By Lindsay Smith/Real Estate Columnist
The first offer was $6,000 over asking price. The young couple had hearts racing with excitement knowing they had a strong offer. The home sold for $60,000 over ask. They “wised up” quickly, and when they found the next home they wanted to live in, they offered $60,000 above asking with no conditions. There were 54 competing offers. They didn’t even come close to the asking price.
Another couple, retired, sold their home and moved to an area where the prices were much more affordable. They decided to rent for a year to determine the best neighbourhood that would suit their lifestyle. Over the next year the prices jumped over $100,000 and they now are considering moving to a more affordable town.
Are we talking Durham Region? Oshawa, Whitby or Clarington? We could be, however, the first example was Salt Lake City, Utah, and the second, Boise, Idaho.
The real estate market is not only challenging to enter here in Durham Region, the difficulties are North America wide. Austin Texas saw a 44 per cent jump in values, year over year. That is similar to Durham where year over year the home prices increased 34 per cent. In the famous words of the songwriter Tom Waits, “Yeah, things are tough all over.”
The impact this market is having on buyers can be termed “buyer fatigue.” This is what happens when a buyer gets emotionally invested in a home they want to buy, only to see it sell to someone else, in some cases over and over. It really sucks. This is where a realtor who is experienced in, not only sales but also in helping to navigate the emotions that come with loss, is critically important to keep buyers on track with a positive attitude until they connect on a property.
As a buyer moves through the buying process, other obstacles show up that question if buying now is a good decision. Weekly we are seeing pundits, economists and journalists predicting a collapse in prices or a “meltdown” in our real estate market. Add to that the friends, family members and co-workers who share their opinions on real estate and breathe a little more doom and gloom into a buyers’ mind. It is tough to remain positive and holding onto a belief that real estate is a good investment and that now is the right time to buy.
Let’s review a bit of history. If we go back five years and compare the week we just had we will see that in the past seven days 87 per cent of the homes sold, sold for full price or more than asking. Five years ago, 76 per cent of the homes sold at or over asking price. For the nay-sayers predicting doom, I can guess they were predicting a collapse every year since the market started to increase which would have been around 2005. For fun, I looked at the same week in 2005 and there were 16 per cent of homes sold for full or over ask. It had really started about that time.
Talking about real estate in Canada is like chatting about weather. People are fascinated with bad weather reports and read into what they see adding their own narrative. This happens in real estate. How does a buyer wade through this information and continue along the process of becoming a homeowner? For starters, turn off the negative nellies and focus on what the objective is, to become a homeowner. Real estate is a long-term investment, and if you plan on being a homeowner for a five-plus year cycle, any minor corrections will return any decreases in value. Locally we did have a sharp decrease in the spring of 2017 and currently our values are hundreds of thousands higher.
As a buyer on the hunt for a home, my advice is simple. 1) Be patient, the right home will come along. 2) Allow the process to educate you about how to be successful in buying a home. The lessons learned can be painful or helpful. Once you understand the dynamics of buying in this market, you will become successful. 3) Get pre-approved. As in a full pre-approval. This means not just an online form application but meeting with a mortgage broker and submitting pay stubs, letters of employment. Also, make sure the pre-approval is updated. Most have a 90 day expiry date. 4) Lean on your Realtor. If they are full-time and experienced, they can help ease the process. (I mention this because we have about 60,000 realtors on our real estate board and in 2012, we had 22,000. Most you will meet have less than 10 years experience) 5) Be flexible. Once you get your foot in the door of home ownership you have an asset that will increase in value with the market. This is the most amazing protection as it appears the market will continue to increase in values over the next few years.
The above examples came from an article I read in the New York Times. In the article, the couple from Utah ended up touring 70 homes, made 14 offers and had no success. I look at this and shudder. I can’t imagine how heartbreaking going through that process would be, and I have to question if the advice they are getting, from their realtor, family, friends or co-workers, is part of the reason they are still renting.