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September 17, 2008
2008 HALIFAX REGION HOME SALES CONTINUE TO SLOW
Halifax Dartmouth MLS® home sales continue to slowly slide as Classic Realty has forecasted since late 2007. Our market is down 8.3% this year versus the same months in 2007 (the best MLS® year on record). While our local market is still "healthy" compared to many other areas of the country, we do have an obligation to report to you on the market conditions that are going to affect your success as a Buyer or Seller in the weeks and months ahead.
KEY BUYER'S MARKET TRENDS TO WATCH
We continue to see a number of specific signals that are shifting the Buy - Sell advantage from the Seller toward the Buyer. We are definitely in a "Buyer's Market":
- We witness the continuing slide in the number of homes sold YTD vs. 2007 (432 units or 7.7% less than last year). Only July 2008 has outperformed any month of 2007 so far.
- Halifax Dartmouth home sales dropped 11.9% in August compared to those of one year ago.
- There were larger MLS® home listing inventories at the end of each month than last year; indicating more choice for Buyers and more competition for Sellers.
- An increase in the number of MLS® sales and new construction in excess of $250,000 has helped drive up total MLS® price averages. 1,612 units have sold YTD, compared to 1,415 in the same period of 2007, a growth of 12.2%, while prices stayed flat.
- Homes under $250,000 are down more than 600 units this year and show flat growth in average sale price vs. 2007. For 3,575 homes sold YTD, we see an average price increase of only $2,867 compared to the 4,204 homes sold in 2007. It is importnat to understand that inn some districts and price ranges Sale Prices are dropping!
- When combined the sub $250K and above $250K markets actually show a decrease in units and the erasing of any average price gains made last year.
WHAT ARE THE IMPLICATIONS FOR BUYERS & SELLERS?
- Be aware of market conditions - gas is going up, money markets are in turmoil and the cost of living is up; understand that the excessive "Bad News" reporting by the US media is not really helping Canadians to understand their much healthier housing markets.
- While the USA market is in bad shape, our Canadian market is fundamentally sound and those who understand it and are prepared will prosper.
- Buyers may perceive that there is a shortage of "affordable housing" in some price ranges; notably lower dollar brackets and starter homes.
- Renting may grow in the face of this trend and with the end of "zero money down" mortgages coming on October 15th the number of "first time" buyers may also decrease.
- It may be wise for Buyers to consider a "Buy & Hold" strategy versus the "Fix & Flip" approach common the last five years. High speculative profits and rapid gains are going to dry up; so be prudent!
- · Buyers should start buying below the "top" of their pre-approved price ranges and avoid "eating hamburgers" because they have to spend the "steak money" to fill the gas tank.
- Opportunities will grow for Investors, particularly longer term "Buy & Hold" and income options.
- Yearly double digit price increases are no longer a reality for the Seller. When one has to down-size or to move across the country they must be more aware of competition in their neighbourhood and price range; then price their home to "sell aggressively and sell first".
- Home value is only determined by what motivated Buyers are prepared to spend at any moment in time in a particular market for a particular home. Understand this and accept this, then plan accordingly.
- Good news - the Bank of Canada prime rate remained unchanged this month, ensuring the continued availability of affordable mortgage money for qualified home buyers.
HOW DO I SET MY HOME SALE PRICE? BE PREPARED!
One has to be very well prepared in order to generate a home sale profit. That's right we said profit - a reasonable, honest profit! If you have owned your home for more than a two or three years you can still realize an "honest profit" based on of the growth of your home's market equity and any improvements that you have made. Clearly one has to manage their expectations in order to maximize the return they receive.
They must avoid confusing a "reasonable profit" with the expectation that the double digit price gains of recent years will continue. These kinds of gain may not happen again for a long while and certainly not in the current market cycle. Grounded, realistic Vendors who work with knowledgeable, well-trained and well-prepared REALTORS® will however fare very well.
WHAT DOES THIS ALL MEAN TO ME?
Our regional housing market should continue to perform well. However motivated Sellers and Buyers must heed the market indicators in order to have success. Successful, profitable home sales will occur for those who respect these changes and choose to work with a good, professional REALTOR®. Please remember:
Only three things sell a home - Good Preparation, the Right Price and Good Marketing.
- Every neighbourhood and price bracket has competition - be aware of your competition and be ready, then price aggressively to sell ahead of them. The Seller that sells first amongst "equal competitors" is more likely to extract the highest value! More time on the market means eventual price reductions and fewer net dollars in your pocket!
- Set your expectations realistically and then get to work on a positive selling strategy with your REALTOR®. Remember that properly setting your home's "For Sale" price will be your key success factor for an efficient sale and healthy profit.
- REALTORS® are trained experts and poised to assist. They understand the trends, know how to manage changing market conditions and are ready to serve!
- Call your REALTOR® today to help you prepare your property for sale and to generate the maximum return on investment.
