Market Shifts Require a Shift in Marketing

There is no question that with the significant inventory of both MLS® resale properties as well as numerous new homes sites in the area to choose from, we are in a buyer's market. Typically, current market value of a resale property is established when a REALTOR® conducts and prepares a comparable market analysis (CMA), wherein you look at what similar properties to the one in question have sold for together with what similar properties are currently on the market. With such a vast array of product actively listed for sale, effectively marketing a property using this age-old method under current market conditions may not get the job done.
In times like these when competition for buyers is fierce, extra effort needs to be put forth by both the listing agent and selling agents to adequately evaluate and present each property on it's own unique merits. Too often, individuals are quick to jump to the conclusion that a specific property is "over-priced" compared to others that have either sold or are currently for sale. Recently, I was questioned on the price of one of my listings, a condominium, wherein the agent stated that the price, based on a per square foot basis seemed high compared to others in the complex. In this case I had visited several of the other so-called comparable properties that were priced $10,000 to $12,000 lower. Most had little or nothing in comparison other than street address. They had seen little in the way of renovations or upgrades since new. The higher priced unit had newer flooring, carpet and paint, a gas fireplace, newer appliances, an updated kitchen with new countertops, a new deck and more including a superior location. All of these features added additional value to the specific property which is reflected in the price. When setting the price of a given property, the true method of arriving at current market value is to establish a base price then to perform a number of +/- "adjustments" based on comparing the location, condition, and features of similar properties in order to arrive at a fully "adjusted" sale price. Appraisers routinely perform this task every time they prepare a property appraisal. Agents especially in times like these should similarly evaluate the individual merits of a property to establish a price and marketing plan that reflects the true value and attributes of the given dwelling. Every property is unique and should never be treated as a commodity.
The market has shifted from a seller's to a buyer's market and in order to sell your property, your REALTOR® must shift their mindset and marketing strategy accordingly.

Is It Time For "Elvis to Leave the Building" a.k.a. Collingwood?

I have read with interest, minutes from the Elvis Festival Services Board and public comments regarding the much ballyhooed Elvis Festival. A recent letter to the Editor sent in by Al Truscot of Collingwood and published in the January 14th issue of the Connection stated that after 10 plus years and ongoing controversy, it was "time for Elvis to leave the building." Recent newspaper reports and Services Board minutes indicate that last year's festival is expected to lose somewhere around $23,000. It was further stated that no one knows for sure because not all of the expense invoices, revenue and other financial pieces to the puzzle have been completely tallied up and accounted for. Not to criticize those that pour their heart soul and time into running this event but any company or organization worth it's financial salt even if run by volunteers, have their books closed and financial statements prepared within 2 or 3 weeks of a month-end and within as many months for a fiscal year-end. It has now been six months since last year's event and we still do not know how much "red" ink is expected to flow down the Town's ledger sheet for this enterprise. If after over 10 years of running this event, the organizers have yet to find a way to efficiently and effectively run this function as a business, in support of local business, wherein it can turn a profit or at least break-even and the financials are duly and accurately accounted for within weeks and not unknown after months, it's long past time to close the doors of this Heartbreak Hotel. Countless man-hours are added to the municipality's payroll running this affair and unless detailed time sheets are kept, I dare say this added payroll expense to the Town is probably not fully accounted for. A private promotions company ran the event for what 1 year? What does that tell you? Probably that it's a loser! The royalty fees paid to Graceland are going up, interest/attendance is apparently going down and many locals are sick to death of the whole affair. With a potential loss of $23,000 or more, every man, woman and child that permanently resides in Collingwood is on the hook for $1.33 to cover the event's 2008 deficit. Is it time for Elvis to leave the building? Well you be the judge but if nothing else, after over 10 years it's time for the Town to spend their resources, human and otherwise on the critical issues facing this municipality. It is unlikely that any number of sequinned jumpsuits are going to turn this event into the financial jewel we are lead to believe that it is.

2008 Condominium Market Summary

As was the case with the local real estate market overall, 2008 also saw a decline in resale condominium sales throughout the area. Annual condominium sales reported through the MLS® system of the Georgian Triangle Real Estate Board for 2008 totaled 265 units as compared to 345 condominium properties that were sold in 2007. This represents a decrease of 23%. The accompanying graph highlights the unit sales most of which take place in the municipalities of Collingwood and the Blue Mountains. Unit condo sales in Collingwood for 2008 were 162 versus 209 in 2007, a decrease of 22%. Town of the Blue Mountains recorded 78 condo sales in 2008 as compared to 84 in 2007, a decrease of 7%. Condominium sales in other area municipalities fell by 52% with just 25 sales in 2008 versus 52 in 2007.

