New Year, Old Problems?

How do we figure out the last piece of the puzzle?

Last year turned out to be a fairly strong year for real estate (even after the doom and gloom of the "Next Great Depression"). With any good year there are still problems that exist. When we are sitting on a strong real estate market what inevitably happens is people get caught up in the dollars and feel their home is worth way more than what the market is willing to pay.

The stats for 2009 show KW had their second best year in home sales. But what do the rest of the numbers tell us? Let's have a look.

For the Waterloo Wellington area MLS sales in 2007 were 13,093 based on 19,573 listings. These means that 66.89% of the homes listed sold. 2/3 of all homes listed sold, a very strong year and a seller's market for sure. This means that as a seller you were in a stronger position than a buyer as decidedly more people were selling than not selling.

2008 showed a reverse of this seller's market. MLS sales for 2008 were 11,573 based on 20,292 listings. Less solds and more listings, not looking good. The List to Sell Ratio dropped to 57.03%. Still not a bad ratio but an adjustment of 10% year over year effects the market. This is a common occurrence after a strong market as more and more people jump in to "ride the wave" and get their piece. People see what their neighbour got and then proceed to ask more for their house (and this continues to perpetuate). As the market price pushes up buyers either become more cautious or they just can't afford the costs of ownership.

Which way did 2009 go? I still don't have the Dec numbers in but Jan-Nov show 11,325 MLS sales (sure to be above 2008) based on 18,811 listings (expected to be under 2008). So as it sits the List to Sell Ratio has increased vs. 2008 but is still well under 2007 at 60.20% (Jan - Nov).

So where does this leave us in 2010? What is the piece of the puzzle to keep a strong housing market? I believe that the increase in 2009 is directly related to the lowered mortgage rates we saw. If these rates continue through 2010 then we will see a slight increase over 2009 as the first few months of last year we were still getting our feet under us. If the rates move up with any swiftness we will see a quick spike as those approved under the lower rates will make rash buying decisions and then a stall in the market slowing sales.

All in all our 2010 looks like it should be OK. Could be worse, we could live in the US...


M

May Monthly Real Estate Statistics

It seems these days we are always waiting. Not sure it is because things take longer or because we expect things to happen that much quicker.

Guelph stats for real estate are a little slow to be posted this month. I found an alternate source that says sales are down a little over 16%. Stats for KW and Cambridge are looking a little more promising. With increases of 9.9% and 7.7% respectively it shows the first year over year increase for Waterloo Region since September 2008. This helps the YTD numbers slightly but in total MLS stats show a decrease of almost 15%.

All things have been pointing to the stop to the free fall. Low interest rates and the home buyers' plan and home renovation tax credits. Low interest rates have started to move back up. Does this put an end to people looking to buy, a halt on the pick up of the market? Anyone that was pre-approved has some time to make a purchase but anyone that does not already have the locked in rates may think twice. I would watch for a stall in the July-August time frame if nothing else changes or if the rates continue to raise.

Not to sound bleak. Just looking at what I see. It could always sound worse...


M

April Monthly Stats

The new growth of spring.

Numbers are in for both Kitchener Waterloo and Cambridge for April real estate sales. Congrats to the home sellers of Cambridge as the leak in the dam seems to have been plugged by the tulips of spring. Cambridge has shown 20-40% decreases over the last 6 months so to only be down by 1.8% over last year is quite an accomplishment. This is still a drop of nearly 20% over the 2007 numbers of 307 homes sold in Cambridge.

KW is improving as the gap between this year and last year is shrinking. This month a 14.9% gap from last year is an improvement over the preceding months.

Guelph on the other hand does not seem to be holding it's ground. Early numbers show a 26% decrease over last year and that was down nearly 6% from 2007.

Let's hope that the consumer confidence is back and can repair the levee damage so the spring/summer homes sales don't get washed away in the tidal wave of unsurity.


M

On The Upswing?

Life at the park.


In my monthly stats post for February I predicted March MLS solds based upon their slumping sales to date. The good news is the market out performed my prediction, which means things are improving.

Cambridge ended March with 209 solds (I predicted 175), Guelph came up with 241 (I predicted 210) and KW had 497 (I predicted 470). All in all the Waterloo Wellington MLS market was down by over 17% versus last year and nearly 24% from the record 2007 numbers.

How is this an upswing if we are on a downward trend? I would liken it more to a pilot pulling up on the stick as they plummet in a stall hoping to level off before the unfortunate ordeal of an unplanned landing.


