as a more competitive market takes shape for spring 2012, says RE/MAX
Major Canadian real estate markets continued to show exceptional resiliency throughout the first quarter of the year, with strong demand and diminished supply setting the stage for a heated spring 2012, according to a report released by RE/MAX.
The RE/MAX Market Trends Report, highlighting sales, price, trends and developments in 15 markets across the country, found that 12 of 15 Canadian centres (80 per cent) were reporting year-to-date (January-February) sales activity ahead of last year%u2019s levels, with more than half reporting double-digit increases. Low interest rates, coupled with strong consumer confidence levels and a mild winter, played a significant role in the upswing, ushering in an early start to the spring market. Average price climbed in 14 of 15 markets (93 per cent) examined, yet appreciation was more tempered, with only three markets posting gains in excess of 10 per cent. Tighter inventory levels at entry-level price points have sparked bidding wars%u2014particularly in Winnipeg and the Greater Toronto Area%u2014with similar conditions starting to emerge in Saskatoon, Regina, London-St. Thomas, Hamilton-Burlington, Ottawa, St. John%u2019s, and Halifax-Dartmouth.
Given the current economic climate, the strength of the country%u2019s housing market clearly reflects the value Canadians place on homeownership. One driving factor has been the overall performance of the market over the past decade. Existing homeowners have realized substantial equity gains, especially in recent years, and many are taking advantage of the combination of historically low interest rates and equity to upgrade. Perhaps more importantly, housing has outperformed just about every other asset class %u2013 and a principle residence is capital gains exempt %u2013 a fact that%u2019s not gone unnoticed.
In terms of sales appreciation, the best performing markets heading into the traditionally busy spring season were Halifax-Dartmouth (35 per cent), Saskatoon (21 per cent), Saint John (20 per cent), Regina (16 per cent), St. John%u2019s (12.5 per cent), Greater Toronto Area (12 per cent), London-St. Thomas (11 per cent), and Edmonton (11 per cent). Only Vancouver, Kitchener-Waterloo, and Winnipeg have experienced softening in housing activity so far this year. Sales are down 16 per cent in the Greater Vancouver, 4.5 per cent in Kitchener-Waterloo, and almost on par in Winnipeg.
Housing values are escalating at a steady pace in most major markets. Yet, gains are, as predicted, much more moderate than in years past. We expect this will remain the trend moving forward%u2014in line with the Canadian economy, as GDP growth also moves ahead at a more subdued pace. Conditions will vary locally, with some markets exceeding expectations, largely due to the fact that the significant influx of inventory expected never materialized or, in the case of Saskatchewan and Newfoundland, the local economy has shown extraordinary strength. On the whole, this is a very stable and healthy housing market in line with traditional norms, with few exceptions.
Year-to-date average price in most major centres is also on the upswing. Winnipeg, Greater Toronto and St. John%u2019s each posted a percentage increase of 10 per cent in the first two months of 2012. Values in Kitchener-Waterloo followed at nine per cent, while Regina and Saskatoon escalated six per cent.
Purchasing intentions have largely been driven by confidence in a buyer%u2019s own employment and financial picture, followed by major lifecycle events. While global uncertainties caused some to pause in recent years, purchasers will only sit on the fence so long before the need to make a move becomes a stronger impetus. That reality is starting to fuel momentum, along with the domino effect of an enthusiastic entry-level segment. First-time buyers are driving demand in both the smaller and major markets, in turn sparking strong sales activity among move-up purchasers at the higher price points. As a result, the upper-end of the market has also held up well. There%u2019s no question that the spring 2012 market will see all segments working in tandem.
Highlights:
Halifax-Dartmouth%u2019s residential real estate market is firing on all cylinders thanks to the $25 billion shipbuilding contract awarded in the last quarter of 2011. Renewed confidence has bolstered home buying activity, with sales up 35 per cent over one year ago.
Markets in Saskatchewan are also red-hot, with Saskatoon (21 per cent) and Regina (16 per cent) supported by strong economic fundamentals and increasing population levels in the province.
Tight market conditions have seriously hampered sales activity in Winnipeg, but purchasers remain undaunted. In February, 44 per cent of single-family homes sales sold above list price, while 31 per cent of condominium sales sold for more than ask.
