Figuring out the value of your home isn’t as simple as it used to be and the margin for asking price is tightening.
It’s more than buying a house for $X, investing $Y in improvements, thereby making the property worth $Z. Those days are going the way of the Dodo bird.
Pricing a property is also no longer thinking of what your neighbor got for his similarly sized house and adding 10K just because you think you can get it due to your improvements. And it’s definitely more complicated than deciding to price it higher to allow for "offers". (Ask anyone who has tried to sell at an inflated price and watched their property sit and sit and sit forever and not sell until they lowered the price significantly and by the time it sold, it sold for less than other comparable homes that had a more reasonable asking price)
In the Winnipeg market, the days of multiple offers flowing in from many buyers who are eager-to-the-point-of-desperate are reaching extinction.
Sorry. It’s not a seller’s market anymore.
Which means you’ll need to adjust your pricing expectations accordingly.
Cold Hard Facts That Determine Fair Market Value
When we’re talking about selling price, we’re talking about Fair Market Value (FMV) – a number not based on nostalgia, emotion, or a narrow comparison with a neighboring property, but on data.
Establishing FMV requires gathering and analysing three specific kinds of data.
Statistics (Knowing what’s currently for sale and what has recently sold)
Currently we are facing a tighter supply of properties for sale in the Winnipeg market. We’ve also got a tighter supply of buyers. That kind of knowledge gives you critical insight about property value, and only comes from watching the metrics.
Don’t let me lose you in these few stats. Stats may be dry, but they paint the broader picture that impacts how your sale is going to go.
At the time of this writing (third week of April, 2018) in Winnipeg we have 1260 homes for sale, that have been on the market for anywhere between 0-200 days. In the last 30 days, 540 sold. Another 135 are pending sale (meaning they are conditionally sold).
1260 active, 540 sold, 135 pending sale = 675 currently for sale (more than half of the total active properties), means we have a two-month supply of homes (absorption rate). That is a very balanced market, edging slightly toward the seller market side.
Once you start getting a 3-month supply of houses for sale, (400 sales to the 1260 available), it would be moving in the direction of a buyer’s market.
Whether you’re in a buyer’s or seller’s market absolutely impacts the value you can get ask for, and get for your home, so it’s essential to analyze the stats and get a pulse on your local market.
Science (Awareness of Market Influences)
There’s the current and broader market, and then there are external happenings that are influencing those markets. These trends help us know what are we facing and also what might be coming down the pike.
Our nation’s financial landscape has changed dramatically in recent years, and it impacts home values, people’s ability to buy homes, and the vibrancy of real estate markets across the nation. The recent mortgage rule changes, for example, are impacting Canadian markets already. The highly inflated housing markets of Ontario and BC are unsustainable and set to crash unless something changes (which is why the mortgage rules were introduced in the first place – to head off a housing market crash.)
With Baby Boomers being 25% of our population, they’re already changing the economic landscape and they’ll keep making enormous waves of change. The real estate market will definitely be influenced by their impact.
Keeping aware of such influences is critical to creating a more accurate and effective FMV.
Experience (Understanding How That All Translates to Reality)
There’s knowing the data and there’s interpreting it. A qualified, experienced real estate agent will know the practical implications of these big picture influences and the minutia of data like days on market. They’ll know how it impacts their client’s transaction, and be able to help their clients duck and weave their way past obstacles and through to success.
For example, with the new mortgage changes that came in January 2018, coupled with the changes implemented in January 2017,it has several practical implications for sellers. It means people who would have been able to buy their home before are now less able to afford it, which could make the sale take longer. It means when the seller goes on to buy their next home, they are also able to afford less and may have to change their plans entirely.
Wondering how your home and real estate plans are impacted by these tightened mortgage rules and what your home is worth in today's market?
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