What Fear Means to the Guelph Real Estate Market - Issue 382

Today is a unique day - it’s Friday the 13th! October, Friday the 13th, no less - the spookiest month of the year!

Many people are superstitious about Friday the 13th because it’s ‘unlucky’, & will avoid making any big decisions or having any big events on this day. What would normally be just another Friday can become quite the fearful day - no matter how irrational this may be.

What does this have to do with Real Estate?

Well, we all know that the residential real estate market is a very emotional place. Buying & selling your family home is loaded with expectations and emotions - sometimes even irrational emotions, no matter how hard we try to avoid this.

So what happens when those emotions, particularly fear, become prevalent in the market place before a buyer or seller has even met with a Realtor?

Good Realtors recognize the huge role emotions play in the process and try to guide clients in channeling those emotions into achieving the right outcome for the consumer.

Fear can have a significant impact on the real estate market. Its impact can affect both buyers and sellers, influencing their decisions and behaviors in various ways. Here are some key ways in which fear can influence the current real estate market:

Market Volatility

Fear, often triggered by economic instability, geopolitical events, or natural disasters, can lead to increased market volatility. Uncertainty about the future can cause home buyers, sellers and investors to pull out of the market or delay decisions, leading to fluctuating prices and transaction volumes. We saw the opposite of this over the past years during the pandemic.

Reduced Buyer Confidence

When potential buyers are fearful, they may become more hesitant about making large financial commitments, such as purchasing a home. This can lead to a decrease in demand for real estate, potentially causing prices to stagnate or decline.

Delayed Purchases

Fear can lead buyers to postpone their plans to purchase a home. They may wait for more stable economic conditions, such as reductions in the lending rates, or for prices to drop further, which can contribute to a slowdown in the market.

Increased Rental Demand

In times of fear or economic uncertainty, some individuals may choose to rent rather than buy. This can lead to increased demand in the rental market, potentially driving up rental prices, as we’ve been seeing over the past 24 months.

Tightened Lending Standards

Fear can lead financial institutions to become more cautious about lending. This might result in stricter mortgage approval processes, higher down payment requirements, and increased interest rates. This, in turn, has reduced the number of qualified buyers in today’s market.

Shift in Property Preferences

In times of fear, people may prioritize different features in a property. For example, proximity to healthcare facilities, low population density, or access to outdoor spaces might become more important than amenities like urban conveniences. This was evident during the pandemic when people moved from the GTA to Guelph for larger lots, more space and the ability to work remotely.

Impact on Sellers

Fear can lead some sellers to delay putting their properties on the market, hoping for more favorable conditions in the future. This can contribute to a shortage of available properties, potentially driving up prices in certain segments of the market.

Government Policy Response

Fear can prompt governments to implement policies aimed at stabilizing the real estate market. These might include measures like tax incentives, subsidies, or regulatory changes designed to encourage buying or investing in real estate.

It's important to note that the impact of fear on the real estate market can be highly context-dependent. Different types of fear (economic, environmental, political, etc.) and their specific causes will have varying effects. Additionally, the resilience and adaptability of a particular market can influence how quickly it recovers from fear-induced disruptions.

Pick your “fear” and you can see the impact in the current market conditions locally. I’ve been in this market for the past 35 years and have seen the impact of each of these “fears” in the Guelph real estate market. I’ve also witnessed the recovery and the long-term growth after these fear events. Some people have missed out on long term growth because they have let fear, rather than logic, dictate their choices.

So if you’ve been letting fear dictate your Real Estate decisions, think about the irrational fear of Friday the 13th. Sometimes talking about your fears helps you to overcome them - so talk to one of our agents about how to make this market work for you, no matter what uncertainties you may have. They may surprise you with the opportunities they can find for you.

Will you let this current market allow your fears to outweigh the opportunities and your needs?

Happy Friday the 13th!

Paul

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