This article appeared in the Saturday, May 20, 2017 issue of Waterloo Region Homes.

Knock Knock? Who’s there? Someone who wants to buy your house? Consumer Beware! For most readers this is no newsflash: Waterloo region’s residential real estate market is red hot!

Like many markets across the Greater Golden Horseshoe (GGH), we in Waterloo region have been experiencing record breaking sales combined with low inventory levels for months now. In other words, it is a sellers’ market.

During the first quarter of 2017, there were 1,532 home sales through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR). The average price of a residential home during this same period increased a whopping 28.3 per cent on a year-over-year basis to $468,653.

While statistics like this can paint some of the picture, what it cannot tell you is what your home will sell for. The fact is no one really knows what price their home will fetch until it is put to the test of being listed with your Realtor on the MLS® System.

These days we are seeing some sticker shock. For example, when a house priced in the $300,000 range subsequently sells for a hundred-thousand dollars over asking! Does this mean that every home listed for $300,000 will bring substantially more? Absolutely not! In fact, it might sell for exactly $300,000 or even less. Only the market can determine sale price, but the experience of a knowledgeable local Realtor can certainly help predict it.

With a shortage of listings (we have been sitting at less than two month’s inventory or less for the past 12 months) inventory levels are at an unprecedented low and buyer creativity at an all-time high. One strategy some buyers and their Realtors have turned to in these times is good old fashioned door-knocking to find homeowners who could be tempted to sell while the market is hot.

Now, knowing what you do know about today’s market, what would you do if someone came knocking on your door tomorrow, offering you X amount for your house? Would you know if what they were offering was fair market value?

There is certainly nothing wrong with this practice and when it works out it can be a win-win for both buyer and seller. On the other hand, my caution to homeowners is: the person doing the knocking may be offering you a price that sounds attractive, but how can you be sure?

Sometimes in this scenario, sellers are attracted by the idea of a quick hassle-free transaction. They’ve been offered a price that is way more than what they originally paid for their home, and maybe even way more than what they ever dreamed they could ever get.

I have heard a few anecdotes recently where the buyer knocking on the door has actually encouraged the homeowner NOT to use a Realtor (It would be unethical and illegal for a Realtor to do this by the way).

In one case, the gentleman did sell his house without the aid of a Realtor, and the price he sold it for – while far more than what he paid when he purchased it over 30 years ago, was substantially less than what he would have got had he put it on the open market.

I think the Canadian Real Estate Association’s latest advertising campaign says it best: “Live with No Regrets.” Using a Realtor is the most important decision you can make when buying or selling.

On whatever side of the transaction you are on, if you have a Realtor in your corner (i.e. you’ve entered into either a listing agreement or a buyer representation agreement) they have a legal duty to only act in your best interests. Furthermore, they are bound by the Real Estate Council of Ontario, the Canadian Real Estate Association and their local real estate board’s Code of Ethics, rules and regulations.

When your home is listed by a Realtor you get the counsel of someone who understands the market and can guide you on the best pricing and selling strategy. If you’re purchasing, your Realtor will provide you with insight and advice on the home, the neighbourhood, and when it comes to submitting an offer, how many other buyers you are competing against and advice on the price you offer. So what should you do when someone comes knocking on your door? Please take my advice: take their information and then talk to a Realtor. He or she will be able to assist you in reviewing the doorknockers’ offer and help you understand all of your options to ensure you end up with the offer that is best for you.

First-time buyer activity drops as market adjusts to new mortgage regulations

TORONTO, October 3, 2012 – The Royal LePage House Price Survey released today showed the average price of a home in Canada increased year-over-year between 1.8 and 4.8 per cent in the third quarter of 2012.

Survey findings indicated that the average standard two-storey home in Canada increased 4 per cent year-over-year rising to $403,747, while detached bungalows rose 4.8 per cent to $366,773. Standard condominiums witnessed an increase of 1.8 per cent to $243,607. Most cities in Canada experienced modest price appreciation in the quarter, but fewer homes were sold compared to the same period in 2011.

