:: Barrie Real Estate 2009 Market forecast ::

Discussing the highs and lows of the year as it draws to a close along with preparing plans of action for the next year's market are annual rituals of the Realtor. Another is attempting to forecast the Real Estate market for the coming year in so far as how it will financially enhance or impact on all of us. No one has the crystal ball (snow globe?) that can predict the next year's market with 100 % accuracy but some amongst us are better than others at reading the signs and interpreting the past and present to project on what is to come .

2008 in review
From early in 2008 a suspicion (at least amongst many Realtors) began to manifest itself that home prices which had risen with consistency for each of the previous eight years were beginning to look like they were hitting a plateau.
People moving to Barrie and continuing to work primarily in the GTA have always made up a significant portion of new buyers but prices had increased to a point where in addition to the dramatic increases in gas prices, many of these home buyers were opting to either buy a lesser home or condo within the GTA while others have stayed out of the market completely in 2008.

We also began to see an easing back on price increases for the first time since the early part of the "new millennium". As a result fewer existing home owners were seeing the year over year equity increases that has instilled the confidence in previous years to cash in and buy into a higher priced home now within reach. The trading up buzz was gone and people were instead sitting tight and the lure of the bigger home fell into remission.

Homes typically beyond the average 1st time buyer range ($275,000 and up) were starting to take longer to sell as a result and by early summer record numbers of listings in this price category were accumulating. With this, the shift from a seller controlled market to a buyer controlled market had taken hold. The gap between list price and final sale price on homes over $275000 was growing, further evidence that we were now into a buyer's market.
In spite of the signs, home owners were slow to accept that for the first time in a few years their home did not increase by a five figure amount over last year and in fact may have even decreased some in value over the past 12 months. It was also an adjustment period for many Realtors who got caught up in the whims of ambitious vendors and found themselves saddled with stagnant listings that languished on the market indefinitely only to expire, and often reappear under the banner of another overly anxious Realtor.

One of many examples of market denial amongst sellers this year occurred for me in a listing presentation this spring where a couple insisted on my listing their home for $25,000 more than I had determined it to be worth telling me they had talked to other agents and one of them was willing to list at the price they wanted.

I told them shopping around for a Realtor who agrees to take an over valued listing is much like shopping around for a doctor until you find one who tells you you are at your ideal weight.

It is only in the last quarter of 2008 that the realities of how the overall economy is affecting home values and sales volumes has started to take hold on the majority of Barrie area home owners.
Consumer confidence on the whole went for a slide in 2008 mainly due to uncertainly at a global level in the economy especially during this later half of 2008. We now live in an age of competing 24 hour cable news channels that have created killer bee like colonies of financial experts available to the news networks 24/7. In previous periods of economic challenge, a few minutes of the 30 minute evening news and a blurb in the morning paper kept us as aware as we needed to be on the economy. Today the constant drone of doom and gloom is hard to escape.

The good news is - good news is likely to become a marketable media commodity once again in the new year and the emergence of a fresh (and potentially intelligent) government in the US will certainly account for a major part of that mind shift.The year will finish up with about 400,000 home sales Canada wide (down 15%) and with overall home prices down 3% nationally with a further 2% drop anticipated before prices begin to rebound. In Barrie the impact on price has again been mainly in the over $27500 range with average detached home prices below that mark actually rising slightly over last year.

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2009 Predictions

Looking forward to 2009 we should begin to see stability returning to our economy here in Canada while south of the border there are greater depths to climb back from that will take them longer and continue to be reflected in their real estate economy. Demand for homes locally is off though less than in many regions of the country, and certainly not by enough to produce further price drops of any real significance through out the next year, at least not in the first time buyer price range. CMHC does predict that buyers will continue to have the balance of the negotiating strength tipped in their favour for at least the next year.

Anyone selling in 2009 can find comfort in knowing that even with the present economic uncertainty, their property is still likely to sell at a higher price than it would have at any other point in the past 15 years. As for what 2009 means for buyers, you have the negotiating strength and there will continue to be increased inventory to select from as in 2008. The number of good purchasing opportunities is high and betting on the likelihood of bargains similar to stories of buyers grabbing homes in parts of the States for half price is a long shot at best, now or at any time in the future here in Barrie. Barrie will remain one of the Provinces targeted municipalities for growth over the next twenty years.

There is allot of trepidation amongst potential home buyers, uncertain as to if and when to buy and for them I offer this advice; When it becomes clear to the masses that the market is on the rebound there will be a sudden flood of buyers who have been holding back. The ensuing frenzy will quickly shift the negotiating strength back to the seller when that happens. The main thing to consider if buying is in your plans; There wont be a better opportunity within the next five years to buy a home than what next year is going to offer.

;; When should Barrie home buyers step up?

Buy low, sell high, the universal principle of investment and if it were as simple to implement as it sounds we would all be reaping the rewards.

The real skill is in best determining where the bottom of any market is before it passes by and it takes a few months of steady value increases to know we have hit it. It also lies in having the confidence to step up.

