Understanding Market Conditions

real-estate-market

Numerous factors affect the real estate market. There may be more buyers than sellers. There could be more sellers than buyers. Interest rates, employment statistics and pricing. The supply of resale and new homes are also considerations when selling a home. Generally speaking, there are three types of markets that affect the sale of your home. Understanding each of these can make a difference to your bottom line.

Buyers’ Market
Description: There is an abundance of homes on the market. Supply exceeds demand.
Characteristics: Many homes available for sale. Fewer buyers than homes. Homes remain on the market longer. Stable prices. Prices may also drop.
Impact: Less panic in buying. Buyers shop longer for homes. Upon negotiation, they often have more leverage.

Sellers’ Market
Description: There are more buyers than homes available.
Characteristics: Few homes on the market. Many buyers. Homes are sold quickly. Prices often rise.
Impact: Home prices are higher. Homes prices often rise. Buyers purchase quickly, and tend not to shop as much. Multiple offers are common. Sellers may prefer offers with no-conditions.

Balanced Market
Description: There are roughly the same amount of buyers, sellers and number of homes on the market. Supply equals demand.
Characteristics: Demand equals supply. Sellers accept reasonable offers. Homes sell within a reasonable time period. Prices generally remain stable.
Implications: There is less tension among buyers and sellers. There is a reasonable number of homes to choose from.

We have seen exponential growth in the Kamloops real estate market over the past five plus years. Often buyers would have little time to place an offer to purchase a property because of the sense of urgency in the market. Multiple offers was commonplace at that time. This fortunately for buyers has changed recently with the economic downturn. Buyers have time on their side and an abundance of homes to chose from. Today in the Kamloops real estate market we are seeing a strong buyers market. It will not be a buyers market forever, but it is expected that it will be this way for a while. Eventually, the market will cycle into a balanced market, which we have not seen in quite a number of years.

Selling Your Home: For Sale By Owner

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FSBOMany people don’t realize that selling a home is a complicated, time-consuming process. With numerous factors to consider such as open houses, advertising, pricing, negotiating and handling the numerous kinds of inquiries, it can be very exhausting and even worse – unfruitful. Many homeowners report the familiar grief after an open house: “I got lots of people, but most were just looking.” “They wanted it for next to nothing.”

You may be thinking, “Why would I need a Realtor to sell my home?” Let me give you just a few of the key reasons why a For Sale By Owners need Help in today’s difficult market:

1. Without working day in and day out in the real estate market it is quite unlikely that a FSBO will have complete understanding about pricing. Often a seller is forced to reduce the price and may have to accept less money for the home than the seller would have received had he or she started at the right price. When a Realtor goes to work with you, they ensure you will receive the most current market stats along with a thorough market analysis report to place your home  in a solid market position.

2. A property depreciates the longer it is on the market. Many owners fail to take advantage of this excitement by limiting the market to their immediate contacts and advertising.  Ensure your home is advertised 24 hours a day until it is sold. Realtors use a home selling system that is constantly being tested and improved to ensure your home is exposed to the largest pool of QUALIFIED buyers.

3. The two most common people who prey on FSBO’s are:

– #1. Investors / Bargain Hunters: these are people who are looking to capitalize on a FSBO’S lack of negotiating experience and market knowledge to score their next deal. Any time a buyer doesn’t buy from a store or through a sales person they expect to pay substantially less. In a sense they would expect to save the sales commissions or profits that would normally go to a sales person or store owner. Why should someone do all the work a salesperson would do and still pay the same price? For example if the seller is trying to save six percent and the buyer is trying to save six percent, now they are 12 percent apart!

– #2. People who can’t qualify to buy your home: These people will often approach FSBO’s because they have had previous financial difficulties and would want the owner to finance them. While for the right person, this could be a profitable investment, most sellers need to pull as much equity out of the property as possible to be able to move on with their next home.

4. It is important to ensure that only prospects who can qualify are introduced to your home. This eliminates the hassle of “lookers” and non-serious buyers and reduces the chance of strangers who may have activities in mind other than buying a house will come. Realtors often also have some of the best mortgage brokers in the industry working with their team who can pull the necessary strings to help finance a purchase.

5. Did you realize that any time a private seller is away from home, the home is off of the Market? It is important that someone will always be available to handle and follow up with inquiries during both peak hours and off-peak hours.

6. A seller selling privately can expect to put a minimum of 80 hours “work” into the project, without a guaranteed result. This does not account for out-of –pocket expenditures such as advertising, lawn signs, etc. Selling a home can be extremely stressful! Often FSBO’s don’t have the time available to take care of the details, from the first step of marketing to the final sale, because you have a life outside of the sale of your home.