“A drop in the number of homes trading hands typically precedes a period of softening house prices. Where there is reduced demand, those who want to sell their homes adjust their asking price to stimulate interest. During the third quarter, unit home sales were positive in July, fell 9 per cent year-over-year in August and we are expecting September to show a decline as well,” said Phil Soper, president and chief executive, Royal LePage. “We had predicted this cyclical change early in the year, a natural market reaction after a period of strong expansion. Changes to mortgage regulations, which took effect on July 9th, accelerated the correction.”

In July, the Minister of Finance announced that the maximum amortization period for insured mortgages would be reduced to 25 years from 30 years. This was the fourth intervention in the mortgage market in just four years and the most impactful. Potential first-time buyers, which in a typical market represent one third to one half of all purchase transactions, felt the changes immediately.

“While hard-hit in the short-term, first-time buyers will adjust to tougher mortgage qualifications. The dream of homeownership is very much alive among young Canadians. They may remain renters for sometime as they save; some will opt for less desirable neighbourhoods and some will purchase smaller homes,” added Soper. “In the meanwhile, we will feel their absence in national sales statistics.”

Canadian consumers were bombarded with troublesome economic news from around the globe during the period, particularly in the early weeks of the third quarter. While this has been a drag on the nation’s housing market and contributed to a slowing in home sale transactions, consumer confidence appeared to rebound in September, which should support activity in the important fall market.

“Policy makers in Canada and the United States have confirmed that the current period of very low interest rates will continue, likely through 2013. This is very supportive of housing market activity and any downward pressure on home prices should be minimal,” said Soper. “And for the first time in six years, sustained positive news from the American housing market should leave Canadian’s more confident about our continued economic prosperity.”

National average house price changes do not always reflect the markets of individual cities, which are closely tied to their local economies. Case in point, some $29 billion in energy related investments are now underway in Alberta and Calgary is expected to lead the nation in economic growth through 2013. The city posted healthy price appreciation for both detached bungalows and two-storey homes, as predicted in previous Royal LePage House Price Surveys and Market Survey Forecasts.

“When the underlying economy of a city is sound and growing, house price appreciation is sustained. Calgary has enjoyed solid growth in home values this year. I have also been very pleased with the growth in commercial brokerage transactions seen in our Royal LePage Commercial business in the region,” said Soper.

Regional Market Summaries

Halifax’s strong employment levels led to average price increases across all three housing types surveyed. Detached bungalows continued to witness the largest year-over-year gains, increasing 8.9 per cent to $293,000. Detached bungalows in St. John’s witnessed the largest average price gains across Canada, rising 9.9 per cent, as mega-projects continue to boost migration.

Despite a decline in market activity, Montreal’s house prices posted healthy increases in the second quarter of 2012. Standard two-storey homes witnessed the largest average price increase, rising 5.5 per cent to $387,786.

Healthy employment in Ottawa’s technology sector balanced job loss in the government sector as the region posted healthy average price increases across all three housing types surveyed, with house price gains ranging from 4.9 to 6.1 per cent.

Average house price gains in Toronto ranged from 2.7 to 5.9 per cent for housing types surveyed. Although demand decreased modestly due to mortgage rule changes, the pipeline of potential buyers continued to put upward pressure on detached bungalows and standard two-storey homes. Multiple offers are still very common in the region.

Winnipeg’s real estate market produced average price gains ranging from 6.5 to 8.3 per cent as first-time buyers remained fairly active, despite recent changes to mortgage rules.

Low inventory coupled with demand created by low interest rates continued to put upward pressure on average year-over-year price gains in Regina. Standard-two storey homes posted the largest increase of 9.8 per cent rising to an average price of $359,500.

Calgary’s healthy market activity and increased consumer confidence has led to house price gains in the third quarter for detached bungalows and standard two-storey homes, increasing 6.5 per cent and 4.1 per cent respectively. Detached bungalows in Edmonton posted strong price gains rising an average of 7.5 per cent in the third quarter, while two-storey homes increased a modest 1.5 per cent and standard condominiums declined 0.6 per cent.

In Vancouver, average house prices posted modest decreases as market activity slowed down during the third quarter. Standard condominiums posted the largest decrease, slipping 3.0 per cent year-over-year to $498,000.

New Hamburg Mennonite Relief Sale

Event Details:

Location:
Fairgrounds, 251 Jacob Street, New Hamburg, ON