The short answer is no. But we wouldn’t be writing an article about it if there wasn’t some hope
A lot of buyers and investors are trying to speculate when the best time to buy would be in a market that is trending downwards. The honest truth is, we will never know what the best time to purchase was until we start to see the light at the end of the tunnel. This means, the true answer can only be found looking in the past and studying the comparables and trends of recent sales, which would mean it is already too late. Let’s look at todays market and try to gather the most information possible, My professional opinion is instead of trying to time your purchase perfectly at the dip, you should be buying as it dips. You may be able to save an additional 10-15k in a couple of months, but you also might watch the opportunity pass right by you.
Todays market is in simple terms, not the healthiest. Interest rates are higher than the previous 5-7 year average, buyer confidence is low, inventory is growing monthly and everyone knows about it. You see it on the news, on social media, EVERYWHERE. This is exactly what makes it the ideal time to purchase now. Here’s my logic – Home prices (wether condo’s, revenue properties or homes) are almost always based on the previous 3-6 months of data which shows realtors and sellers what similar homes have sold for in their neighbourhood. In todays market climate, we have sellers that compared their homes to the sales of March 2022 – June 2022 and priced it a little higher than they should have. With their current market knowledge and depending on their situation, they understand that their price probably needs adjustment and would be willing to come down on their asking price, or entertain a lower offer. The case today may also be situational, where the seller has already purchased another home (3-6 months ago) and needs to sell urgently.
Current home listed at: $995,000 (Listed in August, Current time September 2022) based on comparables listed and sold from January 2022 – June 2022. When this seller priced her home, she did so with her realtor who presented her comparable homes, they studied the market conditions and came up with that asking price. Now, 30-45 days into the process, both seller and realtor have watched the local news, have obtained new data from July/August and have sat down and discussed that we are in a changing market, interest rates have risen and we clearly see the prices dropping. So what is the next step? – Price reduction.
2 Days later, Johnny visits the home, and makes an offer at $900,000. The seller is probably going to be much more open to providing Johnny with a counter proposal because she was already advised/understands that her home is no longer listed at the right price, so instead of doing a price reduction and waiting to see how the market will react, the seller will entertain Johnny’s offer, and for the purpose of this article, lets say she accepts an offer of $930,000 ($70,000 under her current asking price).
You see, Johnny made a move, that he was not sure was going to work, based on the seller being aware of current market conditions. Johnny now bought his property for 70-100k less than January – August comparables, and moving forward, the sellers neighbour will no longer be using outdated comparables to price her home, she will be using the most recent comparable
. which is always more accurate.
So why buy the dip, instead of trying to time your purchase perfectly? Because the next seller will be basing her price expectations on the most recent comparables, which has already been adjusted. I can agree that more adjustment may be necessary, but 7-10% is usually plenty in any market condition. You do not want to be the investor waiting for the zombie apocalypse to come, why? It usually doesn’t, and when it does… it just isn’t as evident as an actual apocalypse.
Your local brokers advice?
1. Follow local trends not national ones. (Canada may drop 20% as a whole, but what is Villeray doing?)
2. Stay in touch with your realtor for information about current rates, price drops and interesting properties. Remember your broker has 25 clients, if you want daily news, you have to reach out as well.
3. Be prepared (as you always should be) – Are you pre-approved? Is your down payment available within 60-90 days?
4. Study the market, ask for data, it never lies.
You might not get the lowest price known to man kind, but following the market like a hawk will allow you to buy in a downwards trend and purchase a property at discount price. Remember, even if you could have saved 10-20k, your purchasing a long term investment, in 25 years when your property is worth significantly more than the 10-20k you could have saved, your only regret will be that you should have bought more. Don’t take it from me, Ask your 60+ investor uncle or aunt.