Regional Market Statistics

One of the topics I spend more time talking about to media, clients and colleagues is the Average Sale Price trend of properties in our region. (Collingwood, Wasaga Beach, Blue Mountains and Clearview)While I understand the relevance and curiosity in obtaining these statistics, I am often disturbed as to how they are interpreted and used. The accompanying graph illustrates the change in the average price of residential units sold on the Georgian Triangle Real Estate Board since 2004. However, it does not necessarily mean that your property (if you have made no changes to it)is worth 3% less than last year or 20% more than in 2004.

What needs to be looked at is the composition of the sold inventory. One of the greatest influences of the average price statistics are the homes that are currently being sold that did not exist 10 years ago. Many of these new subdivisions, especially at the bottom of the Niagara Escarpment, have homes/chalets that start at $1,000,000.

However, there has been a definite increase in property values as illustrated in this graph. Here, we show the number of properties sold in different price catagories. The bars on the far left show the number of homes sold in the $100K to $199K range in each year from 2004 to 2008. You can see a distinct decline each year. In contrast, the next catagory from $200K to $349K shows a steep rise. These homes are most likely not new homes but the supply and demand of affordable homes in the area have pushed the prices of these units to new levels.

In contrast, I have personally sold a well kept home on an attractive street close to Blue Mountain Resort for the same price over a period of little over 2 years. Neither buyer or seller was under any pressure and there was no alterations done to the building. I believe this to be a true indicator of our market. Generally speaking, I believe that we peaked in terms of average price increases in July of 2004 and have more or less flatlined since then. (this may not apply to homes under $300K in the town of Collingwood) I conclude, therefore, that a certain caveat should be excercised when quoting or making use of "average" price increases or decreases.

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Georgian Triangle Absorption Rates

There are many ways to analyse the current real estate market. One of the ones I find most useful is the absorption rate. This is basically the mathamatical relationship between supply and demand and indicates the number of month's supply of a certain product in a certain area. For the purposes of determining the balance of supply and demand with respect to a buyers or sellers market, here are our recognized parameters:

Normal or balanced market: 5-6
Sellers market: 0-5
Buyers market: 7 +

The following absorption rates are calculated on a year to date basis to the end of November, 2008 for single family residential units only.

Clearview Township=10.5

Town of Collingwood=6.9

Town of Blue Mountains=15.3

Wasaga Beach=6.5

As can be seen by these numbers, we are generally in a Buyers market. In the case of the Town of Blue Mountains, with over 15 months supply of single family residential homes, pricing becomes critical.

The Quarterlife Crisis

In my business, which is the delivery of real estate services and information, we are constantly challenged by our ever evolving society and its changing needs. In order to survivie in this industry, we must be keenly aware of these changing needs and address them accordingly.
Recently, the bright, young minds of Abby Wilner and David Singleton described our next generation of leaders and consumers (aged 21 to 32) in a report titled, The Quarterlife Crisis: The Net Gen Transition to Adulthood. Now, whether you are in the business of selling services or products to this group or you are a parent with children in or around this age, you should find this information interesting.
The quarterlife crisis experienced by many in this group is described as a state of panic and uncertainty that often accompanies the transition to adulthood. This panic has been brought on primarily by the increasing costs of education and housing which delay financial independence, and that delay, coupled with a later average marriage age, essentially prolongs the transition period into adulthood. They are, therefore, largely dependent on their parents for financial assistance and housing during this entrance into the "real world". It was also interesting to note that the Net Geners might be Internet savvy, but they are at a loss when it comes to communicating in corporate settings; they find rich virtual communities on sites such as MySpace or Facebook, but often lack neighbours or colleagues to lean on in times of crisis.
As someone who is at the leading edge of the Babyboomers, I fully understand the concept of the "mid-life crisis". Interestingly, the "quarterlife crisis" describes a phenomenon that is in some ways the opposite of the midlife crisis. At the midlife, life has become stagnant and people want change and excitement; at the quarterlife, young adults experience constant change and want to settle down.
From a real estate perspective, we must, therefore create affordable, community-oriented housing and find ways that the QLC's can discover them through intuitive Web Search that have attributes that appeal to them. ( if you want the full report, email me: allreal@bmts.com)

What goes up......

Recently, I received by tax bill in the mail. In our province (Ontario), the amount of residential taxes charged by the municipality is predicated by the mil rate which is a multiple of the fair market value of your home. Being in real estate for approximately 30 years and the owner of an office with 25 knowledgeable professionals, I do know, or at least have access to, a lot of information about the value of homes and properties in our area. As a result, I thought there was a significant difference from what MPAC thought my property was worth and what I thought I could get for it in today's market. Armed with compelling evidence, I challenged their assessment and ended up in a discussion with one of their senior people. Basically, I was told that their appraisal model had a 5.6% increase built into it based on national and provincial figures established about 2 years ago and I had nothing to worry about if my increase was below that average (it was not). I pointed out that unless they never opened a newspaper, television or computer, real estate values have decreased...globally. I was told, essentially, that their model was not built for decreasing values!
Perhaps this thinking and this model have been the root cause of our current economic malaise. The sub-prime mess south of the border, Wall street, GM, Ford and Chrysler have all built their models on the premise that what goes up will continue to go up. Maybe we have to pay more to find CEO's that understand that what goes up.....must come down!