MTD July 2012
Sales 371
Listings 857
Inventory 4900
July 2011
Sales 523
Listings 1375
Inventory 5094
From the stats above, sales in Victoria seem to be doing just fine. All may not be as it seems, however. The statistics from last week, July 16, reported 258 sales so far in the month meaning there were only 113 sales for the week- in other words, July started strong but has slowed. Even the number of listings is coming in slowly, at just 857 currently versus July 2011's total of 1375.
Just what exactly is happening?
Those who have read my posts before know I am not prone to "doom and gloom" reporting. I have, in fact, been criticized for an annoying positive outlook (I learned this from Googling my own name!) although strangely my assessments tend to be congruent with market trends and results. So here's my opinion about the current market:
Sellers
Don't dispair. Properties DO sell. Even though above I've said "only" 113 sales transpired in the past 7 days, that's still 16 sales each day on average. The key is that not every property sells. Just because a property is listed on the MLS system does not guarantee a sale, as is evidenced in the weak listings-to-sales ratio this entire year.
In a strong seller's market, we were accustomed to seeing 5-10 viewings per week (or more) until a sale transpired weeks later. Today, the sale still comes weeks later but traffic can be as little as 1 per week or every 10 days. A reminder that heavy traffic does not guarantee a sale.
The key to sell today is and always remains price. There is no amount of marketing, promotion, packaging or agent effort which will overcome an overpriced listing. In today's market, being anything less than sharply priced will result in a long market time and worse- an expired, unsold listing.
Also, price reductions after 30 days or so on market have little effect, as do reductions in small increments ie. $5000 steps. This is a market where a seller literally has to venture into a totally different price level in order to succeed. In other words, there's no point going from $565,000 to $559,000: it is wise to drop to the next segment which is $549,900. Your next step would be a potentially painful $525,000 so best find that sale sooner rather than later.
So, price your property correctly from the start for an expedient sale at top value and beware of Agents competing for your business by quoting high or unrealistic pricing. You really do need to be the first sale in the area, otherwise other sales at lower prices will set your maximum achievable value.
Buyers
How much cheaper can interest rates become? Many overlook the opportunities now available for the very first time. You are experiencing record low interest rates combined with high inventory + great selection = ideal buying condition.
Seize the day and go ahead with the purchase of that property which ticks most of the boxes on your list. I can't tell you how many times I've seen in the past 21 years people regret not acting on a purchase just because they thought better opportunities lay ahead.
By the way, just because inventory is high and prices softer doesn't mean sellers are compelled to take massive losses on their properties. We received an offer last week 20% below list price! Guess what: in almost every case, if a seller can't get what they need to move (i.e. paying off their mortgage and other fees), they'll simply decide to stay. Just because you made an offer doesn't mean the seller is obliged to either accept it or work with it.
There is a chance that whatever property you buy will devalue slightly over the course of time (ever heard a Real Estate Agent say that before?) but one thing is for certain: as long as you need a place to live, it makes sense being your own landlord. The longer you live in your home, the less the effects of the market will have on you. Even if values go down 5% (BTW it has not gone down more than 5.5% in any given year in 25 years- values reduced in only 5 annual periods for detached homes since 1988 ranging from 0.04%-5.47% vs 9 annual periods of double digit growth), your loss is only on paper as long as you stay in your home. PLUS- low interest rates mean less of your payment goes toward interest so your principal is being chipped away quicker than before.
Don't let pride stand in the way of your next move. I'm not suggesting you overpay for a property but rather don't waste your time seeking steals or giveaways. This is Victoria after all and there are many reasons why we remain the second highest priced Real Estate in Canada.
Buyers who need to Sell first
This is the third and often overlooked demographic in the marketplace.
Unlike your first home purchase, you are now burdened with the fact that you need to sell your home first in order to free up equity to purchase your next home.
Do yourself a favour and avoid "subject to sale" offers. You need to realize that with such a condition in place, you have no negotiation strength whatsoever and even worse- the "Time Clause" aspect means at any time the seller can sell the property to another party without your ability to defend your position. The very best you'll have is 24, 48 or 72 hours to decide if you will step away or if you have the resources to continue. And if you had those resources, why didn't you utilize them to begin with?
Always sell first for these reasons: 1. you'll know exactly how much money you have to spend, 2. you will be in a liquid position and in a strong negotiation position, 3. you will not live in fear of someone else snatching your dream home just because you couldn't act fast enough.
Always sell first for these reasons: 1. you'll know exactly how much money you have to spend, 2. you will be in a liquid position and in a strong negotiation position, 3. you will not live in fear of someone else snatching your dream home just because you couldn't act fast enough.
As mentioned above, the reality is you may need to take less for your home than expected in order to move upward in today's market. Statistically, consumers buy 50% upwards meaning those selling their $400,000 home buy a $600,000, those selling their $600 buy $900, etc. If statistically prices are down on your $400,000 home, they will be on your $600,000 purchase as well.
Summary
I have said many times in presentations, seminars and reports that people do not move because the market says so or solely because of market conditions. People move because something in their lives can be made better by a change in address. Growing family, retirement downsize, changes in family dynamic: these are the reasons why people sell and buy.
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