of the universe indeed!
We live in interesting times.
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