A Shifting Market Requires a Shift in Thinking
As the Real Estate markets across Canada shift through a balanced market to a buyers market, behaviours become very predictable.
Buyers adapt very quickly to a changing market. Buying a home is and always has been an emotional decision first and a financial one second. A shift to a buyers market has everything to do then with buyers who are fearful, running to the safety of the herd and staying on the sidelines.
The data to support this is irrefutable. In most major metro markets across Canada, year over year sales figures have dropped significantly for five straight months. In some cases these falls are as high as over 30%.
If buyers have retreated to the sidelines, the question becomes “how long will they stay there, and what brings them back?” If you asked buyers they would tell you that they are afraid of prices falling more in Real Estate, which is of course well supported by what they read in the media. They will tell you they will come back when the market hits the bottom and it is therefore safer to return.
Sellers have always resisted a shift to a buyers market. We can’t blame them really, it is hard to know who to believe. The media on any given day can have two stories that completely refute one another. This can become very frustrating.
On top of that Sellers often hold on to the fantasy that “my neighbour sold his house earlier in the year for X, I want X+ or at least X.” They hold on to this fantasy until they have showing after showing with no offers, which then evolves into fewer showings and still no offers. Then, finally, when there are competing listings in their area, they blink and start dropping their price. This phenomenon explains why, while sales have been dropping for several months in a row, prices have not yet fallen. Once sellers realize their fate, prices will fall ~ and it is starting to happen in various locations across the country.
What to do about all this then ?
Enter the Buyer Protection Plan. As we mentioned above, sellers are blamed when the market shifts to a buyers market. ”Sellers aren’t pricing their homes properly”, or “sellers need to drop their prices” can be heard in many Real Estate offices.
The problem actually lies with the buyers though. Buyers are the ones who have moved to the sidelines. Buyers are the ones who have disengaged from the market. This is certainly a common problem.
The Uncommon Solution…
If the problem lies with the buyer, then the solution has to help the buyer. The Buyer Protection Plan gives buyers confidence to enter the market again by satisfying the two things they are most concerned about:
- The effects of Rising Rates on their mortgage over time
- The prospect of home prices falling after they purchase
Want more information on this innovative plan for the Canadian Real Estate market?