Real Estate Information Archive

No matter what the headlines and news feeds say, as Realtors we always have to maintain a global, national and local understanding of what the numbers say. Recently I've been looking at Condo Townhomes in Whitby between the same month, September, of 2008 vs 2006 and they're really quite interesting. The reason I'm looking at 2006 instead of 2007 is that '07 was an abnormal year in sales volume so 2006 is more typical in terms of volumes and price.

Here's what the numbers say between the two months of September 2006 and 2008 for Condominium Townhomes in Whiby:

• Prices increased 13.39%
• Inventory increased 32%
• Number of Sales to number of Active Listings decreased 20%
• Total Sales Volume decreased 35%

The chart below shows prices in 2006. E15 represents the Town of Whitby

The chart below represents prices for the same period, September 2008. E15 Represents Whitby.

 The price increase is interesting because everyone is saying prices are decreasing and in general, they are up and down. However, for this particular product in this particular town there has been no pull-back in price. See how local/yocal it gets?

The real story is in the rest of the numbers. Higher inventory, less homes selling in relation to the amount of inventory and total sales volume down dramatically. This would lead you to think that prices will (or should) drop but not necessarily. It always boils down to what the seller is willing to accept and what the buyer is willing to pay.

Unlike many Sellers in the U.S., most Canadian sellers are not selling out of duress. Home prices experienced gradual yearly increases of approximately 6% per year, not 30 or 40% like some areas of the hard hit U.S. As the politicians and bankers have been saying and for once, it's true... there are fundamental differences between the Canadian and U.S. markets.

I prefer to look at year-to-date numbers as opposed to a single month since a monthly snapshot can be quite skewed. Overall year to date price comparisons of all homes in Whitby in 2006 to 2008 shows a 6% increase in prices overall. This percentage would be the better one to use if pricing a home, especially considering the other negative numbers (i.e. sales volume, inventory etc.) quoted above.

For all of you sitting on the sidelines or currently renting, do you still think it's worth waiting to purchase? 13.3% increase over two years is pretty good. Not that you would realize that gain if you sold now but real estate is not a two year profit vehicle unless it's a booming market. If you buy now, by the time the market starts to pick up, say in two or three years, you'll be so much further ahead than if you were to continue renting.

Feel free to add your 2 cents worth...that helps the discussion. 

One thing I love about real estate is that everyone is absolutely interested in what the market is doing, both when it's up and/or down. I appreciate the fact housing stats are of such interest. Often, however, the stats and media clips don't tell the whole story and you can often get conflicting opinions...ask 10 people and get 10 different answers!

Are sales down so far this year? Yes! But...2007 was a record breaking year and we would be hard put to maintain that pace, so I find the short media clips often don't express the full perspective.

In our 905 Region, sales in May were down by 9% but up 4% from 2006! That's not exactly a market crash. Also important to note, the average price was up 7% from the same time-frame in May, 2007.

Some areas actually experienced an increase in activity, driven by supply and demand. And yes, we have had a couple multiple offer situations recently, even in the higher end homes. We do have increased inventory...up 11% compared to a year ago. From my perspective, this is a good thing. It results in more choice for home buyers and has a postivive effect on the quality of available listings. In this balanced market, home-sellers have to be very concious of their asking price. The appraisal skill sets of the Realtor are extremely important to the potential Seller.

And one last statistic...my team had a 46% increase in booked business as of the end of the first quarter this year over the same period last year. We thank you all!

POWER OF SALE:

Most consumers think "Power of Sale" means a cheap sale, under market value. Real Estate agents use the term to attract business to their web sites, offering extensive lists of power of sale properties and the buyer's eyes light up with quick, get rich visions.

The fact is, the Bank Act in Canada mandates the Banks must get "fair market value" for any homes that are repossessed. They cannot simply sell the house for what is owing on it. With most power of sale properties, there is very little equity to begin with, the result of 100% to 105% financing in many cases.

In addition, these homes are often in need of repair, which adds to the purchase price. Typically, the bank lists the home through a real estate agent at market value. The home will sit for 30 to 50 days before the first price reduction. This reduction usually causes some activity and the home may sell. If not, it sits for another month at least before the next reduction. By following this strategy, the Bank ensures that it cannot be held liable for failing to try and get the mortgagor fair market value for the home. It's a bit of a dance.

Even if you buy the home after the 1st or 2nd price reduction, the property usually needs repairs. This would bring your investment back up to "market value"...hardly a "deal" if you plan to re-sell it and pay real estate commissions and legal fees.

Don't forget, when looking for deals on the multiple listing service you are actually searching the retail market for good buys. This is much easier said than done and is not the best way to find bargains. However, I don't think a real estate agent would ever tell you that! We get a lot of "leads" from folks looking for these type of purchases.

To be fair, you can occasionally find a power of sale property that makes sense from a financial perspective, but it's not as easy as you may think.

I'd love to hear your comments on this topic.