At this time of year,
one of my jobs is to help selling clients by forecasting the real estate
market’s ‘prime time’. For
instance, is the spring real estate market on the upswing or downswing? At the
moment, it would appear neither of these ‘swings’ are in vogue.
Let me give you some local
stats and then explain what that may mean to you.
The average sale
price in our local real estate board was $216K
in 2011 and again in 2012. No
increase in prices. However, there
were 26% less sales in December of
2012 vs December 2011 and 14% less
homes on the market in December 2012 vs 2011.
These statistics
would seem to indicate that we are on a similar path to other markets in Canada
as outlined by the Canadian Real Estate Association. In other words, prices are stable now but sales of units are
down and some sellers are taking their homes off the market because they can’t get
the prices they would like in this stable market.
Sellers should know
that, at this time of year, the comparable sales that are used to determine the
value of a home are usually based on sales from the previous year. This is due to the fact that,
typically, there are not many sales this early in the year.
In other words, to
establish value for your property we look at similar home sales and extrapolate
the differences between your home and the comparable homes that have already
sold. But we also need to look at
‘when’ the comparable sold and what the market has done between then and now. For example, if a home similar to yours
sold last August and if there were no other major differences between that home
and yours, we could use that sale as an indicator of what your home may be
worth today … without adjusting for any price changes in the market due to time
i.e., the market has not gone up or down in value since August.
Therefore, if your
home has been on the market for two months or more without any price changes
and the market is stable (as it appears to be), then the market is suggesting
that the price is too high. Some
sellers contend that there will be a buyer in the busier spring market but, of
course, the spring market will also bring more competition as other homes are
listed for sale.
Finally, let me say that there is a ‘belief’ amongst some of
my colleagues that there will be a downturn in pricing later this year due to
the tighter mortgage restrictions imposed by the federal government. Given that fewer units being sold (as
per the stats above) is usually a precursor to a reduction in prices, I would
have to agree that lower average sale prices are feasible.
As the most successful Royal LePage Team from Port Hope to
Brockville in 2012, we are on track for the same number of homes sold again
this year. Not everyone can say
that in 2013! We hope our insight
and business approach to the Real Estate profession will
assist you in your real estate decisions going forward.
David Weir
