Multiple offers. Houses selling before they hit the MLS®. House prices jumping up in all categories. Calgary’s market hasn’t seen this kind of action since 2014.
At that time, oil was at $100 a barrel and people were flocking to Calgary from all over to work high-paying jobs. Now five years after a long recession, we find ourselves in a supercharged sellers’ market – and it makes no sense.
Oil is in the tank, we’ve had negative migration the last two quarters, and unemployment in Alberta is around 10 percent.
Despite this, buyers are scrambling to take advantage of historically low-interest rates before they rise any further. This fear of missing out combined with low inventory levels has created a pressure cooker where the stakes couldn’t be higher for buyers.
If you’re looking to buy into this kind of a market, here are five ways you can protect yourself now and in the long run:
1. Just say “no” to the FOMO
Feeling the need to win or buy under pressure will only lead to emotional decisions, rather than practical solutions. At this point, the market is already taking off. Unless you have a gun to your head with a time deadline or have no choice except to buy, it’s better to be patient and out-wait a volatile market.
2. Target over-priced homes
Every market has its sweet spot and there will be homes that are overpriced, despite demand. Target over-priced homes or ones that have been on the market a while.
Remember, the best activity for a new listing is in the first 10 days, so it’s easy to get into the “I don’t want to lose it!” mindset. In reality, you could be paying more based on emotion or competing offers.
3. Don’t include unreasonable conditions in your offer
Deals can be made and lost based on conditions in this kind of market. Remember, sellers are still in the power position, so don’t include extra conditions like rug cleaning or furnace maintenance. You’ll risk alienating the sellers’ and it’s just not worth it.
Just last weekend, I helped negotiate a deal for my clients to finally buy their dream home in Auburn Bay. There were five other competing bids including one that was higher, but the reason we were successful was because we made a strong, clean offer.
4. When it comes to financing, think long-term, not short
Get a pre-approval from your bank and interview two other banks/mortgage brokers to find all the best option for you.
Remember, the best person for the job isn’t always the one that quotes the lowest rate. Your mortgage specialist or broker, like your Realtor®, should listen to you and offer you solutions to meet your needs now, and a few years from now when you go to renew.
5. There is no perfect house – in any market
Unless you’ve got unlimited money (and even then?) resale houses will always be missing something – whether it’s those Hunter Douglas blinds, or that steam shower upgrade.
I encourage my clients, in any market, to focus on the must-haves versus the nice-to-haves. You should never compromise on your needs, but you can always find a way to plan for your upgrades down the road.
My Auburn Bay clients from last weekend wanted a fourth bedroom in the basement, but it was undeveloped. We took that into account as part of their offer, and now they have enough money left over to finish the basement – including making that fourth bedroom to suit.
Remember, there are always opportunities in real estate. If it’s a sellers’ market and it looks like it will continue to build – then it’s better to get in right away. But if you need a place to live and can secure financing, it’s better to pay your own mortgage than make a landlord’s dream come true.
If you have any questions about this market, or are looking buy or list your home, I’m always happy to have a conversation.