The logic one needs to apply is really no different than that used by a practical shopper in Wal Mart. When an item you have wanted goes on sale you snap it up, you don't shy away from it because the price has dropped. Perhaps if the headlines you've been seeing for the last six months read "Sweater market in trouble" then shopping for sweaters at any price tends to become an unnerving experience. That is exactly what happens in Real Estate and the media hyperbole typically overwhelms the opportunities lying within.

You can wait until the eventual upswing confirms the bottom has come and gone but by then the sense of urgency is returning to the real estate market and the squeamish have become frenzied buyers once again taking to the streets to stake their claims. Vendors quickly become aware that the negotiating control they lacked when prices were stagnant or heading south has now shifted back over to them.

Ok, so where are we now on that curve? Have we hit the bottom yet?

In Ontario and much of Canada over the better part of the last year demands for housing have softened. The biggest factor is the down shift in consumer confidence brought on by what we are seeing in the United States, and to a lesser degree here at home. It is a self fulfilling prophesy. The news tonight interviewed a couple in the mall and asked if they will be spending as much this Christmas. The answer was a resounding "no, the economy is too unstable." Meanwhile they stated their employment situation is unchanged. They and everyone are paying far less for gas and heating fuel than a year ago. Chances are they are in better financial shape all around than last November but the mood has changed.

Responsible spending within our means is taking hold, what will we do? Less spending and less borrowing to spend means fewer goods need to be produced by companies that expanded to accommodate a boom without any thought to it ending at some point. Now companies are downsizing to adjust and unemployment numbers are on the rise. The local widget plant is laying off 200 workers and when we see it on the six o’clock news our consumer confidence drops a little bit more and so on….

At some point when we begin to sense things are stabilizing the media hype shifts to everything is rosy mode. Stories on new and expanding businesses, profit gain and closing bell increases on the stock market get people excited and they start to spend their money and up their visa limits once again. New housing starts increase and we all do our happy dance spending and buying for a few more years. Donald Trump and Warren Buffett probably read Marshal McLuhan's works.

In the US it isn't quite that simple. More than just confidence has shaken their financial foundation. Their experiment with high risk lending has put them into a situation that will take a couple years at least to correct. Hopefully measures will be put in place to assure it can’t happen again, measures like we have here in Canada already that regulate lending practices.

Right now in the Barrie area, home sales are down; the number of active listings continues to accumulate with the inventory of resale home listings at record highs. Residential real estate prices on properties under the $250,000 mark have held their value and for the most part, continued to climb during the past year, all be it at a slower rate than in each of the previous eight years.

The under $250,000 range has been the most active for sales over the past year in the Barrie area. This is the price range most first time home buyers default to where carrying costs remain within range of what they were comfortable with paying in rent. In each of the next few higher $50,000 ranges the percentage of total sales drops lower and the gap between initial asking price and the percentage of initial list price received on sales drops as well the higher you go. A combination of factors is challenging sales in the above $300,000 range, The first and most obvious is higher carrying costs and tighter qualifying requirements. A wave of fiscal and environmental conscience has started to effect the housing industry the same way it has impacted on the auto industry. The Hummer is out, the Prius is in.

During the housing boom we just came through you saw a return to low interest rates that allowed many the opportunity to buy their first home. Builders responded in kind with record numbers of new home starts in most years. Many of these people bought townhouses or lower end homes being what they could afford, then within a year or two these buyers realized their home had appreciated by $25,000 to $50,000 and they now qualified for more and had equity to trade up into a bigger and better home with little perceived impact on their monthly budget. (One more entry level home for the market and the next first time buyer and one more buyer for the higher end market homes being churned out as fast as the land could be cleared.) That cycle has slowed and most who bought their first home in the past couple years are sitting tight and many who bough a higher end home in the last few years are looking to sell and find something more affordable. Those higher end homes are taking longer and longer to sell and are accumulating to record levels in and around Barrie and other Ontario communities.

Homes over $300,000 could drop more in price before we see a levelling off and a climb once again. This could take another year or so. Home buyers whose price range is under $300,000 are less likely to see average prices drop much if at all any time soon. What buyers have in their favour right now is a slower market where the urgency of the seller often translates into substantial dollars saved off the list price through negotiation. (This is where your Realtor proves their worth.)

A home listed for $250,000 today could possibly be had for $235,000 to $240,000, maybe less after some back and forth bargaining. Once the market is in full recovery mode the seller is more likely to guard the list price, confident that demand will bring other buyers willing to pay more.

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Questions to ask yourself;

Are homes in the price range I am interested in more like to go up or down over the next year? How much more? Am I going to save anything by waiting a year? Are interest rates more likely to go up or down if I wait a year? Will negotiating strength work for or against me a year from now?

The fact is interest rates are low and pressure will likely take them even lower in the coming months. Negotiating strength still lies with the buyers due to the abundance of active listings and a hesitant buying public most of which to their own disadvantage will not step into the market until it heats up again. It is a good time if you are buying your first home. First time buyers are benefiting well from our current market conditions.

As I said in a previous post. Stop reading the paper and watching CNN and spend some of that time looking at the nice thick catalogue of homes for sale.

