It's perhaps hard to say
what's to become of us these coming twelve months -- and harder still to
predict exactly where we'll be as the year 2005 ends.
However, I do think some forecasts can be fairly safely made, even if others
are subject to anybody's guess.
In any case, I'm willing to share a number of thoughts that have occurred to
me these past couple of weeks.
So then ....
2005 seems likely to continue somewhat in favour of its sellers, much as the past twelve months have done. It will probably be unkind to buyers who prefer to take their time -- even though there's wisdom in making haste slowly -- but there will again be fewer listings than there used to be and, if priced right, they'll have a way of going quickly. Thus, there's sense in being forearmed if you're thinking of buying. It will pay you to check out your ability to get a mortgage ahead of time, and you'll be better off if you're able to take a quick look at new listings and reach a quick decision about them. Although there's always room for negotiation -- or at least there ought to be -- it may not be what you'll hope. Asking prices -- which in theory are only that -- have been tending to get met (or fairly close to it) of late and many sellers aren't going to reduce them all that readily.
Nevertheless, galloping price increases are no more than a remote possibility, despite excited media reports of them happening. Today's buyers aren't inclined to to pay over the odds, nor are tomorrow's purchasers likely to do so. Indeed, the bubbles that exist in such places as Toronto may burst, especially in view of the forecasts that the media is also fond of reporting.
A predictable outcome
My
own experience in 2004 gave me no reason to question a view that you can
-- and indeed should -- buy carefully. The objective of any seller
(and thus the listing agent) is to get the place sold and, despite all high
hopes otherwise, an offer that reflects a realistic opinion of the value
won't be turned down too lightly. The key to this is a supporting rationale.
Simply coming up with a figure isn't enough. You need one that's backed
by a Comparative Market Analysis, which sets out what the current competition
is and what similar properties have (and have not) recently sold
for. Emotion does play its part in both buying and selling properties,
but logic makes the basis of an offer stronger and it becomes much more difficult
to reject.
For good measure, though, the C.M.A. idea also makes it more difficult
for you to pay a higher figure than the market implies you should.
It won't stop you from buying what you want, of course, but it will encourage
you to get the proper value for your money.
And the coming year will, I'm quite sure, see this principle increasingly
prevail. The growing public awareness of the availability of Buyer Agents
(who'll look after their clients' best interests, in sharp contrast
to what the sellers want to happen) cannot fail to put pressure on listing
agents and people who want to get as much money as they can for properties
and show no great interest in pricing them fairly and never mind realistically.
New
home prices
Something
of an exception to my belief in a stable market may surface in the
way of accelerating prices for new homes. Builders are being faced
not only with rising material and labour costs, but also with the trickle
down effects of federal and provincial governments budget cutbacks.
One way politicians have been able to "solve" their deficits has been to
download programs onto municipalities, who must then find some way of paying
for newly imposed responsibilities. The answer can be a rise
in local taxes, except that the total taxation load simply becomes redistributed
rather than ending up one red cent lower. An alternative is to raise
development charges, building fee permits, and other processing costs
that can be demanded from builders -- who then, like as not, will have to
recover them from people who buy the new homes.
I'm not alone in seeing some futility in this whole exercise, but, as the
saying goes: someone's gotta do it -- even if it means picking
up the tab because no one else is showing a willingness to do so!
To some degree, then, the prices of new homes could go up and, in keeping
with a fairly well recognized side effect, this could lead to a rise in resale
prices.
However, the pattern isn't, to my mind, going to be overly pronounced,
if only because builders are very market driven and won't price themselves
out of it just to keep their profits up.
It is, though, a factor that deserves watching.
Political
wish lists
Whether
or not the new housing market will become a hapless victim of a bureaucratic
bright idea, the entire Niagara Region stands a good chance of being significantly
transformed by two planks in the political platform that have been recently
retrodden by some proponents.
One is a plan to limit what many people consider the scourge of urban sprawl
and, most particularly, the fear of losing any more of our tender fruit lands.
The other is a belief that, ahem, "You take the low road (the QEW) and
I'll take the high road (the Mid Peninsula Highway) and I'll reach the Peace
Bridge before you."
There are strong opinions both for and against either proposal, and neither
of them is likely to see a quick, let alone easy, resolution. In that
the wheels of government grind slowly, restrictions on additional subdivisions
will come slowly, if at all. Equally, building a new billion dollar
thruway is undoubtedly going to get bogged down in traffic through the halls
of power involved in approving it, even if they finally do give it the green
light.
Nonetheless, the potential impact of the two ideas is probably destined
to do some hovering in the background throughout this year.
A positive outlook
The argument for buying a house nowadays rests on the ability
to eventually stop paying rent, rather than being able to make a quick profit
because values are going up in rapid short order.
At the same time, there are no signs of them going down any time
soon.
In Niagara, we're fortunate to have a steadily improving economic and employment
base. We did suffer a downturn a decade or so ago, and there are still
areas that have yet to make much of a recovery. Overall, however, we've
been steadily moving forward for the past several years. 2004 was no
exception and 2005 can be viewed with optimism.
It all makes for stability, free from the volatility that can create havoc
in the housing market.
Things do change and it makes the real estate business an interesting
one. Nevertheless, I don't see any cause for pessimism in the months
ahead of us.
In fact, I think the path in front of us can be described by a phrase I
often use as the subject line in my e-messages to people: Onwards and
Upwards!
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