U.S. Housing Crisis Continues...

As real estate sales across Canada including the local market continue to show a positive trend with strong sales again in November, the same cannot be said for our neighbours to the south.
With the U.S. unemployment rate climbing, the housing crisis continues to show no signs of letting up with a record 14.4% of mortgages either in foreclosure or delinquent, this according to a recent story in the Globe and Mail. The U.S. unemployment rate is now at its highest level in 26 years and even those homeowners with conventional seemingly low-risk mortgages are facing the prospect of going into default. One in seven U.S. homeowners is either in default or at least one payment behind and millions more are under threat of losing their homes in the next two years.
As I have always maintained, a low interest mortgage is of little benefit if you are jobless and can't make the payment and a growing number of Americans are now finding themselves in this unfortunate position. Housing activity is seen as one of the benchmark indicators to economic health. Real estate sales and the related economic spin-off purchases that come with them play a significant role in driving the economy. The latest sobering statistics pertaining to the U.S. housing market would suggest they are a long way from a full economic recovery.
I couldn't help but notice lately a proliferation of car ads on U.S. television networks by dealers putting a significant emphasis on "credit" availability. Isn't the over-extension of credit how this whole mess started in the first place? Until some stability in the U.S. jobless rate is achieved and people can afford to meet their debt obligations, it is unlikely we will see any improvement to the U.S. economy overall.
As one area newscaster commented on this morning, General Motor's current debt load exceeds that for the entire country at the time of JFK's assassination in 1963. That really puts into perspective the depth of the "muck and mire" our neighbours to the south now find themselves in and it is going to be a long and messy climb back to a healthy U.S. real estate market and economy overall.

MLS® Home Sales Forecast Increased for 2009 & 2010

Despite the lingering recessionary nature of our economy, real estate activity across Canada in 2009 has far exceeded the expectations of most. Following record sales in the months of July, September and October, the Canadian Real Estate Association (CREA) has revised their 2009 and 2010 forecasts for MLS® home sales across Canada.

Canadian MLS® home sales for 2009 are now forecasted to increase by 6.6% from 2008 to a total of 460,200 units. This revised sales forecast for 2009 is equivalent to annual sales achieved back in 2004 but is below levels attained for the years 2005 through 2007. For 2010, CREA now forecasts that national home sales will increase by 7%. Should this 7% increase materialize, 2010 will be the second highest year of sales on record for Canadian home sales.

Like the rest of Canada, MLS® home sales here in the Georgian Triangle continue to increase significantly. Unit residential sales in October were up 71% while revenue increased 84%. Sales at the end of the 1st quarter were off 47% from the prior year. By mid-year the shortfall had been reduced to 23% and by the end of the 3rd quarter, the shortfall in year-to-date sales had been completely reversed and we were ahead of 2008's results.

Monthly activity in November has continued to remain exceedingly strong. As of today's date MLS® sales in the Georgian Triangle total $30.7 million a full $10 million or 48% more than November last year with 13 days yet remaining in the month.

My own personal forecast is that MLS® sales in our area will reach $500 million or better for the year, up by 14% or more from the $438 million worth of properties sold in all of 2008. Single family home sales for the year will remain constant with those in 2008. Vacant land sales are off 12% and will remain so for the balance of the year. Conversely, condominium sales year-to-date are up 12% driven by increased sales in the $200K to $500K price range. In summary, real estate sales activity in 2009 has exceeded everyone's expectations with robust sales in most markets across Canada including ours. Renewed consumer confidence and low mortage rates are helping to drive sales. In our market the migration of retirees from the GTA is also a large factor in our success and this trend is unlikely to abate any time soon.

