Developers and Home Buyers Can Benefit From Today’s Shifting Market
British Columbia’s real estate market has officially entered a new phase
Gone are the days of hyper-hot bidding wars and homes sold drastically over listing value. It’s time to accept, and even welcome in, a new stage: a more balanced market. This sentence might incite panic in some but the shift from a seller’s market to a more balanced market can benefit the industry overall.
In a balanced market, sellers and buyers are on more equal footing with supply and demand. While supply remains an ongoing concern, slight increases in active supply have partially brought on these more equitable market conditions. Interest rates, economic uncertainty and the amount of new housing construction have contributed to buyer behaviours that move away from the extremely competitive environment we’ve become accustomed to and toward more balanced conditions. Homes are beginning to sell at a price closer to the asking prices, and on a less frantic timeline. Buyers have more opportunities to view options, and sellers have the chance to do thorough due diligence. Ultimately, there’s a win-win situation to be found in a more sustainable matching of buyers and homes.
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DEVELOPERS MUST INTENTIONALLY PREPARE FOR CHANGE
The reality of a shifting market means that developers must alter their expectations as the market changes. No longer can we assume that prices will always continue to elevate, and that projects will sell through all at once. The modus operandi of the past 18 months is no longer applicable. Overall, more thought and intention will need to be involved and applied at every step of a project. Developers must be strategic on when, and how, they release a project to market. After looking at the logistics of any financial requirements around a development, a plan to capitalize on strategic sales phasing should be considered. For example, a project might benefit from a phased sales tempo with specific targets on absorption and replenishing costs for each phase. Rather than hitting the market strong and all at once, they release the project over time against those specific targets to maintain attention and generate success.
Developers also get the opportunity to be more creative and intentional about product positioning. It’s key to highlight and showcase the specific consumer needs that each development fulfills – and to have accounted for those needs prior to beginning each build. Of course, pricing is a key driver of sales right now. The demand for housing has not changed, and the need for supply has not reduced, but the cost of homes is what is driving people away from buying. Inflation and interest rates mean that pricing must make sense for the buyer. Thinking strategically and creatively in the way of incentives for both realtors and buyers is necessary. For example, deposit structures on pre-sales may need to be creatively structured in a way that relieves some stress for buyers.
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BUYERS EXPERIENCE MORE CHOICE AND LESS PANIC
If you’re a buyer right now, you might be looking at inflation, interest rates and housing supply with trepidation. Ultimately, a more balanced and stable market equates with less urgency and more options for the purchaser, which leads to a more positive buying experience. Buyers are benefiting from fewer offers and fewer bidding wars. There is more opportunity to talk over each purchase with a realtor and to put conditions for financing and inspection on your offer, with less fear that you’ll be beat out by offers with no subjects. As that competition slows, buyers generally benefit from having more products to choose from at a pace that provides more chances to review a purchase thoroughly.
While the white-hot market returns to a more equitable state after a particularly strong 18-month run, buyers and developers can identify the advantages of this new status quo. Purchases are less likely to be rescinded upon, particularly in pre-sales, and long-term home satisfaction is likely to be higher.
If you are considering selling or buying a property and need advice from a trusted real estate expert, please contact Geoff or call him at 604-313-7280
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