Barrie Real Estate

Is now a good time to buy?

I have been telling everyone the best thing that could happen to the real estate market in Canada right now would be for our cable companies to stop carrying CNN. We need a break from the panic mode doom and gloom financial health forecasts of economic prophets lined up around the block at CNN headquarters like it was the tryouts for American Nostradamus. My suggestion, watch a good movie. Back to you Wolfe.

A snap shot of our economy here on this side of the 49th shows inflation has dropped from August to September and continues to ease while some are predicting we are actually heading into a period of deflation. The central bank predicts inflation will hover around 1% for 2009. Gas prices which are at the core of inflation, have dropped from a their summer high of $1.37 just a few weeks ago and are now right around the dollar per litre mark, about where they were just over a year ago. The Canadian dollar has dropped to $0.80 US which should stimulate our export volumes and tempt more American tourists and shoppers to go north once again.

Interest rates keep falling and are still at historical lows right now however lenders have begun tightened the purse strings on higher risk borrowers this year. If your credit is good and the property appraises at or within your purchase price then you should not have problems securing a mortgage.

We are still in a general period of stifled growth economically and likely will remain in that shadow for a while yet due to global economic tension. This climate has caused many to hesitate on buying real estate and allowed listing inventory to accumulate this year to previously unseen levels. This presents opportunity for smart investors and savvy home buyers. Right now there are record numbers of properties listed for sale in and around Barrie.

Many of those sellers have been listed longer than they hoped to be and are looking to negotiate. Some will have found the home they want to buy and made offers conditional on their own sale. The clock on their conditional offer is counting down. This happens more frequently in a slow turnover market. Some are finding they are in deeper than they can or want to handle financially with increased energy costs and wish to downsize or cash out of the market altogether for a while. The problem for those in that situation today is it can take a few more months than they are prepared for to close a sale and this puts pressure on them to take the offer presented to them now over chancing the odds of a better offer down the road.

My advice would be turn off the TV and start watching the real estate papers for some of the deals that are out there.

:: The Barrie Real Estate Report is ready to go ::

Wow, I have just completed and sent the first monthly addition of my new online news letter, "Barrie Real Estate Report". It has been a few years since I have had a news letter. The last one I had was a lazy ass canned product produced in the U.S. that Realtors bought and had sent it out automatically.

The main problem with that was it was an American product and Canadian home buyers and sellers really don't want to hear about Fanny May or Freddy Mac (unless they are American Idol contestants). How the U.S. market is influencing things north of the border is about as much as people in my area want to know about it. This week I have been working on the contents for a truly local newsletter that is relevant to our community

Into the wee hours of the morning and again for a few hours this afternoon I collected the email addresses of past clients, past contacts, family and friends. I sifted through eight years of completed purchase and sale contracts, my old laptop computer, the IBM Tortoise. that has not been used in at least five years. Surprisingly it fired up, though after a couple minutes there was a smell in the air like someone had stuck a work sock in the toaster. Any where and everywhere I looked for misplaced and forgotten email contact files and in the end I had collected up 996 names and emails!
The next step was to convert all of them into a format that my mail sender program would use and put the finishing touches on issue one of The Barrie Real Estate Report. In one push of a button, off it went in every direction of cyberspace to a computer near you. If there was ever a week in which I wish I had a paid assistant, this was it.
This is a truly local report that will keep everyone up to date on local market conditions and movement, news from or impacting on the Real Estate industry and some good, made in Canada Real Estate advice for buyers, sellers and home owners.

If you would like to add yourself to the mailing list to receive your own monthly copy of The Barrie Real Estate Report just fill out the boxes below and click the button.

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:: Kempenfelt Bay is Barrie's most valuable resource ::

Barrie appears at times to have forgotten its greatest asset is the bay on which it surrounds.

It's why Barrie exists at all and the magnet that draws thousands to its edge to recreate and celebrate each year. Our city officials must never take this for granted for one minute and it should be plainly reflected in each and every decision they make regarding her.

Homes on the bay’s edge trade for five to ten times the premium of their inland equivalents to owners willingly paying three to five times or more in taxes for the unique privilege. The esteemed opportunity to build a commercial project on the few remaining waterside properties in the City of Barrie is no less a unique privilege yet we devalue the opportunity by wholesaling and waiving development charges.

Forgive my ignorance if I say I don’t get it, but might I suggest that the beneficiaries of those millions in forfeited charges that then have to come from the pockets of existing taxpayers at least be required to offset their investment windfall over time through a newly created annual waterfront development surcharge?

Funds collected through such a surcharge could be earmarked for future waterfront projects like keeping our city marina on par with the growing demand these projects bring, creating additional transient boat slips to bring more boaters to our downtown shops and restaurants, building a world-class public pier that could be the pride of Barrie and further put us on the map, creating a skating path along the bay's edge between the Barrie dock and the South-Shore Centre similar to the canal rink that attracts thousands to Ottawa in the winter or just be used to save us the embarrassment of having to abandon our prided heritage symbols Like the Waterfront Steam Engine to museums in other townships rather than showcasing them ourselves as we should because we can’t justify the cost to do so.