2020 seems to have come in with a bang, at least on the real estate front. A number of clients have contacted me this month, looking to sell as soon as possible. And I'm helping several buyers, on the hunt for quality properties. One recently-listed property sold in a day with four offers; my client and I decided to sit that one out.
As mentioned in my December e-news, the desirable properties, priced appropriately for today's market, have been and continue to be in strong demand. With the low listing count at this time, there's just very few homes that tick all the boxes for many potential buyers. And it seems that more and more people have decided they can't continue to hold off making a move while the market settles, and are doing what they can to get into a home of their own or to make the move to another home. The result? An extremely active market in some sectors, even this early in the year.
You've read the following from me before, but it deserves repeating: If you're selling and buying again in the same timeframe/market, the absolute price difference may be similar to years past, or perhaps more favourable to your plans. A step-up move may be more attainable now, as the future home may have fallen more in value vs your current home. With prices stabilizing this might be the time to make a move!
The issue you need to watch for these days is your ability to finance or refinance a purchase. When selling, most people assume they can "port" their existing mortgage to a new property, increasing their mortgage amount if needed. Most however do not realize they'll likely need to qualify from scratch under the new mortgage "stress test" rules. These rules require adding another approx. 2% on top of the actual mortgage rate the borrower will be charged; it's this artificially inflated higher rate that the borrower needs to qualify for. In essence, think of qualifying at a 5% rate vs. a 3% rate. This 2% differential has a huge effect on the theoretical monthly payment and thus the amount that can be financed. Additionally, the borrower's situation may have changed. A different job, a car lease, credit cards, lines of credit, other debt, etc., can also make a huge difference to qualification ability. Before making any commitments to sell, ensure you fully sort out and confirm your future purchase plans and financing with your mortgage broker or bank. And get it in writing.
Once you've sorted your financing there's no time to waste if a move is part of your plan for 2020. Although a home can be bought or sold at any time of the year, we do see specific seasons of much higher activity – a higher number of listings but also a higher number of buyers. Think of the 2-3 months of spring and the 2 months of fall as prime time. There are strategic reasons to make moves on the margins of these time periods, however. And right about now is the time to start the process of selling. You may need to spend some time prepping your home for sale as well, which could involve contractors and their schedules, etc. Best to start sooner rather than later. (By the way, if you don't have a copy of my comprehensive sellers' guide, which includes advice and checklists to prepare your home for sale, just ask, and I'll send it over to you.)