Selling A Non MLS® Listed Property

The renewed strength we are seeing in our real estate market seemingly brings with it an increase in oddities relative to the traditional listing and sale of properties through the Multiple Listing Service (MLS®)
In the last 2 to 3 weeks I have received calls or emails from consumers seeking some guidance with respect to the sale of their homes which at the time of their contact with me were not actively listed for sale. In these instances, the sellers were asked by the REALTOR® representing the potential buyer to either sign a short-term "Listing Agreement" ie: 4 or 5 days, or to sign what is known as a "Seller Customer Service Agreement." The fundamental purpose of these agreements from the REALTORS® perspective is to ensure they get paid a commission should the house sell.
Having a seller sign a formal "Listing Agreement" for a few days in order to facilitate them showing a property to their buyer client is rather pointless. With all of the conditions typically inserted into today's offers ie: financing, attainment of insurance, completing a home inspection etc. it is highly unlikely that all of those conditions will be satisfied in such a short time frame before the listing expries unless the Listing Agreement is extended. One of the short-term listings in question had an offer accompanying it that was conditional on the buyer selling their present home in a couple of months!
The "Seller Customer Service Agreement" is the more appropriate of the two documents to use when bringing forth a buyer for a property not listed for sale and I have used this form for numerous transactions. This Agreement has dates both for the commencement of the Agreement as well as an expiry of said Agreement. Secondly it stipulates the commission to be paid by the Seller either in terms of a percentage of the sale price or just a set fee.
There is however one alternate means for a REALTOR® to sell a home that is not listed for sale and to be paid for doing so. Have the buyer pay the commission. Most REALTORS® dealing with buyers these days have or should have in place a "Buyer Representation Agreement." This Agreement establishes a formal agency relationship between the REALTOR® and the buyer(s) thus appointing the REALTOR® to act as their agent. As with the "Seller Customer Service Agreement," the "Buyer Representation Agreement" also can facilitate a commission to be paid to the REALTOR® by the buyer for successfully acquiring a property on their behalf. Although used less frequently having a buyer pay the commission removes that burden from the seller whose home is not actively listed by them for sale and this can help in the negotiation process with respect to price.
The bottom line is, it is not necessary for a seller to sign a short-term Listing Agreement in order to have a REALTOR® show their non-listed property to a potential buyer or to bring forth an offer. There are other alternatives that can facilitate an accepted "Agreement of Purchase and Sale" being achieved with the REALTOR® being paid for their efforts.

Collingwood & Town Blue Mountain Sales Surpass Last Year

While overall real estate sales in our area have come back strongly in recent months, Collingwood and Town Blue Mountains are the two area municipalities showing the greatest improvement in sales activity.
Year-to-date unit sales in Collingwood are up 4.9% with 236 proprieties sold to the end of October versus 225 last year. In the Town Blue Mountains, sales for the year now total 136 properties which is a 13.3% increase over the 120 units sold in the same period last year. MLS® sales in each individual municipality for the first 10 months of this year ranked in order are as follows:

1. Town Blue Mountains 13.3%
2. Collingwood 4.9%
3. Clearview -2.9%
4. Wasaga Beach -4.8%
5. Grey Highlands -10.0%
6. Municipality Meaford - 19.5%

The bulk of the sales activity we see continues to be at mid to lower end of the market with 83% of the sales below $350,000. This is a percentage of total sales that has not changed in the last three years. Year-to-date 2009 sales above $500,000 total 102 units compared to 100 in 2008 representing just over 6% of the total market. Again this percentage has changed little in the last three years although it has been in the last 3 to 4 months that higher end property sales have resumed a similar pace to what we were seeing prior to the commencement of the current recession.

The big question on many consumer's minds is that of pricing. As President of the Georgian Triangle Real Estate Board last year, it was my contention that we would not see any significant reduction in prices in our market. One year later that is now essentially fact. The 12 month average price in our area has in fact risen (0.8%) from $280,724 in October of 2008 to $283,009 this year. Average pricing however is an ever-changing number that is affected far greater by the mix of properties selling than by inflation or deflation. To obtain an accurate synopsis of pricing requires an in-depth look at your neighbourhood and or property type. Recent reviews I have conducted in this regard indicate that pricing is fundamentally stable with the only significant price reductions coming from those listings that were over-priced to start with.

As always, if you have any questions or comments please consult the writer and I would be happy to assist you without obligation.

October Sales up 84% Over 2008

Further to my last post, area real estate sales during October slightly exceeded my earlier forecast totalling $52.4 million versus $28.5 million in October 2008, an increase of 84%. These results are based on sales processed through the MLS® system of the Georgian Triangle Real Estate Board and do not include new home sales in the area.

