Without a doubt, what we are witnessing in the local real estate market is unprecedented. About this time a year ago, realtors thought they were looking into the abyss as the pandemic first hit. There were dire predictions by some (including the head of CMHC) of plummeting real estate prices as people had to sell their homes and supply flooded the market. Nobody saw what was about to come next – something we will call “The Covid Effect.” While over the past few years we have seen a slow but gradual increase of people moving to our area, the pandemic put this movement on steroids.
Migration of people out of larger urban centres in the GTA, combined with historically low interest rates and very few homes for sale in our area, has resulted in a very quick and significant increase in real estate prices. Homes are selling for $ 100,000 to $ 150,000 or more than they would have sold just 12 months ago. Many homes are attracting up to 18 offers – even more in some cases.
The Proper Execution of a “Holding Offers” Strategy
If you are following the real estate scene, you have certainly heard about how realtors are “holding offers“ on homes for sale. Properly executed, great for sellers – but admittedly not enjoyable and very frustrating for buyers. Simply stated, “holding offers” is when a home is listed for sale today, but the seller does not look at offers for 5-7 days. The goal is to get as much viewing activity as possible and attract multiple offers – with the desired result of achieving a sale price/firm offer well over asking price. Sounds simple – but it is not. While many realtors are holding offers, executing the process properly is the key. A recent example of one of our listings shows details and process matter. Two similar homes on the same street came to market at the same time. Our listing, with 18 offers and a selling price $ 175,000 over ask, significantly outperformed the other out of town realtor listing. Our selling strategy, understanding of the local market, attention to detail, and staging approach made a difference.
A Cautionary Note on Selling Privately
I get it, real estate commission is a lot of money. So the attraction of saving commission is understandable. And houses are selling themselves right now, so who needs a realtor anyway? Let me say this – a good realtor is worth it. And I truly believe this market is one where a good realtor is especially worth it. I have witnessed a few private sales recently (and when I say private, this includes sellers who use a “do it yourself” real estate service which assists sellers in the sale). In most cases, the seller still paid a commission to the buyer’s realtor, but “saved” the 2% or so listing commission. So a great result, right? Not so fast. At the end of the day, it’s about what you net from the sale, not commission. In the sales I have analyzed, I strongly believe the sellers would have sold for significantly more using a good realtor utilizing a properly executed holding offers strategy – and would have netted more money in their pockets. The local market is changing so fast right now, so using a good local realtor who understands what is going on is imperative to ensure you do not leave money on the table. As Centre Wellington’s # 1 listing realtor, I have my finger on the pulse of the market. I am confident the results I will get for you will exceed the commission I charge. (Note: While I have concentrated on selling price, a good realtor knows it’s not just about price, especially in this market. You want your home sale to actually CLOSE on closing day. Complications over issues like appraised value vs selling price can end badly for sellers. A good realtor knows what questions to get answered early on in the process to ensure a smooth closing. But this whole matter is for another article another day. Suffice to say, this is truly where a good realtor earns their commission.)
Should You Sell Now – or Wait?
While I don’t have a special crystal ball, in my opinion what we are seeing in the local real estate market right now is not sustainable. So from that perspective, yes – now is a great time to sell. To be clear, I think the real estate market in our area will remain strong throughout 2021 – but 20% + price increases simply cannot continue. While I do not see prices decreasing in our area, I believe supply and demand will balance out somewhat later this year and we will not see the frenzy of 10-20 offers per listing we are currently witnessing. Multiple offers are not going away, but the numbers and frequency of multiple offers will decrease.
Of course, whether to sell or not isn’t a straightforward decision. While you might be able to sell your home for top price right now, the challenge for many is – where do you move to? Unless you are moving out of the area, this is the major challenge one faces until more homes come to market for sale. I am seeing more people moving north to seek more affordable housing, but home pricing to the north has also been impacted by the Covid Effect, so even that option is now off the table for some. And certainly the trend of more and more people moving out east is getting stronger. I have had several clients move out east over the past 12-24 months – and this trend is picking up momentum.
A Few Final Words
As a realtor, I see up close how our community is being impacted by the changing real estate market. Sellers hire me to sell their home at the highest possible price. That’s a fact I do not deny. At the same time, I do see how the escalating pricing is making it much more difficult for local buyers – especially first-time buyers – to afford a home in the Centre Wellington area. Buyers from the GTA are often the ones winning the bidding wars – that is also a fact. The optimist in me says – we are a healthy, growing community – and having younger people move into our area is a good thing for the future of our community, right ? But I am conflicted for sure. I hope all the people moving to our area settle down and make roots in our community – make this community their own. Become part of the community. I hope we aren’t simply viewed as a place to buy more affordable housing. I hope people are moving here because they see it as an amazing place to live – a place they will come to love. The ironic thing is as people look to buy here as an affordable alternative, our community becomes more unaffordable for people who already live here. It does concern me as well that many moving here will need to commute. The housing growth in our community is far outpacing employment growth. We need to create more jobs in our community. I do not have an answer for this today, but as a community – including our local politicians – we must come up with an action plan.