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Six trends to predict the housing market
Here are six things we can keep on eye on to try and determine which direction the housing market could be heading.
1. The news – News companies thrive on trying to predict the future and while they sometimes over state things, oftentimes it can be a good indicator of what is to come. If buyers are overly fearful of what the news is saying, it can cause them to wait it out and see what happens.
Google “Canadian Real Estate market crash” and you’ll see headlines like
The news is certainly indicating that a correction is on the horizon, but doesn’t that sound familiar?
2. Employment Rates – Low unemployment levels typically point towards an increase in prices as more people look to purchase and high rates would decrease as people cannot afford to buy. Canada’s unemployment rate has been trending down for the last 6 months, but It is higher than pre pandemic years. Will Vaccine Mandates affect this?
3. Months Of Inventory – This market stat is one of the best indicators of where the market is going. Month of inventory means this: If no new listings came on the market, how long would it take for everything currently for sale to sell. Currently in Grey Bruce it is 1.8 months and in Canada it is 2.1. We remain in a tight sellers market.
Sellers Market <4 months
Balanced Market 4-6 months
Buyers Market >6 months
4. Affordability – This includes the cost of the home, cost to maintain the home, and the level of income to support the home. If income rises with home prices, then things will not change, however if income stays equal and home prices go up then we have a problem. Low interest rates have been key to keeping homes affordable. An increase in interest rates combined with an increase in gas, electricity, property tax would take a toll on housing prices.
5. Showing Request – Showing request on listings tracked over time can indicate buyer confidence in the market. In Ontario showing requests have been trending down since May, but look to be starting on an upward trend, more data is needed.
Impact of COVID-19 on Real Estate Showings in North America
How are builders feeling about the market? An increase in housing starts indicates confidence, lower starts indicate skepticism. Since the pandemic began Canada has been trending upwards in housing starts, peaking in March. Since then it has been trending down, however we are still significantly higher then pre pandemic.
How about Lumber? We all know how bad that got during the winter, it has fallen, taken a sharp turn and fallen back down.
So what can we conclude with all this information? Right now the news is predicting a crash, and affordability is dwindling with the cost of housing and living going up. However, inventory remains low, unemployment is low, and builders are still building. I believe we are in an unknown territory.
Want to talk Real Estate? Connect with me here, I’d love to chat.
Source: https://www.revrealestateschool.com/tips/how-to-predict-real-estate-prices
