Question:
My home is currently for sale, and I am not getting any people coming to look at it, let alone making offers. My neighbour sold his home in the spring for $550,000 and received multiple offers, and I’ve priced mine (which is comparable) to reflect that going rate. Why is my home receiving so little interest from buyers, but his sold in two days with several offers? Am I doing something wrong? Am I going to be able to get what my home is worth?
Answer:
In short, the party is over. The market is leveling off, and the implementation of the HST pushed many closings to happen before July 1.
“Over the past 47 years the Ottawa real estate market has given an average four per cent annual return in increased value to owners. Ottawa is considered the most stable real estate market in Canada because of the federal government base and is known to truck along just like a bond return,” says Sunny Daljit, CEO and Team Leader with keller Williams Ottawa Realty, Brokerage.
“Over the last 10 years, however, Ottawa’s real estate has returned sometimes more than 10 per cent per year and values have risen considerably. Relative to other Canadian cities and other world capitals our real estate is still economical and fair. However, all good rides must come to an end, and we balance off until the next cycle.”
In short, the past 10 years have seen increases well above the norm, and it’s not something that people should get used to. It is quite possible sellers won’t be able to get the record prices of only a few months ago. It doesn’t mean they’re not getting what their home is worth; it means the market is leveling out from all-time highs.
“During a multiple offer situation the seller usually gets a bonus, usually around 10 per cent, however, don’t fool yourself that this is the new market value. The fact is that your neighbour’s house was only worth $500,000 and they got the extra money because of the bidding environment. Now your home is comparable and listed at $550,000 and you have had very little activity, so it needs to be reduced to what it would be worth before multiple offers,” explains Mr. Daljit.
The more the home sits on the market without showings and selling, the more you will lose the captive audience. In fact, if you wait too long you may have to cut the price drastically because when properties sit for long periods, it sends the message that the mainstream consumer is not interested, and it gets “black listed”.
“Remember the market always dictates activity, so don’t wait, reduce it now. In the bigger picture you have still done well on your real estate investment because if you purchased the home for approximately $300,000 in 2003, that is a great return for seven years, and still well over the normal Ottawa average.”
According to Mr. Daljit, leveling off is going to be the best thing for Canadian real estate in the long term after a record run. “With the way salaries, unemployment and cost of living are going, real estate needs to stay close to current levels. The higher it goes, the harder we fall, and increases the chance of washing away the bulk of a person’s net worth due to real estate equity.”
BUYING & SELLING – Your Ottawa Real Estate Information Source
The party’s over as Ottawa’s real estate market levels off
The Ottawa Citizen
Saturday, August 28, 2010
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