M

Kitchener Waterloo Monthly Stats

The horse is dead, stop beating it.

I commend Karen Shartun (KW Real Estate Board President) for trying to put a positive spin on the economy. The traditional media has put enough negative spin on this whole thing we could use some good news. Problem is we need information that is not misleading us.

In another article in the KW Record Ms. Shartun says "the positive momentum suggests the market has turned the corner". Truth is this is nothing special. The "momentum" of the spring market is all part of our normal cyclical nature. More houses sell in the spring and summer then in the fall and winter, FACT.

A better perspective to look at this would have been "Sales for January in KW were down 36% year over year and 28% for February. In March we are seeing that number shrink as MLS sales are only down 18% vs a year ago. Not only are we seeing the seasonal increases that we do every year but the gap to last year is closing as the economy settles down."

On another positive note PropertyGuys.com numbers for KW in March show that client sales were even with last year. If we look at the entire Waterloo Wellington area PropertyGuys.com clients sold 26% more homes this March than last March.

You would think that by know their arm would be getting sore.


M

February Real Estate Statistics

Still not pretty.

Well according to the numbers in KW, Cambridge and Guelph things are continuing as expected. Sales are down almost 30% and average house prices are still below last year, albeit not by a lot.

Real estate boards are sticking to this ridiculous notion that increasing sales versus December and January is something to boast about. Here is the quote from the KWREB president.

Last month's sales represented a healthy gain over the activity in December and January, the boards said.

"It's a small victory," Karen Shartun, president of the Kitchener-Waterloo board, said in a news release. "But after a steady diet of bad news concerning our economy that we've had in the past couple of months, we'll take it."

At least this time they only claimed it as a "small victory".

Now I know you are wondering if all this lipstick is doing any good? Is the pig looking any better? Is it actually kissable? Someone seems to think so...


I expect the spring market to pick up, as is the cyclical nature of our market. Based upon what we have seen over the last 4-5 months I would expect about a 25% drop in solds over last year. So for March that would put KW at about 470 solds, Guelph at about 210 and Cambridge at about 175. Let's see how close my predictions are.

M

Real Estate #'s Buried In Snow?

I can understand why the president of the Real Estate Board of Cambridge would want to try and paint a pretty picture but let's call a spade a spade. Lipstick on a pig only gets the farmer in trouble.

In the Cambridge Homes insert on Friday February 20th there was a "report" by C Warrington, Twire. In this "report" Mike Toffner, President of the Real Estate Board of Cambridge, stated that January house sales were up 14% over December. It is true that January house sales were up over December. The stats that I find released from the board show December had 95 houses sold and January had 109. Here is the issue with this glamorized statistic. Traditionally January increases over December, that is the norm! Poking around I found stats that show last year it went from 124 to 177 and the year before from 151 to 196. Telling us that January house sales are up over December is like saying the we had more snow in January than July. If they told us that there was 35% less snow this year than last year and snowfall has dropped by more 50% in the last 2 years it might mean something.

Now snow fall has not changed like that for us here in Cambridge but the housing market has. So far since October when the economic crisis became a part of our everyday lives we have seen continual 30%+ drops in housing sales versus last year. In January that was also coupled with a 4.9% average price decrease over last January.



Things may not be pretty but let's not stick our heads in the snow, or worse, shovel it on our neighbour's head. Maybe the Real Estate Board of Cambridge needs a Shovel Cam!

M

January Monthly Real Estate Stats

It seems everyone has the same question.

Where is this market going?

Waterloo Region MLS stats are out for January 2009. The market is adjusting, make no mistake. Another month of sales decreases for the agents. Nearly 1/3 less homes SOLD means money is not flowing into the brokerages. Expect to see less agents in 2009.

Average prices are starting to drop, as we have been expecting, with a 5% drop versus January of last year. Expect this to continue.

If you are currently selling your home, note that prices are dropping. If you are thinking of selling, find an appraiser that uses a forecasting tool and not just past history. When the appraiser tells you that your house is worth less than you might have anticipated, don't be surprised.

If your home was worth $300,000 last year, today it is only worth $285,000. Interestingly if you SOLD last January with an agent at $300,000 you would have ended up with today's lower value ($300,000- 5% commission = $285,000). Today if you SOLD that same house with an agent you would end up with $270,750 ($285,000 - 5% commission). So now the market has taken away 5% and the agent has taken away 5% and you are left with a $30,000 hole in your pocket.

Don't worry though. According to this video, in Ontario we have an increase in affordability. That should help!


