May 20, 2018

Buyers Lose Their Herd Urgency

A report from Global News in Canada. “If you’re thinking about selling your home in Saskatoon but don’t have to, you might want to hang tight. The number of home sales recorded across the country dropped by 2.9 per cent in the month of April to the lowest level seen in more than five years. According to the Canadian Real Estate Association, the number of homes sold across the country also fell by 14 per cent from March to April of this year. Dustin Ratzlaff’s home sold in two months but he admits he and his wife listed it for lower than they were expecting to and didn’t get their asking price of $379,000. ‘It definitely is a buyers’ market right now, working through that was a big challenge for my wife and I and resetting our expectations.’”

“Kent Braaten, the couple’s realtor, says it could have been sold a lot sooner. ‘We had an offer on it three weeks in but the problem was the buyers couldn’t sell their home.’ A situation not uncommon to our market these days with Braaten adding that there’s no urgency for buyers when it comes to putting in an offer and that they’re shopping around. On the seller side, they’re left between a rock and a hard place and facing some difficult decisions ahead. ‘I think any of us that own a home, we always want to sell it for more than we paid for it but in not every case is that possible,’ said Jason Yochim, CEO of Saskatoon Region Association of REALTORS®. Condos, for example, he said are selling for a lot less than they were four to five years ago.”

From CBC News in Canada. “Seems new condo projects are popping up everywhere in Calgary: city centre, inner-city and suburbs. Is there really a market for all of these condos? Who is going to buy them? Isn’t Calgary supposed to be in a recession, with slow growth and high unemployment? Aren’t people fleeing Calgary? Turns out there are some solid reasons behind the condo boom. Developers are not building for today, but for future demand.”

“Add it all up, and there’s a whopping total of 88 sites entailing 6,522 homes currently under construction. That’s room for about 13,000 people — roughly the number of people who live in Brooks. In addition to all this shovel-in-the-ground stuff, there are another 128 condo projects that have the necessary permits, but construction hasn’t started yet. That’s a lot of condos. ‘Yes, we have a glut of condos on the market in Calgary today,’ said Calvin Buss, president of Buss Marketing. ‘And yes, it will take time to absorb them all. But they will get absorbed.’”

From the Canadian Press. “Lynne Kent says owning a home in Vancouver that’s valued at $4 million isn’t the blessing it may appear to be. She and her husband are among a small group of homeowners in British Columbia facing a tax bump on homes assessed at over $3 million who say they simply can’t afford it — a claim that some are questioning. ‘I think the whole property value escalation is more of an albatross than a benefit, and have seen it that way because this whole escalation is really pushing us out of our home,’ said Kent, 71.”

“For the Kents, that would mean an extra $2,000 annually. Kent and her husband bought their three-bedroom bungalow in the Kitsilano neighbourhood in 1972 or 1973 for about $40,000, which was their household income at the time. They renovated the 1923 home in 1982, themselves. As retirees, they live on Canada Pension Plan and Old-Age Security payments, plus some savings, she said.”

“Kris Sims, B.C. director of the Canadian Taxpayers Federation, says it could represent a slippery slope to an extension of the tax to less expensive homes. And she pointed to families not unlike the Kents, who have children and want to pass their homes on to the next generation, which may not be able to afford the taxes on them. From Sims’ view, it doesn’t matter if a home is assessed at $8 million. The homeowners don’t deserve a ’surprise’ $16,000 new tax each year, she said. ‘On paper, their homes have ballooned in assessed value,’ Sims said. ‘That is why this is really unfair, because it’s based on assessed value, not (price) when it’s sold.’”

From the Australian Financial Review. “Sydney’s auction clearance rate fell to 50 per cent at the weekend, and housing market economists have predicted further ‘gradual’ price corrections over the quieter winter months. ‘This is consistent with continuing gradual falls in prices,’ said AMP Capital chief economist Shane Oliver. ‘Sales volumes are also continuing to decline on a year ago.”

