May 27, 2022

PROACTIVE vs. REACTIVE

Be careful of what you wish for.

A few months ago everyone was complaining about how hot and difficult the housing market was in Guelph and Southern Ontario. Buyers understandably struggled to keep up with seller’s expectations, the fierce competition, and the threat of looming interest rate hikes. Sellers were never sure if they got enough for their homes and, with the speed of the market, felt like they were leaving money on the table. Like a game of musical chairs, everyone kept dancing around hoping they were close enough to an empty chair when the music stopped. Everyone seemed to be in reaction. With the exception of people making bully offers, there weren't a lot of people making proactive moves to get ahead of the market.

May of 2020 – which seems like an eternity ago now – was the last time I saw a lot of proactive moves in the real estate market. If you recall, there was a two month period at the start of the pandemic that had the market effectively frozen in place. Understandably, people weren't sure if the housing market would be shut down while everyone grappled with understanding how Covid was going to impact their lives.

A lot of people were caught between transactions, either having sold without buying or bought without selling, and needed to complete the circle. A number of them continued to list and look at properties rather than stop all activity and wait for some sort of official pronouncement. There were deals to be had during those few weeks of confusion. You just had to be comfortable with taking on some risk.

Today’s market, while not as extreme as March of 2020, is just as confusing. Interest rates are rising, inventory levels are building (though still painfully slowly) and yet again people seem to be frozen in place as they try to make sense of where the market is going.

Are we heading for a recession and massive price decreases – as all the doomsayers are prognosticating? I doubt that it will be as severe as the boo-birds are predicting. Like short-sellers in the stock market, I have to wonder what their end game is. That’s another blog post perhaps.

Confusion creates opportunities, and to use a well worn phrase, fortune favours the brave. Substitute proactive for brave, and you can see where I’m going with this post.

There are sellers in the market with expectations that are above where the market is now. Some buyers are sitting on the sidelines trying to time the market, again, and this time interest rate increases and higher loan payments will very likely negate the benefit of a modest price drop.

The proactive agents and clients in this confusing market will find the opportunities and deals before the reactive market jumps into action.

It could be risky – and in the words of Mark Zuckerberg:

"The biggest risk is not taking any risk. In a world that's changing really quickly, the only strategy that is guaranteed to fail is not taking risks."