Residential real estate
How to react in real estate during a crisis
· 3 min read
Rising customs tariffs, falling financial markets, climbing interest rates – how should you react in real estate?
How to react in real estate during a crisis: strategies for buyers and sellers in Quebec
In times of economic turbulence – higher customs tariffs, falling financial markets, rising interest rates – the Quebec real estate market goes through significant adjustments. Unsettling as they are, these shifts also create opportunities for buyers and sellers who are paying attention. Here is a look at what is happening now, and at the strategies that will carry you through it.
1. Rising interest rates: challenges and opportunities
Higher interest rates have made home ownership less accessible for many buyers. According to a Canada Mortgage and Housing Corporation (CMHC) survey, 65% of mortgage borrowers were affected by the increase, and 13% postponed a property purchase.
For buyers:
- Buying opportunities: Softer demand has led some sellers to adjust their prices, which creates openings for buyers holding a solid mortgage pre-approval.
- Mortgage pre-approval: Securing a pre-approval to lock in a rate before starting the search is essential.
For sellers:
- Adjusting the price: In a more competitive market, the asking price may need to move to attract buyers.
- Showing the property well: Investing in presentation (home staging, minor renovations) can speed up the sale.
2. Falling financial markets: the effect on real estate
Swings in the financial markets can affect consumer confidence and the ability to invest in property.
For buyers:
- Diversifying investments: Real estate can serve as a refuge during stock market instability, offering tangible and potentially stable value.
- Analysing the local market: Some regions, such as Quebec City, have shown resilience, with prices up 10.4% in the second quarter of 2024.
For sellers:
- Strategic positioning: Highlighting the stability and the advantages of the property can reassure potential buyers.
- Flexibility: Being ready to negotiate and to offer incentives can make the transaction easier.
3. Rising customs tariffs: the effect on construction
Higher customs tariffs can drive up the cost of building materials, which affects the new-construction market.
For buyers:
- A preference for existing homes: With construction costs rising, buying an existing property can become more attractive.
- Costing it out: Comparing the total cost of a new build against an existing property is essential to an informed decision.
For sellers:
- A competitive edge: Existing properties can see stronger demand because new construction costs more.
- Effective marketing: Highlighting the unique features and the build quality can win buyers over.
4. Strategies for navigating a crisis
- Watching interest rates: Staying informed about Bank of Canada decisions – it cut its policy rate by 50 basis points in October 2024, with a positive effect on the real estate market.
- Consulting professionals: Working with an experienced real estate broker brings valuable insight and strategies suited to the current context.
- Assessing your needs: Determining whether buying or selling is the right decision given your personal situation and market conditions.
Conclusion
Times of crisis bring challenges, but they also bring opportunities for those who are prepared. By understanding the dynamics of the Quebec real estate market and adopting the right strategies, buyers and sellers alike can use current conditions to reach their real estate goals.
