Since the prices of homes have increased immensely in the last few years, there have been speculations that a market crash will soon likely follow. Homeowners undoubtedly want to benefit from the crash as much as possible, which is why many of them are thinking of selling now while prices are still high, and buying (homes of equal value) later on, when prices will be low. In “Should You Sell Your House And Avoid The Market Crash,” Mike Holman analyzes if it’s even possible and worthwhile for homeowners to do this.
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He concludes that for a home valued at $650,000 only a market drop of 25% and higher would be worthwhile, and that anything below that, would just not be worth the risk. Although this is subjective since people’s idea of what worthwhile is would differ, the point Holman is making is that the drop needs to be pretty significant to benefit from this exercise at all. There is simply no way of knowing if the market will drop enough to make it beneficial, and if it doesn’t, homeowners could end up not making a profit, and could actually end up losing a lot of money. There is also the issue of timing. It’s very unlikely that they would sell their home when its value is at its highest, and buy again, when the market is at its lowest. This could end up being beneficial and there is potential to pocket a lot of money, if the market drops low enough, and if homeowners are able to forecast the market and sell when the house is valued at its highest, and buy when it’s valued at its lowest.
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So what do the experts say about the housing market in Canada? According to “Marc Pinsonneault, a senior economist at National Bank of Canada,” there won’t be a crash per se but rather a “cooling of the market”. Pinsonneault thinks there will be a cooling because there won’t be “a sudden large drop in prices and sales” that is characteristic of a crash, but rather a slow decline in “prices and number of sales”.
[/two]The reason why Pinsonneault thinks there will be a cooling rather than a crash, is because “demand is keeping up with the supply”. The “number of homes/condos being built and those being sold are on par with historical averages,” which means that “claims of overbuilding which fuel the idea of there being a housing market crash are so far unfounded in Toronto”. If this is the case there will only be a slight drop or rather a fluctuation in the market, not making it worthwhile for sellers to sell now and buy later on, with only a slight chance of making a profit from the exercise.
https://www.moneysense.ca/property/buy/should-i-buy-a-house-now/
https://www.moneysmartsblog.com/should-you-sell-your-house-and-avoid-the-market-crash/