A total of 195 individual sales were recorded during the month compared to just 114 a year earlier as we entered into the early stages of the global recession. Listing activity for the month saw 27% fewer properties listed for sale as compared to October last year. Year-to-date, the pace of new listings coming onto the market has slowed considerably up just 1% which is significantly lower than the double digit increases we previously experienced. Some sellers, frustrated with a lack of interest in their properties often stemming from having them over-priced are taking them off the market and this is continuing to be reflected in the increase we see in expired listings which are up 11% year-to-date. The slower pace of listing activity is resulting in less inventory which in turn has a stabilizing affect on prices.

Year-to-date sales to the end of October are now 1% ahead of last year's results both in terms of revenue and units sold. Sales for the year now total $410 million and are just $28 million short of the $438 million worth of property sold for all of 2008. I fully anticipate that sales through the remaining two months of 2009 will remain very strong. We will certainly surpass the weak sales activity that we experienced in the dark days of November and December last year. That being said, full year sales for 2009 may very well approach or exceed $500 million.

In my next post I will review sales activity in specific areas throughout our region. In the meantime please see my 3rd quarter Real Estate Newsletter for other statistics pertaining to market activity throughout the Georgian Triangle.

October Real Estate Sales Surge!

With 0ne week still remaining in the month, October real estate sales have already far surpassed those of October 2008.
Month-to-date sales through to October 25th total $41.3 million and given the current rate of activity may well pass the $51 million mark by month-end. Back in October of 2008 we were in the early stages of a significant economic slowdown and real estate sales across the country were falling substantially in all major markets. Georgian Triangle real estate sales in October of last year totalled just $26.8 million hence we are already $14.5 million or 54% of last year's volume for the same month.
Back in March, year-to-date sales for the first quarter in our area were down 40% in terms of units and 47% in dollars. Subsequent months have seen a reversal of fortune as beginning in April we saw this trend begin to turn. Unit sales in June, July and August were up 16%, 27% and 30% respectively. As noted in my 3rd Quarter Real Estate Newsletter I predicted that by year-end, total area sales for 2009 would surpass those of 2008. Given the current rate of activity this month, year-to-date sales by the end of October may very well exceed year-to-date sales for the same period last year.
With a high level of consumer confidence, low interest rates and a substantial inventory of property for buyers to choose from, the remaining months of 2009 should see continued strength in our market as we head into 2010.

How Many Bedrooms Does Your Home Have?

With more and more real estate information now available to consumers online either through individual REALTOR® websites or via http://www.realtor.ca/ , the accuracy of listing information with respect to any given property is becoming increasingly important and often frustrating.
As licensed REALTORS® we are required to carry errors and omissions insurance and we are in fact responsible for not only the accuracy of our work reading Agreements of Purchase and Sale but also with the listing of properties as well. For example, the Alliance for Canadian Real Estate Education (ACRE) has specific guidelines to follow with respect to measuring the square footage of a home in order to ensure there is no misrepresentation.
One of the more contentious issues of late is with respect to the number of bedrooms a home may have. A room without a closet is not technically a bedroom. More importantly a room in a basement without a window does not constitute a bedroom. Building code requirements stipulate specific window sizes for basement bedrooms so as to allow adequate space for a person to escape through in the event of a fire etc.
The correct format relative to accurately portraying bedrooms in a real estate listing is as follows. If a home has 3 bedrooms above grade and 1 in the basement then the listing should read 3+1 bedrooms not 4 bedrooms. A house with 2 bedrooms up and 2 down would be 2+2 bedrooms etc. To this point in time, http://www.realtor.ca/ does not have the ability to differentiate bedrooms in this manner. Consequently a home with 1 bedroom on the main floor and 2 in the basement would appear online as a 1 bedroom home. Understandably this infuriates the seller. Later in November, the Canadian Real Estate Association will be implementing programming changes to http://www.realtor.ca/ that will correct this shortcoming.
In the meantime if you were thinking of selling you home, how many "legitimate" bedrooms does it have?