How would you say the Markham real estate market is doing right now? If you look at the numbers you see in the news, it might not seem to be doing very well. If you only read the headlines in the media and online, you might think the sky is falling.
Even reputable publications like Macleans can’t resist sensationalized headlines, recently offering an article titled “Real estate sales are cratering around the GTA. Is this a crash in the making?”
But, when you look at the numbers and the headlines, and beyond doom and gloom language, you can start seeing the real news behind them. For example, even if you believe ‘real estate sales are cratering’, that refers to the number of housing units sold this February versus last February. But homeowners could easily think that the price of their homes have ‘cratered’, which they haven’t.
More Truth About the Real Estate Market
As we said, if you just look at the numbers, or at least the numbers in the news stories, it doesn’t really give you the full story behind what’s happening in the real estate market here in Markham.
How The Headlines Can Be Misinterpreted
Let’s take a look at one typical recent headline, how it might be misinterpreted and find the real news behind it.
– Toronto Star, March 6, 2018
This headline might make you feel that the entire real estate market in Toronto and the GTA, including Markham, is 35% ‘down’ since February 2017.
The Real Truth Behind the Headlines
The Toronto Star headline isn’t wrong. But it can be misleading. To find out how let’s look at the factors behind the headline.
1. The Headline Only Refers to the Number of Units of Housing of All Types Sold in February 2018 versus February 2017
That is the only part of the real estate market that is 35% lower. House prices are not 35% lower and the number of units sold for each type of housing is not all down 35% (some have actually increased in the same time).
2. February 2017 was a Record Month for Real Estate
There is a downside to setting real estate records for numbers of units sold and house prices, which is what happened in February 2017. It makes it difficult for following months to keep up the pace.
Yes, numbers of units sold and selling prices are down compared to the record-breaking levels of February 2017. But, to give you more perspective on current home prices, let’s look are where we are compared to February 2016.
a. $893,072 – Average price for all types of housing sold in Markham, February 2016
b. $947,643 – Average price for all types of housing sold in Markham, February 2018
c. 6.1% – Percentage increase in Markham house prices since February 2016
But you’ll never see a headline saying “Markham House Prices Up Over 6% Since 2016”
3. Some Home Prices are Up
In February 2017, the average price for a condominium apartment in Markham was $463,008.
In February 2018, average condo prices were $492,619.
That’s an increase of 6.4% in condo prices since February 2017.
4. It was a Different Real Estate World Just a Year Ago
It’s hard to believe, but less than a year ago, buyers were scrambling to buy any house that came on the market. To get a house, they would even enter into bidding wars that usually drove up selling prices way above asking prices.
Here are some other major differences in the real estate market in just the past year.
Higher Interest Rates
Mortgage rates fell in 2016 and stayed at that near all-time low until close to the end of 2017. Since then they have been increased twice.
New Mortgage Rules
Starting in January 2018, uninsured mortgage holders had to qualify for a mortgage rate that was two percentage points higher than the current rate. That means it isn’t as easy to get a mortgage today as it was in February 2017.
If you increase interest rates (although they are still at historically low levels), and put new mortgage rules in place, it will have an effect on any real estate market. That’s especially true when you compare today’s market to the record-setting market of a year ago. It always helps to try to see behind the headlines to find out what they are really about.
If you want to buy or sell a home in Markham, Toronto or York Region, get in touch with The Tar Team