Heading into 2021, housing market experts are predicting a year of high demand and rising home prices. Housing market activity dropped last spring. However, there was a quick rebounded. This rebound coincided with stay-at-home orders and closed businesses. Buyers are still eager to move. The lesser supply of homes on the market in many parts of Canada is contributing to rising home prices. It remains a seller’s market that benefits homeowners who are choosing to sell now.
If you’re on the fence about selling, you have a few choices:
- Put your house up for sale to take advantage of the current demand
- Wait out the pandemic (however long that takes) for a more vivid picture of the future of the economy
- Opt to stay in your current home for the foreseeable future
Here are three reasons to sell your home in 2021, along with three reasons you may benefit from waiting:
- Sell in 2021: Interest rates to remain low
- Sell in 2021: You have a starter home
- Sell in 2021: You need to move
- Wait to sell: You just refinanced
- Wait to sell: You’re worried about affording your next purchase
- Wait to sell: You’re worried about finding your next home
SELL IN 2021: INTEREST RATES TO REMAIN LOW
As coronavirus cases began hitting Canada, economists and real estate professionals predicted mortgage interest rates would remain, on average, below 4% for the majority of 2020. The impact of the pandemic has lowered interest rates even further and extended a low interest rate prediction into 2021.
The prime mortgage rate as of December, 2020 was a low 2.45%. The second lowest interest rate record since 2010, when the prime rate in Canada was 2.25%.
Low rates are promising for an affordable mortgage. However, there are not enough properties on the market compared to the number of buyers. Expect rising home prices to balance out low rates, at least in part.
The Bank of Canada Target Rate Will Not Rise Any Time Soon.
The Bank Rate is well below what would be considered a ‘normal’ range. According to the Bank of Canada, “Governing Council continues to judge that the policy interest rate will need to rise over time into a neutral range to achieve the inflation target.” This policy implies that once Canada emerges from a recession, rates will begin to rise.
SELL IN 2021: YOU HAVE A STARTER HOME
If you live in a place where home prices are climbing fast and bidding wars are common, homes at entry-level prices — often purchased by first-time homebuyers — are likely to see plenty of buyer activity through the rest of the year.
The price range that’s considered entry level depends on where you live — typically it’s considered the lower third of home sale prices for an area.
SELL IN 2021: YOU NEED TO MOVE
Need to move? It’s still possible to sell your home and find a new one. The need to move isn’t always positive, though. If you lost your job, you may be worried about your ability to continue to pay your mortgage. Selling may be a valid option.
In a market seeing fast home sales, the lack of inventory can help your home sell. Realtor.ca predicts a well-priced home, or one that establishes an asking price on par with its market value, will sell quickly while inventory remains low.
WAIT TO SELL: YOU JUST REFINANCED
If you’re one of the many homeowners who have refinanced recently, there’s no reason to consider selling your home in the immediate future. Hopefully, your refinanced mortgage has helped ease financial woes by lowering your monthly payments.
If you haven’t considered it, refinancing can be a valid alternative to selling your home. Especially if you’re not seeing the right home for you on the market, it’s OK to be picky.
WAIT TO SELL: YOU’RE WORRIED ABOUT AFFORDING YOUR NEXT PURCHASE
If you’re not unemployed, you may be furloughed from your job, have taken a pay cut or have been warned about layoffs on the horizon. All of these scenarios cast uncertainty on the future of your income. In most cases, you’ll be better off delaying the sale of your house and the purchase of another until you know what the future holds.
It’s a good idea to be in contact with your lender if you’re experiencing any reduction or loss of income. Discuss options for deferring mortgage payments for a short period of time or modifying your loan to ensure you can remain in your home for the long term.
WAIT TO SELL: YOU’RE WORRIED ABOUT FINDING YOUR NEXT HOME
The caveat of a strong seller’s market is that as a home seller, you may struggle to find a new home to buy. You could expand your search to include new construction homes, a key component that will help ease high demand in the coming year.
Waiting for a more balanced market is a good idea for some homeowners. It’s unlikely to hinder your ability to get a good price for the house you sell. In a market where supply and demand are more balanced, you’re less likely to see multiple offers and sale prices well above the asking price. You will, however, still see positive home value growth.
PLANNING YOUR NEXT REAL ESTATE MOVE
At some point, you will be ready to sell your home or find a new home. Whether it is today, or a year from now, we want to work with you. We are committed to keeping you informed and knowledgeable to make the BEST real estate decisions to suit your circumstances. Here are some ways we can help: