The Truth About Our Market – It’s Urgent!!!…
Part 2 of a 10-Part Series
No it’s not. The fact is that the majority of buyers in this area to not “need” to buy. I hear it day in and day out, especially during negotiations when the buyer inevitably wants a deal to talk about for ages. I can always imagine the conversations (“Gather ‘round grand kids, it’s story time! When great-granddad was just 42, I bought this cottage for only six dollars! The guy told me $7, and I said I don’t need to buy this, and I walked away. Oh, he came back pretty quick. Now that’s a great negotiator kids!). 😉
The quest for low hanging fruit is thwarted by the contents of my next blog, Vol. 3; Sellers Don’t need to Sell. Stay tuned for that one. Also, if you haven’t already done so, please like my facebook business page for your chance to win one of TWO iPad MINI’s! The button on the side is to ‘Like’ my page, and the one below is to ‘Like’ this blog post. 🙂
Back to the subject at hand, which is the lack of urgency in our market, from either side. We have two types of buyers here; residential full-time, and recreational part-time. The recreational certainly have absolutely zero urgency, for the most part. Residential full-time are likely to have a few drops of urgency, but there is still often not enough to easily close a pricing gap between buyer and seller.
The reality is that there is ALWAYS a gap between the two in every market. Using our neighbour to the south in Toronto, what happens is that demand and urgency make up that gap very quickly. The knowledge that this house won’t last long on the market and they have to buy it now or never, makes it easy to add a few dollars to your offer. This is compounded by the buyer knowledge that they can’t go wrong and lose money on the house, and the urgency of needing to buy or sell in a certain timeframe to avoid displacing their family.
In the land of opposites up here, the buyer has usually watched other listings slowly reduce their price until they sell. This creates false hope for the buyer and they think this will happen with ALL listings. So, even when you list a property in the proper market value range… (Yes, it is a range here, due to lack of similar comparables and variables. This will be addressed in Vol. 4) buyers will still wait hopefully for a price reduction. This makes negotiations difficult, as the buyers see the list to price ratio on past sales and expect the same. So, it leads to Sellers wanting to price a bit high to allow for negotiations, and this slows the market even more. And the vicious cycle continues 😉
The truth is that we may never overcome the reality that our market is dominated by weekend buyers who don’t desperately need a weekend cottage or condo today, and still have the option to select from thousands of rental options until they find a place to buy. These weekender buyers are speckled with other buyer types, like retirees, investors, young families moving to the area (if they find the absolute perfect place), and the locals who are making a move. All of these buyer types remain cautious, casual and indecisive, and lack the urgency that drives sales and closes pricing gaps in most markets.
The good news is that pricing is getting better and better up here, and inventory is getting smaller. Developments are beginning to sell again, and more and more buyers are realizing that the longer they wait, there actually IS a chance they will lose out on a property. Referring to Volume 1, the Advil is working and the hangover is wearing off. We now just need the smell of bacon to drift through the area to help complete the market correction of the hangover analogy! 🙂
In the end, we need to focus on why we want to own property here in the first place, and it is for lifestyle and enjoyment. Whether it be weekends, full time, or retirement, the real motivation to be here should not be to get a good deal, but to have a ‘good life’ filled with recreation, great people, fantastic landscapes and locations, and best of all… no traffic! (Well, aside from the LCBO on the Friday of a long weekend…)
I aim to keep these short, but I am just so wordy! Always wanting to say it all in one breath! I can’t cover it all in one blog post, but it will be covered and summarized throughout the series. Each of these topics will not be mutually exclusive from the others. Thanks for reading. Don’t forget to like this post AND my business facebook page.