For the most part, condominium prices have remained relatively stable with the only notable exception being in the Intrawest Village. Several Village" condos sold in 2008 were significantly below their listed prices and were also below their original prices when sold new. On a postive note, rental occupancy rates for Village properties have been increasing steadily, thus providing an ever-increasing revenue stream for their owners. Recent financial statements for a Village properety I personally have listed for sale show an occupancy rate of 65% up from 55% a year or so earlier. We suspect pricing for these properties have now stabilized and will continue to increase provided the financial returns to their owners continue to improve. It should be noted that the aforementioned sale results do not include the sales of new condominium properties by developers such as Intrawest and others.

For further information on the local condominium maket please see the latest edition of my Georgian Triangle Condo Communiqué newsletter.

2008 Year-End Real Estate Market Summary

After record sales of $571.6 million in 2007, real estate sales throughout the Georgian Triangle softened in the latter half of 2008. MLS® sales revenue reported through the Georgian Triangle Real Estate Board for the year declined 23% to $437.8 million. Much of this decrease arose during the second half of the year when uncertainty about the economy began to set in resulting in prospective buyers putting their plans on "hold." Residential sales declined from 2,178 units sold in 2007 to 1,711 sold in 2008 a decrease of 21%. These results do not include the sales of new homes and condominiums sale made directly by developers and not sold through the local MLS® system. Numerous new home sites throughout the area had very strong sales during 2008 which when combined with the MLS® results, indicates that things are not as bad as some may perceive.

Through 2008 the number of new listings that came on to the market totaled 5,981 properties, an increase of 10% over the prior year. What continues to be a significant issue is the failure of sellers and their respective agents to correctly price properties to current "market" values. With 1,711 sales in 2008 and 5,981 new listings, it means that 1 out of every 3.5 listings sold. Expired listings for the year totaled 3,036 an increase of 24% over the number of expireds in 2007. For three consecutive years now, 2006 through 2008 more listings have expired than have sold despite strong market conditions!

Despite a softening in sales, we have yet to see any significant downward trend in pricing. "Average" resale home prices in the arera, a term often tossed about without proper qualification slipped 3.3% in 2008 to $279,513 down from the 2007 average of $288,949. The primary cause for this decrease stemmed from the fact that upper-end home sales dropped significantly in 2008. Sales above $500K declined 35% while sales above $800K were down 52%. With such shortfalls in high priced home sales, it is not hard to envision that the average price could have dropped much more. The average residential price in Collingwood actually went up last year, this was the only area municipality that reflected a gain. The bottom-line is, selling prices have not dropped significantly nor are they likely to. Tracking "average" prices is useful in establishing trends over time but do not accurately reflect pricing conditions across specific geographic markets, divergent neighbourhoods or property types ie: singlke family homes versus condos.

For further information regarding sales and pricing in 2007 versus 2008, please read my latest issue of Georgian Triangle Real Estate News for a complete summary of 2008 market activity throughout the area.

Area Real Estate Prices Holding

Despite a softening in sales during the second half of 2008, house prices in Canada and throughout the local real market are remaining relatively constant.
The year-end 12-month average residential price for properties sold through the MLS® (multiple listing service) of the Georgian Triangle Real Estate Board stood at $279,513. This represents a 3.3% decrease from the 12-month average price at the end of 2007. This decrease in the average MLS® sale price in our area is far more attributable to 2008's decreased sales activity especially at the upper end of the market which saw area sales for properties valued above $500,000 decline 30% in 2008.
As was stated in a recent press release issued by Royal LePage Canada and reported in the Wednesday January 7th issue of the Globe and Mail, the average home price declined nationally by just 1.1% in 2008. A further decrease of 3% is predicted for 2009 as we enter into more "balanced" market condtions.
Notwithstanding the fact that we are in uncertain economic times, demand for area properties throughout the Georgian Triangle remain strong. Buyers however are cautious, anticipating there will be a widespread decrease in prices with bargains to be had. Ultimately prices are set by what willing buyers are prepared to pay and much of this falls to obtaining, qualified and quantified real estate advice. In my next post I will recap last year's real estate results in greater detail.