5 Bullet Friday...Buyers Have More Power Than They Can Understand ?? Sent
Hey Sudbury! ??
Today was a tough day. It was the day we had to say goodbye to Rocky, the sixth member of our family.?I didn’t grow up with a dog, but having Rocky as part of our family for the last 6 years was truly special.?Seeing the bond that exists between a dog and a new born kid, seeing that kid grow up and truly embody the definition of man's-best-friend (or in this case boy's-best-friend), as much as we try to give love to a dog, that dog is just going to love us even more.???
Locally, we have the big Skate with Santa event this Saturday, at NHA (the old RHP indoor hockey rink on Kelly Lake Road) for those who haven’t seen the invite. Pop by any time between 10am - noon and lace the skates up to take a few laps with the big man himself! We’ll have hot chocolate and coffee and snacks for everyone.?As we officially close the calendar on November, we wrapped up our first ever Coat Drive with Inner City Homes. I can’t say how proud I am of our office and all those who participated (big shout out to Walden Public School) who helped us gather more than 900 coats and more than 1300 winter items (hats, mits etc.) that we will be distributing to those in need with the help of Inner City Home. I can’t think of a time I’ve been more proud of our agents and staff in our office for doing such an amazing job of promoting, gathering (and washing) all these gifts that are so badly needed in the City of Sudbury.?
On a national level, we are seeing continued positive signs that we may have hit the breaking point with the economy. The latest numbers on personal expenditures were smaller than predicted, and the second lowest of the year.?Also the Big Bad Fed boss Jerome Powell said that they are having success getting costs under control, as well as the rate hike in the US may be smaller than predicted, and after that most likely a pause, and maybe even an end to rate hikes.?This caused the financial markets to rally and push higher with confidence injected back into the market.?
What’s happening in our local real estate market? Take a peek at our real estate stats from the last few weeks. It feels like the market has slowed down, and that was reflected in the # of sales.?The multiple offers as a % is up pretty significantly, and new listings is also up.?All that considered, the total listings pulled back as we continue to get closer to the holidays.?
SALESCONDITIONAL / PENDING DEALSMULTIPLE OFFERSNEW LISTINGSTOTAL LISTINGSNOVEMBER 17TH - NOVEMBER 23RD31.019.011.035.0209NOVEMBER 24TH - NOVEMBER 30TH22.020.011.041.0201
Here are my 5 takeaways this week:
??Sales are down this week, which is to be expected getting closer to the holidays.?Just as I said last week, the buyers have more power than they can even understand. The most interesting point of sales is the % of multiple offers which spiked this week back to 50% (previously being in the 30% range).?What I see playing out is that the sellers who are listing at this time of the year are being so aggressive (pricing below current market value) to generate the attention and buzz that ends up in sales over listing prices. Sellers are seeing things as do I want to be that small group of homes that sell this week (22 this week) alternative is to be one of the 201 houses on the market that didn’t sell.?
??Last week we saw 19 conditional/pending deals, and this week we had a total of 22 sales. I’m sure not every one of the 19 homes showed up on the 22 sold firm this week; some fell apart because of financing or inspection, but almost all of the sales this week were probably deals that were conditional.?This is completely different versus what the market was just a few short months ago.?The question I am not sure of is, do sellers understand the value of a no-condition offer versus an offer with conditions in the current market?
??Mean versus median.?With the stats for November reported, I pulled up the average sale price of a home sold in 2022 (mean average) and I got a response of 476k. That doesn’t feel right. I know it was super influenced by the Q1 activity where we were selling a high volume of homes at a high sale price (over 500k). I decided to compare the mean -average sale price with the median-average; the later being the middle source of data if we get rid of the higher sales prices and the lower sales prices. This number came back at $430k, and I think this is a much better representation of the average sale price.?If you follow the MLS home price index, it actually shows our average sale price according to all the data in our MLS system (including Manitoulin Island, French River, etc…) being closer to 400k.?This feels like what the average home is selling for.?
??This week we saw a perfect example play out of buyers looking for the magazine type home. We saw a renovated home in upper Lively sell with a bidding war (5 offers) for high 300’s. That exact same house is available and has been available for weeks, just not with the upgraded floors, kitchen and bathrooms.?And it's been available close to 80k less. People want the house from the magazine, not the house they can buy with lower downpayment, lower mortgage and live in it as they fix it up. This made a lot of sense when money was cheap and buyers were willing to take ‘free-money’ and live the magazine lifestyle; but I do think we will have to see a shift now that the cost of borrowing has skyrocketed. I don’t know if buyers' expectations will change, but I think as the market shifts, we will need to see the buyers shift their expectations.?
??Where does the market go from here… I took a look at the sales numbers for the last few Decembers, and I noticed a few things.?Last year was crazy, which is kind of expected as the market in general was crazy. But even in 2 years ago, it was consistently busy right up until the last week before Christmas. At that time, the market slowed right down.?This year we have a perfect storm of the massive increase in cost of lending, the questions about are we going into a recession, as well as the holiday season.?Let’s handle these one at a time. The cost of debt this year versus last year is massive, this will be one of the largest drivers of continued slow down in the entire Canadian (and World Wide) housing markets; the way we should approach the current rates are just a sample of what the ‘new normal’ will be.?The second point about the possible recession, I think this has some silver lining. Garth Turner (one of my favourite bloggers and a must-read daily piece for me) did a great post yesterday about how this time is not going to be different.?Early indication is that we are in a much better place with curving inflation, and slowing down the economy than a lot of people understand.?Even the Fed (the US version of the Bank of Canada) has come out recently with pretty positive news.?This doesn’t mean that there aren’t further increases coming, but it does shift the thought that increases could be done in the early to mid-part of 2023.
I’ve made a lot of predictions that we will see house prices continue to trend down until we get a levelling off of interest rates from the Bank of Canada, and this means that could be sooner than later. The last point of the Christmas season is here; buyers buy and sellers sell in all times of the market, but without a doubt there is seasonality that comes with the real estate market. If a seller is extra motivated to sell, perhaps they should be using an underpricing strategy to create that buzz and attention of buyers. I don’t like the strategy in terms of what works in todays marketplace, but looking at the stats it is a strategy that seems to be working.?All things being said, if you are in a rush to sell, you probably have just over 2 weeks of timeline where we will see buyers still out there shopping before the Christmas break. I know we are prepping a few different places right now to hit the market mid-late next week in an attempt to see if we can get a deal before the holidays.?
Those are my big bold predictions for this week. Thanks for tuning in Sudbury, let’s chat next week!
DAVID KURT
Broker Of Record
Lake City Realty Ltd
63 Walford Road Sudbury ON P3E 2H2
Cell: 705-677-5272
Web:?lakecityrealty.ca