Mastermind for June 6th. The Bipolar Real Estate Market
Happy Wednesday. We had a great Mastermind this morning and I’ve been chomping at the bit to get this one down. Great turn out, great conversation. If you missed it you missed a great discussion on the market. Seriously, this is the kind of stuff that makes you a great agent. You simply cannot get a better (and unbiased) opinion of the market.
So, a few weeks ago I wrote a blog about how the crazy market was making us bad negotiators. Check it out here;http://realtylaboratory.com/2012/04/24/are-you-a-skilled-persuader-or-a-trusted-negotiator/ The thought was that with so many offers coming to the table, agents who were winning were just showing up with clean offers and a bigger bag of money. But from the conversation with agents today it seems like the art of negotiation is building momentum. Don’t get me wrong, we are still seeing multiple offers but there have been some interesting surprises. Agents are reporting that some good houses are not selling on offer night while others unexpectedly are. This week alone we had a bully offer and a couple of multiple offers. So,what’s up with this seemingly bipolar market? Perhaps our group can offer a little insight.
The housing market isn’t slowing down because of mortgage rates, or demand. In fact one of the biggest worries to economists, household debt, seems to be lessening. So why the build up of listings? It could be as simple as “The Spring Market” or it could be more complicated. Perhaps what we are seeing is a self correction. It might be that buyers appetite for multiple offers is waning or it might be that buyers are watching Vancouver and waiting for prices to start dropping here in Toronto. In our weekly meetings we often do a short survey with the agents on buyers and sellers. I pose simple questions like how many people are getting a listing sometime in the next month and how many good “A” type buyers are you working with. 6 months ago it was 10 to 12 buyers per new listing, today its more like 5 to 7. While not an exact science, it is a good barometer of the market. Our group also suspects that the condo market and the housing market are decoupling. Simply speaking, these two markets are acting differently. The $600k homes are selling but the $600k condos are not moving as fast. A few noteworthy condominium projects have been cancelled or postponed and that in itself may be enough to act as a pressure valve for the white-hot new construction market. Finally there is a notion that the European Debt Crisis may be having an impact on the higher end homes. The explanation is simple. Wealthy buyers are feeling the pressure of a flat stock market. That means they are taking longer to invest substantial amounts of money into new properties. Here is a recent update to this post; As of the first week of July 2012 There were 14 freehold houses in C01 for sale between $600-$700K compared to 88 condominiums. Ave sq ft of a house was 1600 square feet including basement while the average of a similar priced condo was only 950 square feet.
I don’t have a crystal ball, but I believe that things should settle down just in time for the Fall market. In the meantime what does this mean for us? It means working harder. It means talking to other agents, setting clearer expectations with our sellers, having a solid understanding of our market or neighbourhood, and being better negotiators. Above all, stay focused. Hey, why not consider starting your own Mastermind group.