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Airdrie House & Home: March and the Airdrie Real Estate Market

Some people are wondering where the opportunity lies in this market. The answer seems to be for those that are living in entry-level properties, to carry low fixed-term interest rates that can port their mortgage and move up into a more expensive home. 
HH-NatalieMay2
Airdrie realtor Natalie Berthiaume shares her tips on how to present your home if selling in the spring.

Last year we saw the real estate market go into a frenzy. Low-interest rates, coupled with comparatively low prices compared to other parts of the country meant the demand outpaced the supply. Multiple offers and sales far over the list price became the norm. Prices jumped 20 per cent and for the first part of 2022, there appeared to be no end in sight.

But there was a slowdown coming, and it came in the form of interest rate hikes. The rising of interest rates and headlines that forecasted doom across the country scared away the speculators and investors, leaving a much slower market in its wake.

It took people a while to realize the frenzy was over and that in order to sell, prices needed to be adjusted. For the latter part of 2022, negotiations were possible, but sales overall were at a slower pace.

Starting in 2023, we started to see a new trend emerging. The rising interest rates had changed buyer behaviour and the entry-level market was seeing a dramatic increase in demand. Now we're in March, and this effect has crystallized.

Here is what we are currently seeing in the local real estate market:

First, the higher interest rate means apartment-style condos and townhomes are the only affordable option for many potential buyers. The increased demand for this style of property means we are seeing these listings sell for their asking price or higher.

These sale prices, in some cases, are at levels not seen in the last decade.

Secondly, the highest interest rate has pushed some buyers into the rental market. This has created a demand for rentals, which in turn, has created a surge of investors who want to purchase these entry-level properties in order to rent them.

Finally, the higher interest rates (especially for those with variable-rate mortgages) have kept people in detached homes from opting to move up into larger, more expensive homes. This has created low inventory in the $400,000-to-$650,000 home range. The effect is that these homes are now seeing multiple offers and are selling over the asking price. 

Some people are wondering where the opportunity lies in this market. The answer seems to be for those that are living in entry-level properties, to carry low fixed-term interest rates that can port their mortgage and move up into a more expensive home. 

For example, if a couple owns a townhome and has a $200,000 mortgage on it, they can sell their townhome for a higher price than they paid and gain equity. 

Let's say they purchased it for $220,000 and they can now sell it for $320,000. They also have a mortgage at a very low rate with a $200,000 balance. That would give them $120,000 as a down payment (equity) from the sale.

They can now carry over their $200,000 mortgage with the low-interest rate to a new home. If they buy for $550,000, they can put over 20 per cent down, which leaves $430,000 to be mortgaged.

The $200,000 is ported and now they are only mortgaging $230,000 at that higher rate. It allows them to make the move they've been hoping to make and get into a larger home, while still capitalizing on their low-interest rate mortgage for the duration of the term and getting the highest return on the townhome. 

*I'll add a couple of caveats here, one being that they would need to qualify for that additional $230,000 mortgage, and two, always get advice from a qualified mortgage broker/mobile banking officer to understand the numbers you're working with. 

Another opportunity is for people who own an apartment or townhome that simply want to exit the market. If you're thinking you want to sell, call your Realtor so they can help you make a game plan.

For buyers looking to buy a condo (be it an apartment-style or a townhome), my advice is to ensure that you are reading the condo documents carefully. Better yet, hire an expert to do so to ensure that you understand what you are purchasing. Condos are run by condo corporations. If they are not being run intelligently, they can quickly become a very costly investment. 

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