TRREB published its monthly report this morning and we’re now seeing a clear shift in housing activity. With rising interest rates, inflation, and supply, the market has spoken and the market is changing before our eyes. 

I was on a panel recently, and the host astutely said, we’re transitioning from a period of ‘free money’ to a period of ‘cheap money’. True, but after a long run of rapidly rising housing prices, rate increases are affecting affordability and we’re seeing that in consumer behaviour. Increasingly, buyers are sitting on the sidelines as they track housing prices and explore inventory. 

As a long-standing member of the real estate community, I don’t view any of this as the bottom falling out of the market. Rather, I interpret is as activity pulling back a little bit. Prices couldn’t continue to rise unabated at 30% per annum. That’s simply unsustainable. 

So, for the first time in two years, buyers find themselves in the driver’s seat. Though technically, we remain in a ‘seller’s market’ with only 2.1 month’s supply, buyers are in a much stronger position than at any time since the start of the pandemic. They are now able to influence showings, terms, pricing, and closing dates. They are re-writing the rule book. Buyers haven’t had a say in the transaction in two years, but that time is over. Now, they have more time, more patience, and, frankly, they are fatigued. This is the reality. 

None of this should be interpreted to mean buyers aren’t there or that demand for home ownership has dried up. I speak regularly with mortgage professionals and we know that buyer pre-approvals remain very strong. Many are just exhibiting patience as they explore the increase in the supply of homes, and determine what options are best for them and their families.

Moving forward, sellers will have to readjust their expectations, understand that the sales cycle for their home may be extended, and appreciate that for the time being buyers will have a greater say in the terms of the transaction.