In past markets it was very easy for a For Sale By Owner to sell their home. By all means, if you can do it on your own, go for it! Don’t wait around for a prolonged period of time and For Sale By Ownerhope for that qualified buyer to walk in your door. I have found in the past few months many FSBO’s have had a lot of inquiries about Rent to own options. This sometimes is possible and works for the seller, but not often.

For Sale By OwnerThere are a lot of sellers trying to sell their homes today, that have the advertising power and exposure behind them because they are listed on the MLS with a Realtor. The majority of buyers begin their search on the internet, including FSBO sites, unfortunately the bulk of the current listings exist on the MLS. Once buyers begin their search they often pick a Realtor to help them, they do this because Realtors are free for buyers. Buyers do not have to pay a fee to work with a Realtor and often Realtors have the most qualified buyers.

Selling your home For Sale By Owner is difficult, but can be done. Give it a try and if you get frustrated interview Realtors and find the right one for you.

The News Keeps Getting Better…

The Bank of Canada cut its key interest rate to the lowest point in history on Tuesday. Why?

“The outlook for the global economy has deteriorated since the bank’s December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity,” the bank said in its gloomiest statement yet.

As a result, the dollar plunged to the 78-cent level. It’s now expected inflation will soon be less than zero – which, of course, isn’t inflation any more. It’s deflation. Geez, was it only six months ago economists were saying that was impossible?

On Tuesday Bell said it would dump 1,500 workers, Bank of America sliced 4,000 and stock market traders drove markets hundreds of points lower as they watched the spectacle in Washington and worried about the global banking system.

On Monday came word real estate sales in Toronto have crashed by 50% this month. Last week Nortel went chips up. On the weekend the US bailed out its big banks once again. On Monday Britain did the same – after the mighty Royal Bank of Scotland announced a stunning $41-billion loss. Only a matter of time now before the UK nationalizes its banks. Then Washington.

Last week the Vancouver Sun stated that “B.C. to lose more than 42,000 jobs in ’09” and the Province wrote “Office vacancies on the rise. There will be a crisis of confidence in the big markets”

However, Royal LePage did predict that housing values will fall 3% this year but price and activity gains are anticipated in some provinces. Hopefully they are right, all the job losses, business failures and economic uncertainty will definitely affect the the market, but 3% is much easier to take than other predictions I have seen out there.

Kamloops is not immune to layoffs, as Highland Valley Copper recently announced it would lay off 70 regular employee positions and 14 full time contract positions. Highland Valley currently employs over 1,000 people. Recently Teck Cominco announced it will lay off 1,400 workers globally. The Vancouver-based miner said the move is part of a broader strategy to cut costs, and is expected to save the company about $85-million.

If these were normal times, any one of these events would freak people out. But, this is a developing crisis, so our media puts a positive spin on it or ignores it outright, as do many citizens. I meet property owners who need to sell their homes believing this is a minor blip in the real estate and global markets. Sometimes we need to look at the larger picture because ignorance is not bliss.

The media is overwhelmed with this Obama euphoria.  I am not trying to take anything away from this historic event, but to believe one man will be able to reverse the damage done to the world economy over the past decade would be presumptuous.

I hate to be the bearer of bad news, but I like to live in reality and prepare for what is coming instead of being surprised once it arrives.  I hope I am wrong, but too many facts lead me to believe otherwise.

A Sign Of The Times? Vancouver Real Estate Liquidation

A condo developer in Vancouver who built a number of condominium projects all over the Lower Mainland is liquidating 375 properties at 20%-40% off of assessed value. This recent development is definitely a sign of the times. You have to ask yourself – why are they selling these units at such a discount? Why? Because maybe they see the storm on the horizon. If you owned these units would you discount them if you expected sales prices and activity to increase?

What do you think? Any opinions out there?

Here is the article by CBC…

A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.

The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.

About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.

It is not known whether the big discounts are based on prices when the condos were completed or current market values. Onni was to hold a media event Thursday to announce details.

Onni’s marketing tool might nudge some reluctant home buyers off the fence, said Tim Silk, an assistant professor at the University of British Columbia’s business school.

“If you see the units being priced below comparable units, then you might see people jump in,” Silk said Wednesday. “But there’s still that hesitation of, ‘Have we reached bottom?’ ”

Home prices in the Vancouver real estate market dropped almost 11 per cent between December 2007 and the end of 2008, according to a special price index updated earlier this month by the Real Estate Board of Greater Vancouver.

And the number of homes sold in 2008 fell more than 35 per cent from 2007 sales of more than 38,000 homes.

Link to CBC Article.

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