Timing is everything, especially when it comes to selling one of your most important personal assets: your home. Knowing when to sell can be the defining factor in how successful you are closing the deal.
From understanding seasonal trends to monitoring changes in government policies, here are a few tips to help you determine the best time to sell.
Learn the Seasonal Market Trends
Housing market prices constantly fluctuate and depend on several factors, typically with supply and demand being the most significant.
As a seller, the more houses on the market, the less demand for yours. For example, the majority of people believe spring is the hot time to list their home as your home will look its best, but if seven other houses in your neighbourhood feel the same, you're competing with each and every one of them. This means buyers have more choices and sellers will likely lower prices so their homes move more quickly.
With that in mind, a key time to list your home would be before this listing season arrives, from early January to early-mid April.
A key selling secret is not waiting for the right "season" but get ahead of the trend. List just before the high season to catch your buyer before anyone else.
But the reverse can be true if you choose to list your home in the winter, where buyers aren't as active. To stand out in the smaller market pool you will need to be competitive with your pricing. We noticed trends from April 2016 and behind where you can see how housing prices changed. For April, the average price in Calgary was $437,600, up 0.25% from March, and up 1.43% for February, and so on.
The good news is, the pattern of sales across the year proves to be consistent even through market fluctuation. We know there are two major peaks per year: one at the end of March/beginning of April and another from the middle to the end of August.
Having the insight on supply and demand trends throughout the year, and being strategic as to when you list your home will give you the sellers advantage.
Follow Interest Rates
Interest rates are set by the Bank of Canada, and key interest rates are set eight times per year. This is what banks use to set their prime rate, and establishes the cost of borrowing on your mortgage.
Depending on what the Bank of Canada decides is the right amount of inflation, they will increase or decrease rates at these times. For reducing inflation, the Bank of Canada would increase rates following the theory that if it costs more to borrow money, people will spend less.
But if they're looking for an increase in inflation then the rates go down. This means the lenders can lower their rates and stimulate the economy. Something to keep in mind here: this really only affects variable rate mortgages. But understanding where interest rates are can help you understand where potential buyers are at.
A fixed rate mortgage isn't affected as much by interest rates until the time for renewal comes, but with the state of oil and the Canadian dollar, we'll probably see a drop in these rates.
Monitor Government Policies
Periodically, the Canadian government makes updates and changes to how mortgages and down payments work. Recently the federal government updated the amount of down payment you need to have when purchasing a home. It used to be 5% as a first-time buyer or 20% if this wasn't your first home (realistically anyone could do 5% but there were additional costs if you weren't a first-timer). Now, your down payment also depends on the cost of the home.
While you still need a minimum down payment of 5% (which means you'll also have mortgage insurance costs), now if the cost of the home is over $500,000 you will need to have 10% for the remaining portion over $500K.
This will be a factor in your budget. If you're looking at homes over the $500K mark, you'll need to take into account the additional amount you'll need for your down payment. If that isn't doable, then you know you need to shop under that mark.
Pay Attention to the Little Things
Although many of the factors that influence real estate value are large-scale, market shifting components; there are a number of small, individual factors that can determine how easily it is to sell your home.
It's a little-known fact, but the week you decide to list your home and even the day of the week can help determine your final sale price. Seeking professional advice to assist with the sale and analysis of the timing factors of your local area will give you a leg up on competing sellers.
Buying Your New Home
Now that you know how important timing is to a successful home sale, you get to move on to the fun part: the purchase of a new home. The same tools used to sell your home are the same tools that make you a savvy buyer. Whether you're moving up, or downsizing, staying knowledgeable about interest rates, economic shifts and the rotation between a buyers' and sellers' market will not only help you determine the best time to sell, but also to buy.