Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000
Jim Reid, Broker, (905) 731-2000
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INSIDE THIS ISSUE: |
MARKET FACTS: |
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1. DOWNSIZING POPULAR 2. HOME INSPECTIONS - 1 3. MARKET REPORT 4. ECONOMIC REPORT |
1. GTA UNITS SALES DROP 45% IN DECEMBER. 2. GTA AVG. PRICE RISES ONLY $3K ABOVE 2007 PRICE. |
1. DOWNSIZING POPULAR
During the past ten years most buyers wanted to upgrade the size and quality of their homes and neighborhoods. Now there is a strong focus towards downsizing to smaller homes with lower costs and lower taxes.
People downsize to cut their overheads. They don't downsize to cut their standard of living. Thus, maintenance, updates, upgrades and good neighborhoods are still very important to downsizing purchasers.
Maintenance is extremely important to these buyers. They know that if they keep looking, they will find homes in excellent condition with recent roofing, newer furnace and air conditioner, new or clad windows, newer carpeting. Also, recently shoveled & salted walks & driveways give an impression that the house is likely well maintained.
Updated homes positively stand out in a local market area. "Dated" homes negatively stand out. Buyers assume that dated homes will cost much more than they can afford.
Rooms unpainted in 10 years, or in strong personal taste colours, flash signals of cost and effort at buyers. It is uncommon for the younger generation buyers, and the elderly down-sizers, to be willing to sacrifice time, effort or money to fix up the home they buy. Inexpensive updates: room colours, light fixtures, sinks and taps, etc. will give a home a very strong competitive advantage in the current real estate market.
Upgrades are almost essential to attract the down-sizers. If the wives are moving into smaller premises, they want the house to be contemporary and convenient. A few "luxury" appointments can make a positive lasting impression. Granite counters, new sinks, quality fixtures, new front doorway, etc. will give buyers an impression that they don't have to spend extra money to make the house impressive for their parents, family members or social circle.
Neighborhood characteristics are extremely important to buyers. The GTA comprises many ethno-centric neighborhoods where 60% or more of the residents are from one cultural heritage. There are likely only a dozen areas that are truly fully integrated with no dominant cultures. Thus, the statements of your cultural heritage inside or outside your home could have a positive or negative affect on local buyers. Many buyers check local schoolyards and playgrounds before they choose their neighborhood.
Call Jim to help properly prepare your property for likely Buyers.
2. HOME INSPECTIONS - 1
Over 90% of homes sold will undergo a "professional" home inspection. Inspections may save both sides from a court case, so these detailed inspections tend to benefit both parties.
In a few situations, it can be helpful for the Vendor to have a Home Inspection done before the property is put on the market.
If there is a high likelihood of several immediate Offers, there should be a recent Home Inspection Report available. Potential purchasers are extremely nervous about making an Offer without a home inspection clause to protect them. However, if they have seen an inspection report then they aren't as likely to drop out of any bidding situation.
Most multiple Offer situations require "clean" Offers with no conditions that allow the Buyer to back out of the deal. Thus, the Vendor has a better chance of attracting more bids, and thus a higher selling price, by having a professional inspection done prior to placing their property on the market, (cost of a professional home inspection - $400?).
Another reason for a Vendor to purchase a Home Inspection before marketing their property is to determine its' condition.
A Home Inspector can discover and estimate the costs of any repairs, maintenance or safety issues with the property. If these aren't already taken care of before a deal is made, the deal may fall apart after the Buyer's Home Inspection. Deals that fall apart due to discovered deficiencies could stigmatize a property.
Vendors and Buyers should understand that most home inspections usually identify up to ten items needing attention at some point. But the main benefit of most inspections is to educate the parties on the home's operation and maintenance requirements. A good inspector can save the homeowners $thousands later on.
Jim can recommend several professional home inspectors.
3. MARKET REPORT
GTA unit sales registered a 45% drop in December vs. December 2007, and a 20% overall decline in 2008.
Similarly, the December average price dropped 9.3% since the prices peaked in April 2008. But, the 2008 average price actually rose $3,111 to $379,347 compared to the GTA average selling price for 2007.
Heritage Estates, in Richmond Hill, saw unit sales plummet 45% to only 16 properties in 2008 vs. the 29 sales in 2007. Prices held on with the median price at $655k, whilst the average selling price skewed upwards 9.1% due to sales of some extra large models in 2008.
The weakening market led to an increase from 9 weeks to 11 weeks to sell these 16 properties. There were 48 MLS listing expiries, suspensions or cancellations in 2008 in Heritage Estates - many expectations failed.
Also, 56% of the properties listed and sold made price reductions before they generated an accepted offer. The average discount from original list price was an area record $68k, ie. 8.7% below original asking prices.
Spring 2009 sales may pick up due to low unit sales in the last half of 2008. Most Vendors have accepted that prices are declining, but Buyers may have to negotiate their discounts this Spring.
Most economic pundits are hoping for some strength by the Fall of 2009, but I'm not betting on it. I believe that this Spring will be the best real estate market for the foreseeable future.
4. ECONOMIC REPORT
Amidst reports from our Finance Ministers of cheap government mega-loans to Banks and automakers, consumers are patiently waiting like starving puppies for some scraps to be thrown to us. But I believe we will have to nip their ankles before they will notice us.
The financial community created the present global crises by devising new schemes to profit from the growing prosperity of consumers. These leveraging schemes undermined their traditional bases of wealth and financial stability.
But since the real source of economic growth and development is working people and families, the solution to this economic calamity lies with the financial status of consumers.
The financial, industrial and service sectors all survive through consumer consumption. Increasing the loans, (and cutting taxes), to these sectors will not strengthen our economy. More debt only weakens them further.
Thus, these sectors can only survive if we have healthy family and consumer balance sheets.
Having bankrupted over 350,000 Canadian businesses during the past 50 years, the financial sector only takes care of itself. Politicians can not realistically expect them to do anything in the financial interests of consumers and the business sectors that doesn't pad their own wallets.
Clearly, the route to economic recovery is through the consumer. The government must adopt policies that increase take home incomes and reduce consumer debts. Regulations must limit credit card interest rates to 5% over prime, to help consumers pay down credit cards, lines of credit and mortgages. They must control prices of household essentials and enforce laws against price gouging that is taking place in non-competitive markets.
Current government policies are equivalent to pushing on a rope. Instead we need to pull the consumer to their feet. Perhaps we must regulate that politicians must take weekly injections of testosterone and estrogen to give them courage and sensitivity to help the powerless consumers?