EDMONTON, Jan. 14 /CNW/ -
2008 was one of the most difficult years for real estate on record,
sales were slow and inventory had reached record levels.
Psychologically it was difficult as well as the recession was on
everyone's mind and problems seemed to compound.
Numbers wise, 2010 will actually go down as being worse than 2008 with
sales falling just short of that years and inventory reaching levels
similar to what was seen in 2008. The difference in 2010 was overall
confidence was better so sellers appear to managing the stress of
today's market better than previous.
However we feel though, our approach had to be the same as it was in
2008 and that's to get sellers off the market as soon as possible.
Anytime there's a downward trend it's best to be the first one off as
there is risk that sellers can lose more equity over time. So will our
approach change in 2011?
Consumer Confidence and the Economy-We are now about two years out from the heart of the global recession
and all signs indicate that things are improving, especially here in
Alberta. Job numbers are expected to climb, oil prices are up and with
interest and lending rates still at all time lows it all translates to
a higher level of consumer confidence. This confidence is critical
going into 2011 as it directly affects how buyers act and react and
will ultimately impact our sales numbers.
Strong Rental Market-Armchair investors had a big impact on the markets of 2006 and 2007,
but with the market turning so quickly many were left with homes they
couldn't sell and were forced to turn them into rentals. With
anticipated strength in this market many sellers may hold steady
knowing that a steady stream of rent will improve their equity and
their chances of selling at a future date.
As positive as things are with our economy, there are few that say we
are completely out of the water and as many positive signs as there are
a few negative signs exist that we should pay attention too.
Consumer Debt-A recent report has indicated that for the first time Canadians have a
higher debt to income ratio than the Unite States and that we owe on
average $1.48 for every $1.00 earned. That type of debt is disturbing
and can only hurt us as it means consumers have less to spend, will be
less likely to act on significant purchases such as a home and it
reduces a buyers ability to obtain credit.
Foreclosures-I am one of the few if any who is worried about foreclosures. We are
now at the four and five year renewal periods coming off the boom in
2007 and many are in negative equity positions where they owe more than
the home is worth.
Getting actual numbers is tough but I did discovered that the number of
home owners who are behind on their mortgage payments has increased
dramatically over the last two years and that may have something to do
with that increased consumer debt. On the street level I'm seeing a lot
of foreclosures on the market and after visiting over two hundred homes
last year I found a large number of sellers who are concerned, who are
struggling to keep up with payments and are walking a thin line. Now
will this affect our market in 2011? I believe it will, but with so
little information available I cannot say to what degree, but know that
I'll be watching it closely.
Ghost Listings-I coined the phrase "ghost listings" in 2007 when inventories were at
record highs. During the fall season many homes had fallen off the
market or had expired, and with this downward trend in inventory the
real estate industry and the media were quit upbeat about the spring,
but I wasn't so upbeat. In fact, I warned that these expired listing
which were large in number were likely to come back on the market in
mass along with the natural inventory and haunt us.you know the rest of
As important as it was to present a positive outlook to the public, I
have a commitment to my clients to prepare them for any worse case
scenarios and that never changes. Now I don't feel that these listing
will have as much impact as they did in 2008 but they will have an
impact. What's important to understand are that many sellers who were
unsuccessful prior, will likely be more aggressive the second time
round and they're also better prepared mentally to compete, so this is
something we need to watch.
Inventory and Sales-Inventory and sales are directly related to prices moving up or down,
all other factors are external. For example, the changes that occurred
in the mortgage industry last April had an immediate effect on sales,
they slowed them down. All those new condominiums being built downtown,
they affect the market by increasing the inventory levels and giving
buyers more choice. So no matter what happens around us, when it comes
to selling or buying a home what matters is how will these "external
factors" play on home sales and inventory levels.
Bottom line is that economically Alberta is the best place in the world
to be and everyone knows it and I feel consumer confidence will have
the biggest impact on Edmonton's market this year. The message is
getting through that there are a lot of great deals out there and with
the threat of rates going up I expect buyers to get off the fence in
the first two quarters.
Average Selling Price versus Actual Selling Price- That improved demand will move average prices up but not a great deal,
expect 2011 to be the year of balance.
Now never confuse average selling price with actual selling price
they're very different. Average selling price is made up of those homes
that have actually sold and with so few selling it's a number that can
be misleading. So never rely on averages when making selling decisions,
markets exist within markets and each is very different. And remember,
if you don't sell then your home will never become a part of that
Be Flexible. Be Realistic. Be Involved.-All this good news doesn't mean we should move our prices up or become
over confident, if inventory continues to increase and if anything
happens to detract buyers from buying then we need to react
appropriately or vice versa.
Being realistic about what you can achieve is critical. Too many sellers
fail here because they believe someone will come along and pay more
than comparable homes available in the same area. possible but it's
Being involved means understanding the information you're provide. It
means doing the work and spending the money if necessary to get your
home to the level you want to achieve. But all of this requires very
specific information, information that we provided you when we first
met and information that we provide you on a continual basis. The
biggest asset you have in selling your home is your REALTOR®, but it's
ultimately up to you act appropriately upon that information.
So to answer the question about our approach; we'll continue to take a
cautious approach with sellers and encourage them to be the best home
at the best price on the market. We're fine with sellers choosing to
take the risk and price their homes higher than our suggested value, as
long as it's an educated and calculated decision and as long as they're
prepared to react if unsuccessful.
For further information:
Rod Thompson, president/founder SellerInvite.com™
780 994 9998