Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000
Jim Reid, Broker, (905) 731-2000
"MARKET OUTLOOK"
October -B - 2006
My local clients are well aware that the intensity of market competition will likely increase over the next year.
Those who regularly read my "Market Outlook" also recognize that I am very confident that GTA home prices have excellent upside potential. This is because the GTA is growing by 1 million citizens every ten years. Our population is expected to pass 6 million in 2007!
The GTA law of supply and demand tends to create a fairly solid foundation on home values.
Consequently, even though home values may not experience the large growth rates of recent years, there isn’t a great deal of downside potential as we weather this emerging global recession.However, local prices are quite susceptible to short-term local market conditions. For example, the trendy "Beaches", (I prefer the old name!), set its’ own values for a while.In Heritage Estates, Mill Pond and most of Richmond Hill, the amount and type of local competition each month will have a significant bearing on property prices.
It appears to me that realtors who know how to market properties will do much better than realtors who mostly market themselves. When I market my clients’ properties, my SOLD’s market me!My clients can look forward to great deals in this new market! I don’t telemarket – Pls. Call me!
"The New Game!"
"Buy Me!"
Almost every Buyer in Heritage Estates and the Mill Pond have made up their mind that they want to live in this area and not anywhere else.
Since 1996, with very few homes available in each price range at any one time, even homes that needed some repair work, maintenance or upgrades were marketable.
But in a "Buyer’s Market", where there are more listings than buyers, homes not in "tip-top" shape don’t get sold until their price is reduced well below fair market value.So, in the "new game", Buyers aren’t going to buy your property unless they feel it is the best looking, best floor-plan and best value in their affordable price range. This means that your home has to look almost new!For example, a 32002 home in "tip-top" shape may sell for $620,000. Another 32002 home may need: new furnace & AC, new interior & exterior painting, new shingles, new appliances, new carpeting, ie. about $30k to compete with the other home.
However, the Buyer doesn’t just deduct the $30,000 and offer $590,000, ("fair market value"?). These Buyers would need a $150,000 down payment for a low-interest mortgage. This house will require them to have $180,000 in their bank accounts vs. $155,000, (and no hassles), for the $620,000 property.Since they are usually using their equity on the home they are selling to pay for their down payment on your home, you are forcing them to pay this $30k out of their limited savings.
Also, the Buyer knows that on the older homes they will need to come up with at least $25,000 for personal upgrades, updates and personal tastes. In their minds, they will have to pay this on either home. On the higher priced property, they can at least choose to defer these personal preferences for a few years.
The fact is that the Vendor has the $30,000 hidden in their inflated equity in the property. Thus, the Vendor is usually in a much better financial position to take care of the $30,000 in expenditures to improve the marketability/ attractiveness of their property.
Also, in a "Buyer’s Market", that typically sees falling prices, mortgage lenders put pressure on appraisers to keep their valuations low in order to force higher down payments from Buyers.This is why a Buyer needs an abnormal financial incentive and will only offer $550-$560k for a property that needs immediate work. The Vendor is eventually forced to sell at $30-$40k below market value! (I can provide several specific examples of such occurrences in our local market this year.)
Thus, a key to getting top price/ value is how well you prepare your property for the market.
Unfortunately, few owners are qualified to objectively assess the condition of their property vis-à-vis to-day’s Buyers. Often these Buyers are 20 or 30 years younger.They come from a different generation. Your house is serving your needs – not theirs! They want a neutral palette with contemporary fixtures to create their own environment. They really don’t want to have to deal with your 5/10/15/20 year old environment.In fact, only a few local properties need $30k to make them attractive and competitive. So, be sure to contact Jim Reid to learn how to get the best return on your home investment!
Office: (905) 731-2000