I just heard that a house in my neighbourhood sold for $700 thousand over asking. How is this possible when the market has softened so much? – ASTONISHED
DEAR ASTONISHED: When we look at numbers like this, it’s important to consider both the state of the market, and the influence of marketing.
Like the stock market, the real estate market changes very quickly. Stocks can go up or down hundreds of points in a day, and while the real estate market isn’t quite as responsive, it can still move several percentage points in just a couple of months. Prior to 2016, our local real estate market was typically seeing gains of four or five percent in any given year.
Waterloo Region real estate tends to be more buoyant than in other places, which is why national headlines – as dire as they often are – tend not to capture what’s happening in K-W. Here is one example: six months ago, in November 2022, it seemed like the sky was falling. The average local CDOM (Cumulative Days on the Market) was 53, which means if we average the number of days that every home for sale at that time spent on the market, it came out to 53 days. Fast forward to mid-April 2023, and our local CDOM had dropped to 25 days. We’ve endured an entire year of Bank of Canada interest rate hikes, and the repercussions seem baked into people’s budgets as they enter today’s market. Locally, home values have risen about 7.5 percent in the last six months. This tells me that market sentiments are rebounding somewhat, and buyer confidence is being restored, almost on a weekly basis.
With the market changing so quickly, agents need to re-think their strategies and ensure they are marketing homes in a way that benefits their sellers. I remember hearing the same news story you did last week (about the house that sold for $700 thousand over asking) and looked up the listing myself. There is no possible way that property was going to sell for its asking price. The listing price, like many others these days, was set intentionally low (undervalued) to attract buyers. If you’re a market watcher, it’s a familiar strategy. To understand what’s really going on with home values, your Realtor needs to be tracking market fluctuations in real time. You wouldn’t want a heart surgeon who dabbles in the profession by performing surgery once or twice a year. Likewise, your agent needs to be fully aware of the market, not just the headlines. News reports about real estate tend not to occur in real time, and often don’t apply to our region.
PRO TIP: The key to any successful journey is making small, relevant changes as you go. The differences we’re seeing between six months ago and today didn’t happen overnight. As a buyer, seller or agent, it’s critical to stay current if you’re involved in real estate. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.