Understanding Realty Fundamentals – Timing & Your Objectives

1) Real Property values ARE local. Additionally, market conditions vary from year-to-year, from season-to-season, from price-range to price-range and from one market niche to another.

There’s always a reason for market conditions and many times there are several factors at play – often-times several conflicting factors that balance or moderate the effect of any one/all of the other market influences.

2) Buyer’s Market vs. Seller‘s Market is the industry’s terminology to describe a surplus of homes for sale (Listing Inventory) or a short supply of homes relative to the demand from potential buyers.

Market watchers call it the Sales to Listing Ratio – defined as either the # of listings in inventory at month-end divided by the # of sales in that month (gives # of months of inventory) OR the ratio of sales in a month relative to the # of new listings (less that 37.5% of new listings being sold means Buyer’s Market, more than 57.5% being sold means Seller’s wishes will prevail — in-between is called “Balanced”)

3. Prices rise when supply is reduced (i.e. upward pressure applied by bidding buyers chasing the “best” of the available supply). Prices stabilize or fall when a diminished number of buyers “pick and choose” among a wide supply in their target market niche.

It is not quite as simple as supply and demand PLUS the annual weather cycle and the school-year timetable, but mostly … those are the factors.

All the other factors (interest rates, supply of mortgage money, availability of new construction, consumer confidence, immigration, job security, industrial cycles, PLUS national and world-wide monetary-political-economic conditions) are but moderating influences upon peoples’ needs/desires to buy and or sell their homes and investment residential properties for their own personal reasons.

4a. Despite the ‘local’ or ‘current’ market conditions, certain principles remain true – the most fundamental is an understanding of WHAT residential real estate IS:

*SHELTER – everybody must live somewhere. Ownership is superior to tenancy.

*COMMUNITY – most people choose to live near others who share their goals and expectations. When you buy, YOU choose your neighbours.

*A LONG TERM INVESTMENT – Virtually every Canadian urban real property purchase will be a wise and prudent investment … after a twenty-year holding period. Some purchases will pay-off quicker, and some will have bumps along the way, but after 20 years …. almost every buy is a GREAT BUY.

4b. In contrast, we must understand WHAT Residential Real Estate is NOT:

*A SPECULATIVE INVESTMENT – “buy & flip“ only works (generally & everywhere) in the initial phases of an Upturn and only works specifically, (but anytime) when the “speculator” actually changes the ‘use’ or ‘utility’ of the subject property by rezoning or renovation (or sometimes by just good timing),

*A TAX SHELTER – buying for tax-savings is a short-term strategy guaranteed only to deliver no more than the intended short-term tax-savings.

Real Estate in the Greater Metro Toronto Area is always going to be a good investment because this is where the jobs are created and therefore where people tend to gravitate. Greater Toronto is the Financial, Social, Entertainment and Transportation Capital of Canada – people, of every socio-economic niche, want what the GTA has to offer.

I invite you to contact me with any of your real estate needs and questions.

I look forward to hearing from you soon!