Sell or Stay?
Curious things have occurred since last year during the prolonged Covid-19 pandemic. Through the looking glass of the robust Ontario housing market nothing has transpired the way some analyst had predicted.
Contrary to the majority of talking heads that painted less than a positive picture of both house sales and overall appreciation numbers, 2020 and the first quarter of 2021 has left many scratching their heads. Numbers have burst northward by all measures and the real estate sector has experienced one of the hottest years in decades. Let’s break it down:
Mortgage default was predicted on a large scale throughout Ontario and the rest of Canada. The number of homeowners expected to fall into mortgage arrears was nothing less than catastrophic. Did it happen? No. Quite the opposite. Thanks in large part to dramatic Federal Government initiatives that included a 6-month mortgage deferral plan coupled with a substantial government cash infusion numbering in the billions to back mortgage securities. Homeowners across the Province were able to pay monthly mortgage payments and keep their heads above water; in some cases, even to save money.
Buying property was predicted to come to a halt. The thought was that during a severe pandemic which included lock-downs and multiple stat-at-home orders, buyers would be put off with the prospect of snapping up properties. Did it happen? Not even close to that prediction! Numbers are nothing less than jaw-dropping when it comes to the overall housing sales throughout 2020. Consistently in the double-digits in cities, both large and small, Ontario house sales went through the proverbial mortgage ceiling. Record-breaking sales to be precise. In some outlying GTA communities sales were up 97% in April compared to sales in the same month in 2020. Again the opposite scenario played out to the general consensus held by some of the economy professionals when looking into the pandemic-fueled crystal ball.
Depreciation of property in the double digits was predicted. Many realtors were convinced that property values would plummet due to the economic spinoff of Covid-19. This did not occur. Appreciation in the double-digits has been the norm throughout the Province during last year and into the first quarter of 2021. Appreciation has been such that the average selling price for a detached single dwelling in Toronto has ballooned to an astonishing 1.4 million. Properties in the surrounding GTA have routinely appreciated as much as 34% during the same period.
Is it Best To Hold onto Your Property or Cash in your Equity?
This is not an easy question to answer. Certainly, there is a lack of inventory. Many homeowners have opted to stay put for now. As we have all been forced to stay at home far more than ever expected, many Ontario homeowners have chosen to hold on to their valued homes, rather than use the equity gains to relocate and buy another property.
More than a third (31%) of homeowners have decided to put funds towards home renovations in the hopes of increasing the livability of their homes while increasing the overall value of their property. This puts homeowners in an enviable position when the time to sell may become a more attractive alternative.
Inventory remains tight. This lack of inventory is one of the biggest factors driving property prices up so dramatically and resulting in bidding wars. It is not uncommon to see homes sell for up to 150,000 dollars above the asking price. Will this trend continue? According to the Canadian Real Estate Association (CREA), the trend for homeowners to hold on to their properties may lessen somewhat as the pandemic draws to an end. The CREA predicts that we will see increased inventory on the housing market in the coming weeks and months.
How does this apply to you? If you are a current homeowner, the decision to sell has always been a very personal one and remains so. Despite many homeowners choosing to hold fast until the new normal is realized, the choice to stay or sell is ultimately yours and dictated by your financial circumstances and lifestyle preferences. In the meantime, if you choose to stay, continued appreciation will result in substantial equity gains. If you choose to buy, more choices will be available which will help you avoid being caught in a bidding war. There are many factors surrounding the decision to stay or move, ensure that you give solid thought as to all the factors involved. Seek advice from an expert in the industry that can help you answer or clarify many of the factors .