Is it all doom and gloom? I couldn't do that to you. 1st quarter 2009 PropertyGuys.com Waterloo Wellington is up 11% for SOLDS year over year.

December Real Estate Stats And The 2009 Market

Well the news is out. It confirms what we all new.


This linked Record article shows the stats for Waterloo Region for December (and 2008 as a total) had dramatic decreases from last year with MLS SOLD properties

The good news is the sky is not falling.

First we must remember that 2007 was a phenomenal year. Second is MLS is losing ground to competition. The stats for PropertyGuys.com here in Waterloo Wellington show a different story than what the "traditional" real estate model shows. Year over year for December SOLD properties increased by 46.1% and when you look at the entire year of 2008 vs 2007 the increase was 32%.

1/3 more people paid themselves in Kitchener, Waterloo, Cambridge and Guelph in 2008.

People are choosing a cost effective alternative to listing their home with real estate agents. When you sell your home you need some level of comfort. For most a sign on the lawn and an ad in the paper falls short. Some just prefer the all encompassing feeling that an agent can bring, no matter the cost.

I had lunch with an agent today. His opinion of the market for 2009 was pretty bleak. He is going to ensure his clients are focusing on pricing their home not only on past market trends but also on future market trends. This means that with an expected decrease of 5% in the market he will be adjusting his clients accordingly in their expectations.

If you are looking at listing your home and have not purchased one yet you are sitting in the driver's seat. In a market like ours, having an offer not conditional on sale is the ultimate tool for negotiations.



Give yourself a strong start in 2009. Be a CHAMPION!!!

M

Real Estate Market Analysis

Get that brain geared up for the ride. This one is a roller coaster to the sky!

Buyer's market, seller's market or balanced market, how do you know? Most information points to anything over 8 months active inventory is a buyer's market and anything under 6 is a seller's market. The grey area in the middle is boring ol' balanced. In a seller's market prices increase and in a buyer's market they decrease. In the lifeless balanced market they generally hold flat with moderate increases due to inflation and costs of selling.

Here in Waterloo Wellington we are holding our own versus the troubles being yelped about across the country. KW is showing the best of the three communities with 4.44 months of active inventory but there was a massive drop in the active listings in November as expired listings that did not sell came off the market. Guelph is up next with 6.18 months of active inventory and finally Cambridge with 6.88 months. Balanced market, sounds humdrum.

But wait, there's more....

To understand today's numbers lets put them into perspective. Last year KW was 2.22, Guelph was 3.33 and Cambridge was at 3.61 months inventory based upon solds versus active homes in the market for November 2007.

The real estate market is at a point now where it has reached such a height it has nowhere to go. This roller coaster ride has been a long one. Here we are perched at the top of a colossal hill looking back and wondering "Now what?"






Let's ride the balanced market for a bit. The foreboding drop makes balanced seem a little less mundane.



M

November Statistics and other thoughts

Is this the bottom?

Stats for all areas (KW, Guelph and Cambridge) show dramatic declines in the sold properties over last year. This is an expected slow time of the year but year over year would take that into consideration.

It seems that across the country things are bad. CREA just announced that in November prices dropped by 10% and sales are down 42% at the national level. Mackenzie Walsh, an agent from Calgary, comments in this CTV News Story. She explains that real estate is a cyclical industry and when things are up they are up and when they are down they are down. Right now she is trying to reassure her clients that things will pick up. For her sake I hope it happens before her contracts run out.

One thing that has always bugged me about traditional real estate is their exclusivity to your house for 3 months (the most common term in a listing). Once you sign that listing you are theirs, no matter how poorly their service. You can get out of the contract if both parties agree. Since the agreement is generally not with your agent but their broker you may find it difficult talking the broker into releasing you.

As a home seller I want more flexability in the sale of my home. I want to be able to change things when I need to. If someone is not living up to their end of the bargain they need to move on. As a home seller I want the flexability to take my listing down over the holidays or if I feel that I want to wait for a few months till the market is a little stronger. As a home seller I don't want to be tied to paying a set commission rate. If an agent brings a buyer through my home I am sure to want to work with them at a resonable rate. As a home seller I want fexability to market my home in places that I look. Not just where an agent decides he/she might want to advertise it.

As we head into the unkown and watch the market correct, take control of your flexability so you can adjust to fluxuations in the market as needed.

M

Real Estate Statistics for October

At least Rick Astley is there for you.

I was going to throw a bunch of stats at you and show you the grim outlook. You can see that anywhere. We're different here.

