Today is Thursday June 16, 2016 and this is the 23rd episode of the Marshall Report. Welcome to the podcast.
In this week’s episode:
1. Busy
2. Bubbles
3. K-town’s top 10
4. The current state of our real estate
5. The five stages of house buying
6. Mayor Carl Zher Square
7. Offering over asking price
8. The future of podcasting
9. Going all in
10. Traffic
Updates
It has been a crazy busy time recently, like coming around the last turn at a horse race or the ninth inning at a world series baseball game, everyone seems to be giving it their all, trying to buy and sell now before the summertime arrives. The statistics will tell us that March, April and May have been just insane.
For me, my second car, my kid’s car died. I bought it, a ten year used Honda Accord, three summers ago for $5000 thinking if it lasts a year, that’s enough. I figure with depreciation and everything, it costs about $5000 a year to own a car. So when it died, it didn’t owe us anything.
Now I’m looking at cars. I like Hondas and Acuras so I’m going to start there.
A question about bubbles
This week’s question comes to us from Steve in Cambridge. He writes:
Hey, I was just reading your article on the 4 reasons why KW housing won’t crash. One of the reasons was “Bubbles sells newspapers”. I’m wondering, does “no bubble” help you sell more homes?
Thanks
Steve in Cambridge
Answer: Well, I’m not sure why Steve asked me that so I have to suppose it is because people outside the industry don’t really understand the dynamics of how real estate really works. That’s fair. I don’t understand how car dealerships work or kitchen cabinet manufacturers. I was out for lunch with a friend the other day and I told him I had to rush off. He said, “Why? There are no open houses on Tuesdays.” That was kind of revealing how little people know about what we do.
So back to bubbles and selling houses. Housing prices and activity are all over the media this year. Housing is something that most everyone, at least everyone who has a house can identify with, so I do think that housing bubbles sell newspapers. It’s sensational.
Housing activity like we are having this year does also help sell houses. Bidding wars, just days or hours on the market, offers without conditions, the lack of inventory, rising prices…it is a seller’s market. Bubbles do help sell houses.
But wait, there’s more. I don’t want you to think that bubbles are good for real estate agents. For me, essentially a buyer’s agent, I am working harder this year than I’ve ever worked before. I am presenting offers and losing. I am getting up in the morning not knowing how my day is going to play our. My clients have to see and be prepared to offer on houses the day they are listed for sale. That means me too. So for me, I really prefer regular real estate with a balanced market. I’d take that any day over what this is.
Kitchener’s Top Ten
According to The Culture Trip, an art, food, culture and travel website, the top ten things to do in Kitchener are the following:
TheMuseum
Joseph Schneider Haus
Victoria Park
Kitchener City Hall
Waterloo Region Museum
Homer Watson House and Gallery
Kitchener-Waterloo Art Gallery
Woodside National Historic Site
Centre in the Square
Huron Natural Area.
Most people never visit the attractions in their own city. Most of theses are really inexpensive and only take a few hours to visit. My mom and sister are coming for a visit this autumn. I plan to take them to the ones on the list that I haven’t already seen and maybe a couple that I have.
The current state of our real estate
The newspaper and the real estate board are reporting sales at an all time high for May. This May we sold almost 20% more homes than last May and the year-to-date sales are 20% higher than they were for the same first five months of last year.
At the same time, at the end of May we had 26% fewer listings available to buy and that was after 29% fewer listings at the end of April.
Naturally, prices continue to climb. The average price increased by 7.3% compared to May of last year. It is a great year to be a home seller, but a tough year to buy.
The 5 stages of home buying
Buying and selling homes is one of the last bastions of the free market system. I wrote about it here.
Bicycle Repair in Mayor Zher Square
I was in downtown Kitchener on Wednesday last week and I happened to be driving by former Mayor Carl Zher Square. They have a summer midweek lunch hour market in the square. There is pizza and music and bicycle repair. It looked quite fun. As I drove by I noticed that a lot of ladies had pulled the lounging chairs up to the water fountain and were soaking their feet in it.
I started to wonder what happens to the coins that sometimes get tossed into the water there. Tossing coins into fountains used to be a thing, but I don’t think it is anymore.
According to a recent article in The Atlantic, the coins in most public waterworks either go to the so called cost of cleaning the fountain, the workers themselves, enterprising kids and fountain fisherman and/or charity.
I’m not suggesting we need a policy on this.
This is just a captured thought.
Offering over asking price
Over the weekend I was preparing for an offer of a hot listing in Uptown. The listing was getting a lot of action. It is desirable to many people to be in Uptown. The listing is underpriced. So my clients asked me how much they should offer.
When looking at putting together an offer on a place, the listing price is often irrelevant. Realtors and our clients do the best we can but we often get it wrong. A lot of buyers use the list price as an anchor price but this is proving to be a great way to lose out when competing with other offers.
So we look for other formulas, other secrets hidden in the data.
With that in mind, I pulled the recent sales data for three hot neighbourhoods in Kitchener and Waterloo. The market has been crazy hot since the beginning of March so the data was for the past 100 days or so. I wanted to see how many houses went over asking price and by how much.
What I found was, in those neighbourhoods there were 88 sales in the past 100 days. Of those, 31 went over asking price. That’s about 1/3. Of the sales that went over asking price, almost all of them sold in fewer than 10 days, most in four or five days indicating that they were bought without conditions as conditions usually add a week to the selling time of a home.
We wanted to see if there was a percentage over asking price that was prevailing. However no trend could be found. Percentage over asking price can be anywhere from 2% to more than 10%, proof again that listing price is irrelevant especially when competing for a house.
The future of podcasting
Last week a Toronto commuter I know got put on a bus instead of the train coming back from Toronto. It turned out to be a 3 and a 1/2 hour commute home, from Terrible Toronto to Wonderful Waterloo. “It wasn’t so bad”, he said, “I listened to podcasts”.
I feel the same way.
A couple of summers ago, I painted a bungalow listening to podcast. They are a great friends to have when you are doing something else. Often something mundane.
I can’t listen to podcast when I’m working or in the car so I look foreword to the end of the day when I can listen to my favourite podcasts. I used to read at night, but know I always end my day with a podcast or two.
I’ve been watching its popularity grow over the past four or five years and as podcasting is really a personal thing, you never know who you know listens to podcasts too. So now I ask people if they listen to podcasts and a lot of people do. I’m not surprised. We are a tech town, early adopters and all that.
So, as an early blogger, I’m watching to see if podcasting follows blogs. Will podcasts become a media channel? Will others start podcasting? Will podcast become easier to find? Will podcast become easier to do?
I don’t know but I certainly hope so.
Because I was so busy, I missed doing last weeks podcast. I really missed it.
Going all in
In the past couple of weeks, I’ve been involved in five or six multiple offers situations. When there are 3, 4, 5 or even, in one case 10 offers on a property, as buyers you have to decide if you really want the house.
Do you really want the house or do you want to keep on looking? That is the question. If the answer is that you really want the house, you have to go all in. You’ve only got one chance to get it. That is the current state of our real estate market.
Parting thought
When you are stuck in traffic this summer just remember, you are traffic.
