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July 2005
Going
round in circles 
I'm seldom stuck for words -- as those of my readers
who've met me (and those who read my newsletters from start to finish)
undoubtedly know! -- but this past month has often seen me running out
of time. In fact, things have tended to run me rather than the reverse.
No complaints about being so busy, needless to say, but before July
gets away from me altogether, let me make a few observations about the
current state of the (local) market.
Before the
ink is dry
I'll still argue that it isn't a
Seller's Market. Prices aren't particularly going up by leaps and
bounds. Bidding wars are more an exception than a rule. A
difference between asking and selling prices continues to exist.
Indeed, there's no good reason for thinking that buyers can no longer
find value for their money.
However, listings have certainly been selling very quickly of late
hereabouts. On more than one occasion recently, I've found myself
chasing them. In fact, by the time they appear in http://www.mls.ca (CREA's publicly available
search database), not to mention the latest MLS book (which is about
two weeks behind the actual listing dates), a good third of places have
already been sold. Even in the board's MLS system (which isn't
publicly available, but is no more than three days out of date ), it isn't
safe to assume that an Active listing is still available. All
told, in planning a tour of showings, I've become resigned to learning that
some of the listings got sold only the day before.
Good news for sellers, of course, and enough to gladden the hearts
of listing agents.
Overcoming
the odds
Even so, despite the increasing chance
of disappointments, the "one right house" isn't likely to be unobtainable.
Choices remain in most of the market -- and, where they don't, they've
probably been few and far between in the past.
The very fact that a well priced listing isn't going to last too long
these days lends encouragement to both listing agents and could-be sellers
to put additional properties on the market. To a degree, the situation
may also result in higher asking prices, although there's little strong
evidence of it in most property classifications. A quick sale is
more likely than it was a few months ago, but few buyers are showing a
willingness to pay significantly higher amounts. Whether there's
a buyer agent involved or not, the public seems to have largely become
aware that there's room to negotiate in the great majority of cases.
Or, if you wish, people still love a bargain and aren't about to give up
on the idea.
Nevertheless, the recent pace of the market does reinforce my opinion
that there's sense in Being Prepared -- which was the subject of my
February 2004
newsletter.
It is good advice to get something in the way of mortgage
pre-approval before you start looking for something to buy. It's
also helpful if you can drop everything to take a quick look and then
take a decision without any undue delay. Or, if I can borrow
from yet another old saying: the race is certainly going to the swift
these days.
'Twas
ever thus
It's interesting, isn't it, that
I've just referred to some of my thoughts from almost a year and
half ago? It kind of suggests that nothing ever changes in the real
estate business, doesn't it?
And in some respects this is, in fact, the case. There are recognizable
patterns when it comes to selling and buying houses, and they don't really
differ from year to year.
At first blush, it would seem that the market is governed by the Law
of Supply and Demand: i.e., prices go up when things are
in short supply and come down when there's an overabundance available or
demand is largely absent.
However, real estate tends to move rather slowly
as far as ups and downs in prices are concerned. It takes a dramatic
shift in economic conditions to bring about any sudden surge or drop --
with examples being a major plant shutdown and significant job losses,
or a determined political move to bring inflation to a halt (as in the
mid 1990s and what's been called the Mulroney Error).
Instead, the variations are more by way of the kind of house that's
popular and the price range that numerous people have elected for -- in
other words, the controlling factor is much more a matter of Who's Offering
What and Who's Looking For It.
Thus, sometimes a house can sit and sit and sit with no sign of showings,
let alone offers. Or things can get seen and sold so quickly it
seems unnecesary to even add them to the MLS system.
In the first case, the cause can be an unrealistic asking price, but
it can also reflect the fact that almost no one has any interest in its
style, condition, location, and price range. The answer then (from
the seller's point of view, anyway) -- apart from constantly reducing the
asking price until people do begin to show interest -- is patience, especially
if the value isn't all that open to question.
In the second case -- and the one that's applied during the past couple
of months or so in the Niagara Region -- demand is undeniably in the
ascendancy, at least in terms of a range of property types, locations,
and price points. This may lead to competing offers and higher
prices for the next round of listings, but it's more likely to result
in sales "before the ink is dry" than a whole host of price increases --
with the answer then (from the buyer's viewpoint, that is) being my forementioned
Being Prepared
idea.
Dealing with
it all
Timing does become critical when
the market is moving as rapidly as it has been doing, but there's also
wisdom in staying calm. The pace may continue, but it can just
as likely come suddenly to a halt. There's one other known pattern
to real estate and that's that no one can confidently claim to either
understand why things are as they are or predict the directions they'll
take in the foreseeable future. The only absolute certainty is that people
will go on buying and selling houses the way they've been doing for countless
years.
The reason for the current rush of activity may lie in fears of higher
interest rates, even though several authorities say there's no great likelihood
of them -- but it's also possible that the good weather has simply encouraged
people to get out and look at houses for sale!
All that really matters is that there's a time for someone to sell
and a time for someone to buy, and on some occasions the two times coinicide
and on other occasions they don't (!).
But what's also important -- as I see
it, anyway -- is that buyers look for the most house they can find for
the money -- which, ahem, is where I come in.
But, if my clients need to move quickly, it equally behoves me to
take a less than leisurely approach to the market. I have to expect
surprises and plan against them. I have to get going and keep on
going on. I mustn't give up. And if it has me going round
in circles on occasions, so be it, although I must also find my way past
the curves the market throws at my clients and me.
It does at least make
for an interesting life.
Duncan Pollock, Real Estate Broker,
427 Gate Street, Niagara-on-the-Lake,
Ontario, Canada L0S 1J0
Tel: 905-468-3154 Fax: 905-468-3812
Cellular: 905-704-9037
email: dsp.pru@sympatico.ca
website:
http://www.duncanpollock.com
PS. One
of my web pages provides a list of the other newsletters I've sent
out. If you choose to go to it, you can click on any title to bring
up its full text.
PPS. I've recently been invited and encouraged to create a second
website, one that deals with my approach to the industrial, commercial,
and investment real estate market. You can reach it, if you're so
inclined, at http://www.iciniagara.com.
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