Over the past year many have asked “Is the bubble bursting?”, or “ how far are prices going to drop?”, and “when is the market going to turn around?”. We all know Real Estate is cyclical, but until we live through it ourselves, it’s just something that appears on a bar graph at a conference. For many of you, this is the first real downturn in a Real Estate market you’ve experienced. It has been almost 25 years since the last major downturn which was caused by incredibly high inflation and interest rates. Those conditions haven’t existed for years, in fact none of the causes for the last major market drop exist today. The failure of the American and western economies, and probably more accurately the loss of confidence in those economies left the world in shock. Even though Canada has been heralded as the poster country for economic stabilization, we were not immune to the emotional turmoil spreading throughout the world. Consumer confidence faltered here just like everywhere else, even though it wasn’t for the most part based on reality. We are living with the remnants of that feeling. Areas such as Vancouver, Toronto, and Alberta have been immune to market destabilization due to large numbers of immigrants and their commodity based economies. None of which applies to little old Halifax. Of course there is no crystal ball, we can never know when things will turn around, how fast the upswing will be when it happens, or the triggers that will spark the turn around. Consumer behavior is an ever changing and fickle environment.
Having said that, there are certain general truths that apply to all markets:
● Downturns and upswings in the marketplace are normal and should be anticipated
● The downturns will almost always be swifter than the upswings (this is a good thing) unpredictability is short lived.
● downturns are almost always caused by irrational fears in the marketplace and their causes are usually hard to identify.
● The triggers that create upswings are generally more rational, tangible, and easier to identify
● Buyers know when the market drops before sellers know it, or at least admit it.
● Markets will remain out of balance until buyers and sellers believe the same realities about the marketplace ( it’s either a buyer’s, a seller’s, or a balanced market)
● Lastly, all markets eventually have an upswing. People get tired of not buying.
Overall HRM Market: ( MLS Areas 1-40) Our market has been out of balance for several years. Buyers and sellers haven’t agreed on the market conditions. The general consensus is that this is changing rapidly as Sellers are now figuring out it’s a buyers market. Over the last 7 months, list prices have been dropping and selling prices are down almost 2% over the same period last year. It’s impossible to calculate how far prices have dropped overall since we don’t keep track of price drops for listed homes that haven’t sold yet, but is certainly substantial. Sellers have been more cooperative and open to negotiations, they have been open to discussion on inspection issues, especially issues around water and septic quality since lenders and insurers are tightening their requirements. The converse to this is that Buyers are feeling more confident. They are more aggressive with offers, less accepting of inspection deficiencies, and more willing to terminate a sale, especially with the higher than normal inventory levels. Overall, the feeling is more positive now than it was at this time last year. The buyers are responding to falling prices. The challenge is that the increase in buyer activity hasn’t translated into cash in our agents pockets yet, BUT THAT WILL COME. Conveying the realities of the market to potential buyers and sellers is still the main focus of discussion. We receive HRM market reports from the NSAR monthly (usually received by the second week of the month immediately following the month in question).
- RE/MAX nova has sold almost 5 times more homes YTD than all 6 leading discount brokerages combined, even though they have more than half the number of listings we have.
- Over the last 7 months, list prices have been dropping and selling prices are down almost 2% over the same period last year
Market value from an investment point of view over a 5 year period actually averaged very well with the exception of Area 11. If you were to receive news that your property value dropped by as much as 7% from the previous year, you would think the market tanked but adjoining neighbourhoods could have actually gained by as much as 18%! Statistics only make sense when compared over time to see "real" performance. With so many variables affecting value, you should really consider getting a custom comparative market analysis completed for your individual property before you decide if it's a good time to sell or buy in your neighbourhood. We at Merv Edinger & Associates of RE/MAX nova are here to help you understand the statistical data & market conditions to make an informed decision. Contact Merv at 1(902)497-1217 to make arrangements to discuss your best options.