First-time homebuyers continue to drive the real estate market in Canada. Research from the Altus Group estimated that there were roughly 300,000 first-time buyers a year on average from 2009 to 2013. That trend is expected to continue especially in light of the current low-interest rate climate, which experts say will extend to 2015.
For prospective buyers looking to enter the real estate market and trying to get a handle on the ideal time to buy their first home, it's advisable to start researching early and also to gain an understanding of market conditions that may impact sales.
It's important to know what the characteristics of the local market are and especially how this may affect the cost of your home. There are basically three significant market positions to become familiar with.
In a buyers' market, the supply of homes available for sale usually exceeds demand. Conversely, a sellers’ market is reflected when there are many interested buyers after a limited number of available homes. Finally, there's a transitional or balanced market, where the number of homes is roughly equal to the demand.
Should you find yourself in the envious position of being in a buyers' market, you'll likely have the upper hand in negotiating a price and quite possibly talking a vendor down in price. That's because sellers are being approached by fewer buyers and generally homes usually stay on the market longer. Finding the right home at the right price is less of a challenge in a buyer's market but since there are numerous choices you have to be careful to narrow your focus on what you need and what you can afford.
In a sellers’ market, the situation is much different and the vendor usually expects the buyer to meet the asking price. If there are lots of competing bids, as is frequently the case, the asking price may increase. One of the challenges in this market is overpaying for the property because of the competition. In a sellers' market homes usually sell quickly and buyers have to be quite responsive and prepared to make fast decisions. This market will favour those who have their finances in order with mortgage pre-approvals in place and the ability to put in a strong initial bid.
In the case of a balanced market, prices tend to remain stable and homes sell within a reasonable time period. There is more of an inclination for sellers to accept reasonable offers and the number of homes is often proportional to the number of buyers in the market, which creates more of a sense of harmony.
As we can see, the law of supply and demand also influences the housing market, as do other major factors including fluctuating interest rates, economic conditions and level of consumer confidence. Buyers and sellers need to stay informed of changes in these market conditions to reap the rewards.