“Sydney detached house prices have fallen more than 5 per cent over the past 12 months, according to CoreLogic. Listed estate agents McGrath recorded a 55 per cent clearance rate in Sydney, selling 39 from 71. However 17 homes sold prior to auction – an indication of vendor nervousness – and five properties were passed in with no bids.”

From New Daily in Australia. “The inner Sydney apartment of The Block judge Neale Whitaker has failed to sell at weekend auction. It was passed in on a vendor bid and now comes with a $1.65 million asking price. The apartment was bought for $1,705,000 in 2016 when inner city market conditions were stronger.”

From Domain News in Australia. “The Melbourne auction clearance rate was stuck in the low 60 per cent range at the weekend for the third week in a row, prompting market watchers to urge buyers to apply ‘more strategy’ to their purchasing. The trend to pass-in negotiated results has shone a spotlight on the ample leverage held by prospective buyers. ‘The market has certainly turned into a buyer’s market, so you can negotiate and not just on price,’ said executive chairman of the WBP Property Group, Greville Pabst.”

“Mr Pabst said it was unwise for a buyer to accept an agent’s invitation to ‘go inside’ a property after a pass-in and be contained in a room. It was better, he said, to stay outside on the street where you could see and evaluate any remaining competition.”

“Other buyer’s advocates reported a large number of pass-ins around Melbourne on Saturday, particularly for properties priced from $2 million to $4 million. Woledge Hatt director Adam Woledge said Camberwell’s family home market between $2 million and $3 million was soft: ‘There are a lot of offerings in the Camberwell market and they are not really going anywhere.’”

“Nelson Alexander sales director Arch Staver said a number of people in the present market had made purchasing decisions last spring but postponed selling an existing home: ‘They intended to sell in six months’ time, but the reality is that six months is a long time in the real estate market. Things change. Banks freeze up on lending and buyers lose their herd urgency.’”

From in Australia. “Home sellers will need to consider new strategies to entice buyers if they want to offload their properties for a top price in Sydney’s changing housing market, experts have advised. This has followed a major shift in the supply and demand balance across much of the market, which has put buyers in a stronger position to negotiate more favourable purchasing terms. Figures from SQM Research showed there were 33,000-34,000 homes for sale in April and March — 34 per cent more than at the same time last year and the highest number since 2011.”

“The listing jump corresponded with a drop in buyer demand, with additional data from revealing there were nearly a fifth less people actively searching Sydney listings compared to a year ago. The biggest impact of the change was that sellers could no longer expect to list their homes for hundreds of thousands more than what comparable properties sold for only months ago and still expect to attract a buyer, said SQM Research director Louis Christopher.”

“Sellers in areas where large numbers of new homes were being released for sale such as Sydney Olympic Park and Putney in the northwest typically had to slash the most off their original asking prices to make a sale. ‘Vendors have to price their properties more competitively in this market,’ he said. ‘There is a risk in listing too high.’”

The Sydney Morning Herald in Australia. “If you want a sense of how intense the pressure is for apartment development in Sydney, talk to the manager of the landmark Tennis Ranch at Gladesville. Therese McCabe said the owner of the land on Victoria Road fielded ‘a couple of offers a week’ to sell. And her customers, who have seen how quickly apartment blocks have sprung up in the City of Ryde, keep asking if they will be closing. ‘Hopefully not yet,’ she answers.”

“Mrs McCabe was speaking after the state government froze new planning proposals for residential development in Ryde, conceding that rapid growth in apartments was outpacing infrastructure. It also suspended in both the City of Ryde and City of Canterbury Bankstown new planning rules that make it easier for residents to convert their blocks into medium-density homes.”

“Mrs McCabe believes new residential developments have generated too much traffic in Gladesville and questions how many apartments are vacant, either because they have not sold or are owned by investors. ‘I really do think it’s gone from ‘a little’ to ‘too much’ in a short space of time,’ she said. Ms Hall pointed to one apartment block she thought was fine, with a retail area below, but others were just too tall and many units were unoccupied.”