In Greater Toronto, multiple offers are commonplace in blue-chip neighbourhoods, with an estimated 50 per cent of detached homes priced in the $600,000 to $900,000 price range selling for more than list price.
The First-Time Buyer%u2019s Tax Credit and remediation of the Harmonized Sales Tax (HST) issue in British Columbia is expected to breathe new life into housing markets this spring.
There is NO 'Canadian' Real Estate Market!
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How Do I Get Started in Real Estate Investing?
“How do I get started in real estate investing?” This is the most common question I’ve encountered amongst ‘would be’ investors. My first response is, do NOT rush out and start looking for properties you think you can afford, with the idea of renting them out to anyone who is willing.
The question is a good one, and one that needs to be asked and answered. Real estate investing is a business venture and therefore, like in any new business venture, there needs to be a strategic plan of attack.
Firstly, and most importantly, you must prepare yourself through EDUCATION, EDUCATION, EDUCATION. You need to be dedicated and focused about learning what it is you want to do. It can take a year of seminars, books, talking to experienced investors, mortgage brokers, and real estate agents plus researching opportunities and growth potential of different cities in Canada.
You don’t become a professional at anything without study, dedication and focus… and this takes time. Don’t rush it, learning the business around your investment must be undertaken with due diligence.
Secondly, you wouldn’t start a business without a ‘business plan’ (your vision) and real estate investing is no different. Real estate investing is not a destination... it is the vehicle to get you there. Create your plan that will answer these questions:
Why am I going to do this
What is it I want from this venture
What should I be looking at financiall
What are the bookkeeping aspects
What are the steps of how I’m going to do it
What research to I need to complete
What kind of tenant do I want to have and what are they looking for
What’s involved with property management and how will I deliver that
There are many things to consider and learn about. I suggest joining REIN (the Real Estate Investment Network). Here you will meet and learn from seasoned real estate investors that will help and support your goals. I also can recommend the following books that will enlighten and educate:
Robert Kiyosaki and Sharon Lechter’s, Rich Dad Poor Dad, (identifies what is an asset and what is not)
Don Campbell’s, Investing in Canadian Real Estate, (2nd Edition)
Peter Kinch’s, The Canadian Real Estate Action Plan (proven investment strategies to kick start and build your portfolio)
These are some ideas to get you started in the right direction. If you are already a successful real estate investor and have any suggestions of things that helped you get started, your comments are welcomed.
Why Behind-the-Scenes Work Is Key to Selling a Property
Anyone can put a “For Sale” sign on a property, but an experienced real estate agent makes all the difference when it comes to marketing and promoting a property. Following are some examples of what goes on behind the scenes in promoting a property:
1. Communication: Writing a description that sells isn’t as simple as it might sound. Presenting a property in the best light while maintaining professional objectivity is as much an art as a skill. Experienced agents understand what buyers are looking for and how to communicate with a specific target market.
2. Contacts: If the most important aspect of property valuation is location, contacts must surely be the most important aspect of selling a property.
Real estate agents are expert networkers with extensive contacts within the community. In addition to listing the home on the Multiple Listing Service, personal websites and other Internet venues, real estate agents often send out mailers to prospects on their personal client lists. Using an agent often allows sellers to close on properties months faster than trying to go it alone.
3. Confidence: It’s no secret that people are more inclined to do business with someone who puts them at ease and instils a sense of confidence. Buyers and sellers alike often feel more relaxed, free to ask questions and open to negotiation when working through a third party. Agents work closely to show the home, provide valuable feedback and create a win-win situation that benefits everyone involved.
Home value sometimes referred to as "Value in Use", is best described as the probable price at which a home trades in a free, competitive, and open market and is synonymous with the market value.
HOW REAL ESTATE MARKET CONDITIONS AFFECT YOUR OFFER PRICE
A hot market is a "seller’s market". During a seller’s market, properties can sell within a few days of being listed and there are often multiple offers. Sometimes homes even sell above the asking price. Though most buyers want to get a "deal" on a home, reducing your offer by even a few thousand dollars could mean that someone else will get the home you desire.
You may have lived in your home for many years. The location factors that you considered when making your purchase decision may not apply to today’s buyers. The task is to identify the current positive aspects of your home’s location and market them aggressively. When it comes to positive locations, people’s different attitudes and preferences will determine if a location is a “good” one.
to Selling a Property
