It’s the mid-point in this summer of 2013. The 25th edition of the Beaches Jazz Festival has come and gone, and the August long weekend is here. Just around the corner are the advent of the back-to-school sales pitches, and the impending start of school. Yet, there is the beautiful month of August still to enjoy, so I would be ill-advised to put this summer in an envelope and mail it off just yet. So, I thought I’d muse about what has happened in the Beach real estate market over the last few months, and what you may expect at summer’s end, and into September.
If you’ve kept an eye on media reports over the last couple of months, I think you’ll notice that optimism has once again replaced the underlying pessimism of March and April. The Canadian real estate market as a whole is, and has been, broadly resilient to downward economic pressures, whether they be domestic or international. The pundits and prophets on each side of the fence have been taking turns staking out their positions and spreading their news. Much like this summer’s weather, these reports have been very stormy and threatening, or sunny and warm, with everything in between, too. And these conflicting revelations aren’t new either. We have been experiencing differing opinions of the real estate market for what seems to be the last decade and more. Remember the gloom in the fall of 2008? The market took a breather after the financial meltdown (and for good reason), but by the early spring of 2009 we were seeing record prices. The Beach market took leaps and bounds during that period, and hasn’t looked back since.
During this year’s winter and spring there was somewhat of a hesitancy that crept into the Beach, save for the single family home market below $700,000. The colder and longer winter compared to what we had seen the previous two or three winters before seemed to have an impact on the market. So, it was assumed that the warmer spring weather would provide the impetus needed to kick-start the spring market. Yet April and May’s weather wasn’t overly inspiring. Here, first time buyers looking to gain a foothold in the Beach were still actively pursuing what little inventory came to market. Yet, when it came to offers, there were one or two less participants in the bidding process. Perhaps more than a few first-time buyers decided to wait and see where the market might go. The result were still robust selling prices for houses in this category, but not the tremendous over-asking prices witnessed the preceding two or three springs. Some sellers were absolutely thrilled with their selling price, but others may have felt let down.
The mid-level market between $700K and a million bucks was also gaining more of a balance between buyer and seller, with less multiple offer scenarios and a mild softening in the numbers of active buyers. The inventory level continued to grow, offering more selection to buyers. In this price point especially, we began to witness less game-playing when it came to offers. The strategy of setting the offering price lower than one might expect in order to generate a bidding war wasn’t as popular this spring. Instead, it seemed that sellers were setting a more accurate asking price, and didn’t assume they’d see a half dozen or more bidders. Sellers were more motivated to sell at asking quickly, rather than to hold off and risk taking less.
The most noticeable segment of the Beach market to show signs of slowing these past few months was in the higher end, homes priced at $1 to 1.5 million. They weren’t flying off the shelves at the rapid pace witnessed before. The upper end of the Beach market, those properties priced above $1.5 million, showed the highest amount of buyer fatigue. Most needed to adjust their prices downward in order to gain some traction and sell. In this price range, negotiation was the name of the game. I should add, too, that proper pricing and a having a ‘plan b’ price reduction strategy was (and is) very important in the higher luxury end of Beach properties.
The last while, especially since mid-June, has seen a slight uptick in the Beach market. Perhaps buyers started seeing the postings of the market strengthening and more positive viewpoints. The economy seems to have kept its steam, and the low interest environment will continue to keep real estate buoyant. Importantly here though, is through the last few months, and we will continue to observe, is that the frothy head of selling prices has been wiped away. That is to say, sellers won’t see buyers extend a second and third handful of cash their way unless the value is there. This correction in selling prices isn’t a result of a weakening Beach market. Rather, it’s a more balanced and thoughtful market, one void of the excessive prices of the last few years. Overall, my prognosis is for a mildly strong and healthy Beach market heading into September and October.
If you have any questions regarding this article, or Beach real estate in general, feel free to call me at 416-690-5100 or email email@example.com. Have a fantastic August. See you in September!
Thomas Neal is a well-known and respected local Beach agent Real Estate …Beach Wise