By: Michael Tough Realty Group
May 2018 Market Update
Tags: MAY 2018 real estate market update
"The house next to me sold in a week; and one down the street is sitting and sitting. What is up with our market?
The time tested adage in real estate - other than "Location. Location. Location. - is "It's all about price." Ordinarily, I would agree. In a balanced market, where the buyers have a reasonable number of homes to choose from, Seller's must be ever mindful of the price of their house as it compares to other active listings. Buyers have an increasing number of online tools available to research recent selling prices, and today's buyer is incredibly astute and educated as to current market value. In a normal balanced market, value is ultimately determined by the buyer. A seemingly well valued house sells. The others - well they sit and sit!
Our current market is considerably more exaggerated than a traditional balanced market. So right now, it is not all about price. Allow me to explain. A seller's market is typically one where there is less than 4 months of available homes; a buyer's market in excess of 6 months of inventory; a balanced market about 4 - 6 months of inventory. Currently, York Region has just over 4 months of inventory; and 6 months in the Innisfil and Bradford communities of South Simcoe County. So traditional thinking would suggest we are firmly in a balanced market. A reasonable buyer and a reasonable seller should be able to come to acceptable terms through a sincere negotiation process and likely within 30 - 60 days of a house being listed.
However, market factors are weighing heavily on the minds of home buyers at this time and the motivation to purchase remains considerably low. Since April 2017, we have been in a very volatile policy-based market. Provincial Government influences have considerably weakened our market and consumer confidence. Combining this with rising rates and confusing Federal Government Mortgage rules, prices have remained unstable throughout much of the Golden Horseshoe.
So why is it that some homes sell quick and other sit idle and go stale on the market? Most important is that a home seller must accept the current reality of our house prices and have a motivation that is directly related to a competitive price when the house is listed. People often ask, "When is the best time to sell?" Our team's response is always the same - "Whenever it makes sense for you and your goals. You cannot time any market. You can only engage in the one we know right now and if your personal goals can be achieved by selling now, then sell now." A home that sells quickly in this market is one that is well presented and priced strategically based on the current competition of available homes. Price is not based on what your neighbour got 2 months ago or even last week. Prices in our market right now are entirely based upon what other homes the buyer is looking at on the same day or that week; and that same buyer determining what they believe is the best value. Realtors absolutely must be price watching the market and alert to all the competition at the time of listing and at all times during the listing tenure. As more homes come on the market, the listing Realtor and seller may need to respond to the market conditions. Or risk being that house that sits and sits and is helping every other house sell.
However, to my earlier comment that it is not all about price. My comments are not suggesting you be the lowest priced house on the street. Simply, yours must be strategically priced against the most similar homes and look better than every other house on the market in that price range. Plain and simple. Our team has had 4 bidding wars on listings this year - in a market where the buyers clearly have other homes to choose. However, we have ensured our prices have been strategic in a specific price range and we have gone to great lengths to ensure our listings are well prepared and well staged.
Similarly, we have listed homes considerably higher than any other price this year has supported, and our listings still received at or very close to the list price. It is all about the competition, strategically pricing based on that competition, and a motivated seller accepting the new reality of our market.
In my Year Ahead blog that I wrote in December, I alluded to the fact that it would take the first quarter to shake off the hangover of last year's sharp decline and government policy influences. Based on listing to sales ratios, and the decline in overall sales that we continue to see, I would suggest the hangover may be a bit worse than expected and we are likely another couple of months away from the resumption of a moderate and sustained pace of price growth.
Seeking the advice of a Real Estate professional is critical to any next step you may be considering. Our team is here to consult based on your goals and unique situation. We are here to help you make the very best decision about your biggest financial asset. Reach out and allow us the privilege to come alongside and serve you at a high level.
Remember, when the market shifts and the selling gets tough, the "TOUGH" gets selling!