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How the Real Estate Market WILL FALL in 2022 | The 4 stages explained by Surrey REALTOR

So the real estate market is changing and every day that's going by, we are seeing the impacts of that again and again and again, whether it be with our own listings or with our own buyers. We are noticing more listings coming to the market, less people coming through the homes and come offer presentation time. There's less people showing up now. Some people think that this crazy market is going to last forever and would last forever, but that's just not the case. That's why today we're going to talk all about the cycles of the Canadian real estate market, what's happening right now, and what's likely going to happen coming forward if you are a home buyer or a home seller in Surrey, BC and surrounding areas, or just generally curious about what's going to happen.

Okay, so many of you have subscribed to our channel from a video that we posted just a week or so back saying that the market in Surrey, BC and surrounding areas have peaked. I am seeing more evidence of this every single day in my day to day transactions with both home buyers and home sellers, and there are reasons that that is starting to become more and more evident. I've been through a few market cycles in my 15 years as a Realtor and the signs start showing again and again, every single time. That's why today I want to present to you guys the viewers of my 4 stages of a falling or changing market, how you can recognize the signs and what you can do about it. So the 1st phase is what I call "Something's up." 

We know something is changing and what are the telltale signs of that happening? Well, let's go back to weeks or months before where you would put a home on the market and being a Realtor was less like being a Realtor and more like being a showing coordinator or a security guard at a front door. There were so many people wanting to get into properties that it was tough to handle the amount of them. This resulted in incredible offers and offers like we might see anywhere between 20,30,40, 50 offers per property. There were that many people buying and of course the prices reflected that many people making offers as well. 

This is where you start to see that underpricing strategy that you may be so familiar with, where Realtors and their clients begin to start deciding to price a property actually lower than what they think it's going to sell for so they can drive even more traffic and get more and more bids on these types of properties. When we enter phase one though, of a falling or a changing market, we've noticed things have started to change. There's less people showing up to the open houses. There is less offers coming in at offer presentation time. We start to see this a little bit more on the listing agent side rather than the side when we help buyers. 

Because when we help buyers, we don't really know what the experience of that seller is. But when we help people sell their homes, we know how many people are inquiring about the property showing up and actually writing offers on the home. I know phase #1 is in play because I start scratching my head sometimes wondering why some of our homes aren't as busy as they should be, or as we would hope they would be. We start to see lower amounts of offers on the properties, sometimes maybe not even multiple offers at all. The showing numbers go down and we still generally get good prices on the properties. 

They still sell for relatively good amounts in comparison. But this is where as a listing Realtor, you really start to wonder if the underpricing strategy that so many use during this period when they price a home and list it for sale, is really the way to go. Because even at a lower list price you might not get that many people showing up. This is the start of, and the end of Phase One and this is where I actually think our market is today. Phase 2 I call "Why doesn't everybody want to be my friend?" Phase 2 has progressed a little further than phase one and this is a marketplace where you are putting listings on the market as a Realtor and you're barely getting any showings and you're not getting multiple offers at all. 
Sometimes you're lucky if you even get an offer to begin with. The home buyers out there still may feel a little bit desperate because they don't have the same experience that a home seller goes through and they don't know the full story. This is where as a realtor, I'm really scratching my head and saying is under pricing listings a smart move for my seller, and is that actually going to help them both sell and get the most amount of money? So we have to start different conversations at that time. Phase 3 is interesting, and I called Phase 3: "Inventory shock." 

Now, an inventory shock actually starts to happen at the beginning of Phase 1. This is because people are putting their homes on the market, starting to not only see these incredible wild prices, but also in talking with their real estate professionals in fear that the market may be at a peak. The listings absolutely start flooding on at this time. And what happens to a home buyer, is they start to notice that they've got more choice in the marketplace. They don't have to show up at your listing at a specific time for a 1 Day-only open house and then compete against multiple people to make an offer on your home in hopes to win it. 

They might lose your property, but there's lots of other ones out there that they can go by and they're not concerned anymore. This is where as a home seller, you probably want to start pricing your home sharp, very close to what you think it will actually sell for if you actually wanted to do a sale. Now the worst part about phase 3 is when the media starts getting involved, just like anything in terms of maybe Bitcoin or anything like that. When the news starts talking about it, it's too late. You're going to start to hear reports of listings absolutely flooding the market and turning the tides from the favor of the seller into the favor of the buyer. 

Once this happens, we go right into Phase 4. Phase 4 is simply called "Reluctancy. " You have buyers who are now reluctant to pay the price, even what the market value price of a home might be. Naturally, every buyer's fear out there is that they're going to overpay for a property and they're going to get in over their head. You've got the media telling people that the market may be coming down. 

It's better for a buyer, and we're likely going to be experiencing higher interest rates at that time as well. Once public perception changes, everything changes. And in my opinion, forget mortgage rates and all that other stuff. Public perception is one of the biggest things that can swing a real estate market one way or another. If everybody thinks the market is going to fall, the market will fall. 

And if everybody thinks the market is going to go up, the market will go up. This is where, as a home seller, you need to make sure that if you're interested in selling your home, it's priced to move and back to more of a traditional strategy Where you may need to be priced aggressively to even inflict a sale. So those are the four stages of a falling market and I don't want this video to be all about fear and saying that the market is falling, but the market is definitely changing and if we look at the phases that I described earlier, we're definitely in phase 1 of this four phase cycle. Whether we will make it to the 4th phase or not is yet to be seen, but there's a lot of drivers that are coming forward that certainly looks like they will have an impact on the real estate cycle. So what should you do if you're either a home buyer or a home seller? 

If you're selling your home and you are worried about maximizing the dollar value and getting absolute top price for your home, which is the case for many home sellers, you may consider accelerating your plan to take advantage of the market conditions in phase one before it switches. If you're a home buyer out there who's been looking and getting beat up in multiple offers, I got good news for you. Better times are coming again. I don't know if we're going to get all the way to the phase four Where we're going to see prices start to decline, but you're certainly going to have a lot more choice as a home buyer when it comes to looking for what you want. For any of you watching that are first time home buyers, don't try and time the market. 

That's not a great strategy. Let us know what questions you might have by either leaving them in the comments below or you can reach out directly to us by booking a time to speak with me directly in my calendar. As always, see you next time.

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The Germyn Group

Darin Germyn PREC* & Adam Howsam
Macdonald Realty LTD
homes@germyn.ca | 604-542-2444 | www.germyn.ca

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