Real estate: Dealing in a buyers’ market
Globe and Mail
The single biggest investment for most Canadians is the purchase of a home. So, home owners were understandably worried when the Canadian Real Estate Association recently reported that average Canadian resale house prices fell by 10% year-over-year in October.
Comment: Bear in mind, those are national stats and it does not mean that local values have dropped that much in the Toronto market.
On the other hand, the end of the boom would appear to be good news for prospective purchasers after six consecutive years of price increases.
It’s a buyers’ market — but are the buyers buying? Unit sales fell 27% from October, 2007. The economic downturn and a loss of consumer confidence has many Canadians putting major purchases on hold.
Don Lawby, president of Century 21 Canada, has been in the real estate business for more than 30 years and is no stranger to the ups and downs of the market. Like most in the real estate business, he describes himself as an optimist.
Be wary of averages — they are skewed by high-end real estate being taken off the market which, in turn, reduces the average resale price numbers — Mr. Lawby advises both sellers and buyers. Prices are not universally down for all types of housing, says Mr. Lawby, who has just returned to his home in Vancouver after a cross-country tour. However, he adds, the “the market is slow.”
The Canadian market is as complex as the Canadian economy, with regional variations. Real estate is a local issue, varying from neighbourhood to neighbourhood. I have seen, since the end of summer, a decline in unit transactions across the country.
In many places, it is turning into a buyers’ market. But, with very few exceptions, I have not seen any sizeable reductions in price.
The Canadian economy continues to be strong, with limited layoffs at this point and low interest rates, boding well for the real estate industry.
Currently the only part of the market that we see little to no activity in is high-end residential real estate. I am sure to some degree this relates to high-end owners also being involved in the financial crisis rolling around the world (stock market). Therefore, when we pull the prices associated with high-end markets out of real estate boards, when they report average and median price reductions and the associated percentages that go with it, much of these drops relate to the lower end of the market making up a significant larger percentage of the whole.
In many areas prices are very stable. Each market has to be looked at from the local perspective, getting accurate information from a real estate specialist as it relates to pricing activity in the specific area and type of home you are either looking at to acquire or to sell. Average price and median prices today can be very misleading.
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