| | I've decided to turn this into more of a blog. Each and every year our market is doing...something! I have had a great deal of success in my 4 years in the industry, I was here for the build up to our highest market ever (2007) and I'm still here for our area's recovery. I refer to 2007 as "The Perfect Storm"! The Okanagan has always been a fabulous getaway from the big city of Vancouver. We've drawn retiree's, young families and those that just wanted a summer home to lay back and relax. Selling in Vancouver and buying in Penticton/area meant selling in a high market that is driven by a world market and in most cases eliminating debt with a home of similar size in a more affordable market. We've always had that. Then, Calgary and Edmonton exploded. Two more large cities within say a 10-12 hour drive of our area. Their markets were approx $100,000+higher than ours during the upswing so we saw 2nd and 3rd homes being bought here, homes that needed $30K to $50K of reno's done were selling fast with no real reason, other than these buyer's were still pocketing money once the smoke cleared. Once these markets showed signs of slowing, it was just a matter of time before we were hit. I decided to get my propery management licence, knowing that these homes that were bought as vacation homes would NEED to be rented out since nobody wants to take a hit and lose money on a resale. I am a numbers guy. To me, I always want to get the most for my money. Banks and lendors right now are offering approx 2.5%-4.5% on loans. That means that at no point in our future history will buyer's be able to borrow better money! So, let's say your home is a sale of $450,000..(Today). A buyer now needs 5% down to get a mortgage which means they have to show $22,500 to qualify. That means a mortgage remaining of $427,500. Let's figure conservatively and your interest rate is 5%. That's $500 per month for every $100,000 borrowed. $500*4 is $2000 per month + 1/4 of $500=$125. So, A buyer would be looking at a mortgage of approx $2125 per month for 5 years. If, no when, the rates go up they'll be throwing their keys on the lender's desk! All of our area's sub areas have dropped. It's been a buyer's market statistically since April of 2008. Offers are made subject to the sale of, which is a huge hint that the majority of buyers are local. There is no longer room for the market to shoot up substantially within 1-2 years so our "flippers" have stopped buying. The only deals that are out there are the ones with highly motivated sellers who have to sell due to being overextended from buying in the peak and can no longer afford their home...and as you can imagine, there are a lot! This is all a lot of info to take in. I wish I was paid a nickel for every seller who says "the market will come back" My question is, come back to what? Our highest market in history? The driving forces that brought that market will, in my opinion, not be seen again. Now, you have to beat the slide and you'll only know you did the right thing when it becomes hindsight. I'm always optimistic, but I'm a realist..and the numbers don't lie. I think that's enough of a rant today! May 1, 2009 Well things are starting to heat up! Our board hasn't seen this many deals in a looong time! Prime has dropped again and according to the brokers may stay where it is until 2010! This is very encouraging to go along with what may appear to be a leveling off of the prices. It at least gives us more "recent" sales to work with so the market can hopefully start to rise. June 19, 2009 I wrote 3 offers yesterday and put in a couple of tenants. Definitely one of my busiest days! I want to present one of my offers to the sellers because there is A LOT of info to take in. They are definitely NOT going to like the offer considering how far away it is from their current asking price, which is $300K less than their asking price last year! Crazy! I also met with an owner that bought 2 years ago and got locked in to a 5+% rate, her payment is approx $400-$500 more than what the rental market will pay for her home. Huge dilema, sell for less than what I paid and still owe on the mortgage while paying a penalty, or be out of pocket EVERY month in hopes of the market going up $30K-$50K so I break even? I tell you, we are in for a very depressing next couple of years. I sure am glad I got my other licences to be able to give other options, and be informed about those options! Oct 1, 2009 Well, it certainly has been awhile, sorry about that! As usual, the summer brought about plenty of stories and experiences to share. Had a few really good sales, wrote a lot of offers that didn't go and increased my property management portfolio. I started managing a 91 Strata complex in mid June, definitely going to learn a lot from this one, tons of issues to deal with, but I have to look 3-5 yrs down the road and envision the complex as it should be and not as it is. Speaking of not getting some of those deals together, here are a couple stories I can share. There was a beautiful house in Summerland that was the 3rd home in 2007 to break the $600K mark. That buyer put a new roof on it, knocked down a tree and relisted it for over $700K. He of course got nothing and by the time it was dropped to $699K I had clients that were coming out of a lease and wanted that home. I added up the numbers and we offered $650K in May of 2008. The home was still listed for $699K and the owner wouldn't accept the notion that it was "only" worth $650K. Here we were, giving him a chance to walk away without losing any money and he said no. Well, May of 2009 we came with another set of buyers and sold this house for $565K!!! That's right! $85K less that what he could have had. If there is one statement I'd love to explain to every owner it's this....our job as realtors is to show you what the market is doing and to price your home competitively to get the best price. We are not magicians or fortune tellers and the statement most owners say is " they sold it for what?..they must have been desperate" Understand this, your home is only worth what someone is willing to pay. I've been right too many times in the last few years for sellers to ignore the advice. This past year has been frustrating because very good offers have been written and presented to which sellers have turned a blind eye. I just put one together that I thought wouldn't go. A townhouse owner with only a single car garage was asking $20K more that what 2 recent sales of double car garages sold for. The single car garages that recently sold went for $15K less than the doubles. Our offer was more than 1/2 way between that and they were actually countering for more than the double car garage sales!! And while going into winter!!! In the end, we got it together. I wonder, do any of you have stories to share? November 6, 2009 A lot has happened in the last month. Had a Special General Meeting for the strata. Had some major decisions by owners passed, one of which was a levy. Next few months should be interesting as the work gets done. Hopefully we have a mild winter to keep the snow removal bills down. I listed a really nice apartment in a 55+ complex that has turned out to be the hardest building to sell in. Had a realtor bring an offer that was...at first insulting to the seller due to the unit being rightly priced from the start, one of if not the lowest priced unit in town and not because it was distressed but because he was realistic and wanting to move on. The realtor finally brought the offer up to full price but tried to get the seller to close 6 months later!!!! Needless to say, that was the end of those discussions. A few days later we got another offer, full price and a few weeks later for completion. Let's see what the winter brings!! |