Summer Doldrums

July 2006

Summer doldrums

Worried faces photo. Original image at http://www.post-gazette.com/pg/images/200806/20080614rrinsurance_1_500.jpg

What happened?
It's more the case in the US than in Canada, but there are some mutterings currently abroad about a market softening. After a few years of having their listings sell before the ink was dry, many agents are now complaining that they're having to exercise some patience, not to mention persistence, in getting places sold. With the arrival of the good weather the flowers might have burst into bloom, but quite a few real estate people have lately been wondering "Where have all the buyers gone?"
Personally, I have no cause to be concerned. For whatever reason, I'm being kept nicely busy and I'm not altogether sure that I could handle a great deal more than is presently continuing to come my way.
Even so, I'll admit that it's been less harassing of late to set up a tour of showings. For quite some time, I'd find that half a "wish list" had already been sold when a client was ready to take a look at the places we'd identified. On more than one occasion, I actually ended up chasing places that had been listed only a day or two previously so that we'd have something to see.
It still does happen, of course, but for at least the past couple of months I've usually been able to relax and decide that listings found in an MLS search or seen in various ads or noticed while driving around a particular locale are going to be still available.
At the same time, although we've been fortunate enough to avoid being hammered by bidding wars here in Niagara, there's certainly been some need to move quickly when something turned up on the market. Not now, however, or not to the same extent anyway.

Is the bubble bursting?
Perhaps not too surprisingly, some armchair experts have taken whatever softening does exist as clear evidence that an overheated market is about to collapse. For some time they've been saying that this was going to happen and maybe they can be forgiven for thinking that this is indeed what we're seeing -- or that at least we're on the verge of being witness to it.
Less pessimistic views exist, however, and one was contained in a report put together by Don Lawby, President of Century 21 Canada, at the start of this month. Although he (well, sort of) acknowledged something of a downturn in sales activity, he pointed out that it was probably all to the good as far as buyers were concerned. It offered them some breathing room in looking for their dream home. There's less competition, a reduction in bidding wars, and the existence of sellers with a more relaxed reaction to offers that aren't as close to the asking prices as, back in the spring, they were confident were bound to be met or even exceeded.
In addition, rather than bewailing the possibility of a more difficult time for sellers, the Century 21 report reminded agents that the summer months are traditionally quieter. People are busy with vacations or preoccupied with backyard BBQs. By extension, they also have the kids to deal with and, as many a parent will confirm, it's too easy to be distracted by what they're doing (or not!) when you're trying to look at houses and decide which one to buy.
All told, Century 21's Canadian president saw no sign of market weakness. He expressed confidence in our strong national economy and had no sense of any sales crisis in his survey of the country from one end to the other.
Thus, the bubble may have seen a lessening of its internal pressure of late, but it's still skin and air tight. The doomsayers aren't likely to see their fears realized for some time yet -- if at all in the foreseeable future.

Is it a turnaround?
What might seem possible is that there's a shift from a Seller's market to a Buyer's one.
Certainly, sellers have had much of their own way in the likes of the Toronto market for at least the last two years. By many recent accounts, however, things have started to somewhat settle down in that part of the world. In our own neck of the woods, too, listings were selling more quickly a couple of months ago than they've been doing since the middle of May. You have only to drive by lawn signs hereabouts that still don't have SOLD stickers on them yet to know the truth of it.
However, the question of whether we're seeing a change of focus is begged by at least my personal hesitation to apply a label to any market. As I see things, each and every listing is ruled by what the seller thinks a property is worth and never mind what a buyer might consider paying for it. The reverse also applies. Thus, prices are determined more by what each side of the bargaining table deems to be the value rather than by what people choose to call the market itself.
It's a nitpicking point, I will admit, but the real truth, to my mind anyway, is that a property is worth neither one red cent more nor -- if I may call upon an old Englishism -- one farthing less than a seller and buyer are willing to agree upon. Sure, comparative market analyses help and the conflct (and I suppose it really is a conflict) between what listing agents and buyer agents think should happen plays its part, but sometime properties sell and sometimes they don't and the governing factor is timing as much as anything. It's a case of who's looking for what and the range and number of choices -- assuming they exist at all -- that invariably decides the outcome.

So it's just a matter of numbers, isn't it?
You betcha!
Selling was ever thus and will forever be so.
Worrying about where the next sale is coming from, let alone fretting about whether it's going to come at all, takes salespeople nowhere.
Many (many!) years ago, I had a try at the life insurance business (and not with any great success, I have to confess). But of all the advice I received as to how to do well in that line of endeavour, the best came from a Superintendent of Agencies. "To become a member of the Million Dollar Round Table," he said, "all you have to do is three things:

One: see the people
Two: see the people
Three: see the people."

It's a pearl of wisdom I've never forgotten.
And whether the bubble is starting to burst or not is of no consequence. Nor does any possible change in the nature of the market make any difference.
Real estate will go on going on as long as it keeps looking for -- and finding -- sellers and buyers. Summers will come and summers will go, but houses will continue to get listed and they'll keep on getting sold.
Trying to determine the cause of fluctuations in the market place is merely an exercise in speculation. At most, ha, ha, it provides an excuse for me to compose another of my newsletters!