There is no doubt that solds are down, listings are up and the inventory of houses available is swelling as we approach the traditional high tide. Now what? It is important to keep your head about you. If you are purchasing another home, know where your budgets lye and hold hard and fast on the bottom line.

Problem is that your spouse REALLY wants the house with the conditional offer in on it. How will you be able to purchase that house if you can't get yours sold in a buyers market? Ever consider letting your offer go and coming in with a new offer? I mean here we are in a buyers market and you have an offer in that was made when we all had a better outlook.

Take control of the market and continue to sell your house. The market will tell you what it will accept as a selling price for your house. Once you have an offer presented you generally have 48 hours to accept it. Adjust your budget, taking into account the new selling price, figure what you can now afford for the house you want and make a new offer. A firm offer in a slow market heading into the winter should have some negotiating power. Give them 24 hours to accept. If they accept, you accept.

That new house needs to know that you're never going to give it up so don't let it down

2009 Will Be.......

A time for Buyers and Sellers to meet.


Canada Mortgage and Housing Corporation (CMHC) just released their 2009 projections for KW and Guelph. They are predicting a drop of 6% in solds in KW and 7% in Guelph over the projected 2008 numbers. Interestingly they are also showing a slight increase in new listings, 1% in both markets. This shows a move towards a balanced market.

Where are you planning on living in 2009, Buyers Rd. or Sellers Ln.?

If you are living on Buyers Rd. I have good news for you. The market is moving in your favour and that usually means that prices will stabilize or drop, depending on how steep the fall is. If it falls to where the CMHC predicts then it will more than likely just be a stabilizing of the market.

Are you looking at moving on to Sellers Ln.? Don't worry I have good news for you too! The savvy home seller will know that in order to sell in an equalized market they need to be aware of their local market and be sharp with their pencil. You see the average home seller will not want to see or hear about market equalization. They will say things like "That guy across the street got this much last summer." and "No way am I giving my house away." You are a progressive thinker and you know that in order to get a leg up on that guy you need to offer a better value to the market that is not buying at the same rate as last year.

The intersection of Buyers Rd. and Sellers Ln. is a busy place to be. Value is the traffic light that gets you through safely. With out value this intersection can be costly. Sitting and waiting on Sellers Ln. with no one stopping along Buyers Rd. is a frustrating circumstance.

Value comes in many forms. Increase in product like adding in new flooring or appliances is a way to add value. Another option is to decrease price. I have spent my whole business career telling people not to sell on price. Selling on price is not a winning situation because it usually means you are sacrificing profits to do so. If you are looking at decreasing your price you need to be sure to decrease your costs as well. In looking at the costs of selling, the biggest factor that you can adjust is the costs of marketing your home.

Before you start on your journey down Sellers Ln. make sure that you will not get stuck at the intersection waiting on traffic to stop.

Drop in MLS solds across Waterloo Region

Year to date the Waterloo Region seems to be faltering when you look at the MLS solds year over year. An article in the Record last month had some horrific numbers for solds. The article for this month tries to paint a rosier picture by slipping in the YTD stats at the bottom. It seems that the editorial staff the Record are not overly strong in their math skills. They made the error of dividing the difference by this year's total and not last year's giving us the wrong percentage decreases. I have adjusted them below for an accurate assessment.


KW MLS Solds
YTD 08 = 5175
YTD 07 = 5481
Difference = -5.58%


Cambridge MLS Solds
YTD 08 = 2142
YTD 07 = 2437
Difference = -12.1%

When you start adding in the impact of Private Sale into the mix it adjusts slightly. When you add in all the properties sold on PropertyGuys.com (Unfortunately I do not have access to other information) and look at the comparison year over year, it does paint a better picture.

Adjusted KW Solds
YTD 08 = 5336
YTD 07 = 5596
Adjusted Difference = -4.64%


Adjusted Cambridge Solds
YTD 08 = 2199
YTD 07 = 2492
Adjusted Difference = -11.75%

In both markets PropertyGuys.com has seen an increase in sold properties year over year when MLS has seen dramatic drops. In KW the increase was 40% over the same period last year. These increases are all part of a change starting in real estate, a revolution if you will. People are realizing that with the increases we have seen in house prices mixed with no adjustment to the commission based system they need to find an alternative. With the all the talk of economic hard ship and Scotiabank even using the "R" word in today's report people are looking to save where they can, a nickle hear and a dime there. In real estate we are talking about more than a few nickles.

M