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Real estate market tips and tricks
- January 27, 2009 11:20 AM |
- By Your Voice
The economic slump and declining consumer confidence caused house prices to slide during the fourth quarter, according to the latest figures from Royal LePage. It says the real estate market in Canada posted an overall decline in both unit sales and in prices during the fourth quarter of 2008.
What does this news mean for the average Canadian? Is this the right time for buyers to get into the market? Should you sell now or wait it out?
Ozzie Jurock served as the past president of Royal Lepage (Res.), the past chairman of NRS Block Bros. He's also managed real estate companies in Taiwan, HongKong and Tokyo.
He answered your questions on buying, selling and what to expect in the year ahead.
Read his responses below.
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Comments (15)
My spouse and I are both young professionals (25 years old) with combined gross income of $82K. We have saved $40K for a downpayment on our first house and are quite anxious about whether or not to take the plunge when the Real Estate market could continue downwards.
While rates are low, and many sellers are motivated, does it even make sense for young people such as us to take on this large debt load when we could find ourselves 'underwater' within the next months/years?
Ozzie Jurock: We expect prices everywhere to reverse further. While this also spells opportunity it is a time to be extremely cautious.
Should I buy or rent if I plan to relocate in 4-5 Years?
Ozzie Jurock: Depends on whether your employer pays you a guarantee and moving costs. I personally always buy. I hate living in a rented place, but that is a personal choice. No one can tell you what any market will be like in five years.
Which province is poised to make the best housing market gains in 2009?
Ozzie Jurock: Hard to say. I believe that we are going to have the “mother of all inflations” eventually driving all hard assets higher, like we did in 1974, 1981, 1987, 1991, etc.
We are printing money like mad and according to Milton Friedman “Inflation is primarily a monetary phenomena.”
But we are under a barrage of bad news now in 2009. We think we will go down further and then sideways for at least 24 months right across the country. People have become fearful to buy ANYTHING and fear is more powerful than euphoria.
But Warren Buffet says: "Be fearful when others are greedy and greedy when others are fearful." Be a contrarian, act when others run. You make the most money on the day you buy and that is more often than not in a down market. I would look less for markets as an investor I would look for that ‘deal of a lifetime.’ This is the year for it.
1 How is the local Hamilton Ont. RE market been effected in the last 6 months or so?
2 Why is it that 99% of all real eastae agents will say "the market is real strong now" or "busier then ever" are the out to lunch or just trying to get you to sign up with them?
Ozzie Jurock: I think you are talking to the wrong realtor. My favourite three words are: ”So what? Next!”
Get a realtor that levels with you. The market is NOT real strong now.
We have a waterfront beach house. Would like to keep it for a few more years, however, if the economy gets worse, we are wondering if we should sell it now. Now that the interest rates are good. Thank you, Joanne
Ozzie Jurock: Very personal. I have always kept my waterfront property because I love to use it! I could not care less whether it goes up or down in value because eventually it always has been higher anyhow.
My wife & I have two rental properties which we had considered selling this spring. Should we wait out 2009?
Ozzie Jurock: Very tough to answer w/o knowing details. Do they cash flow? If so, why not keep them? In any case, 2010 would likely be sideways.
Do you think that the previously overheated market in Calgary will undergo further correction this year?
Ozzie Jurock: Active listings are coming in line at least as compared to 2007, but Calgary has a lot of new condo overhang. A lot of bad 'oil’ news and things will likely go sideways.
As I keep saying, this may be the time for your best deal ever, but all great deals are negotiated and much better to negotiate with a willing, very willing seller in a down market.
I am looking to get into an investment property in Calgary in the next few years, and am currently paying down a $70,000 variable rate mortgage. Should I concentrate on paying down my existing mortgage, or build up a downpayment on a second house?
Ozzie Jurock: The market won’t run away from you. Pay down the mortgage, keep your eyes open . You can always get a line of credit later.
My Wife and I are in the process of saving for a down payment, but are no where near the 5% minimum. With the Real Estate market seemingly in decline, would this be an ideal time to get into the market while prices are low by taking out a loan for the 5%, or would it be better to wait until we have the 5% ?
Ozzie Jurock: I would wait. The market is not going to run away from you. I would learn to understand what exactly is involved in buying a home. Go attend first time buyer seminars, see a mortgage broker etc.
What are your thoughts on Home values in the GTA, specifically Milton? I have an opportunity to relocate back to my home town of London Ontario and we are considering selling this spring. Would this be a wise choice and when is the best time to sell in this type of economy?
Ozzie Jurock: As questions go, this is a favourite currently. Unfortunately, the answer is not easy, since you are not buying or selling a market, but rather your individual property.
If you are for instance 'trading up' and you are worried to receive #151; say — 10 per cent less for your property in Milton , you will also benefit from the property in London being 10 per cent less and likely better off than you would have been five months ago.
I would get three realtors to evaluate your current property to determine realistically what they can get for you now — and then keep looking for that special deal in London.
I live in a bungalow in an older district of Milton. I also purchased a new home two years ago and the house will be ready by this coming August 09. I stand to lose if I sell my bungalow right now but I also need the funds to lower the mortgage on the new house. Should I sell the bungalow or would it be better to rent it out and wait for a year? thanks Hugh
Ozzie Jurock: Unfortunately, that means that I would have to have a crystal ball for what your specific property would be worth one year from now without seeing it or specifically knowing your local market.
I would hire three realtors, get their best market evaluation and gain an understanding as to what precisely they think you can get for your property now. Then decide.
How could the real estate business model be improved? The feeling we have in Calgary is that realtors feasted on our commissions during the boom years when a house would sell in six days with little or no effort on the realtor's part. Now that there is a market downturn, realtor's are aggressively hustling for listings to ensure they get their share of the commission if the property sells; however they aren't able to bring qualified buyers and rely on other realtors to find the property through the MLS. The homeowner is doing the majority of the work and the realtor is reaping the majority of the profit for simply hanging a sign and entering data into a website.
Ozzie Jurock: Realtors are simply reflecting the marketplace they are in. Two years ago there was no product and some realtors couldn’t hack the multiple offer situation. Today we have listings 50 per cent to 60 per cent higher and the real estate industry will see about 30 per cents of agents leave the business.
If you have a property for sale use some of the new ways. In our real estate investment club we are advising students to use Craigslist and Kijiiji for selling the property. More and more people do successfully.
I am a first time buyer in Toronto wanting to buy a condo in the downtown area in the next few years.
1. Is is better to buy a pre-constructed condo or a condo that is a few years old?
2. Will prices of downtown condos decrease even further in the next year or so?
3. Even though I do not quite have 5 percent for my down payment, is it still advisable to get into the market or should I wait until I have 5% plus the cost of closing fees?
4. One construction company sent me an email asking me to join an "inner circle exclusive event," whereby the $250 membership fee would be applied to the purchase of my suite. If I do not purchase a condo then I will be fully refunded. Is this true? Are there any legal measures that I can take if I decide not to purchase this condo after seeing the display suites?
Thank you.
Peter
Ozzie Jurock: 1.) Generally we advise in a rising market to buy a used condo near a new one. The price increases on the new one would drive up the prices on the used one.
Today, I would make low, low, low ball offers on new, finished condos. Developers MUST sell, homeowners do not. In Vancouver in January you can buy most new condos at 25 per cent below asking price.
2.) Likely, but the best deal may be made now. You are not buying averages, you are buying a specific property. The best deals are always negotiated, never ‘ the market.'
3.) Yes, get the 5 per cent, you are in no rush today, BUT keep looking now. Pick an area, pick a realtor and do some work. Become knowledgeable.
4.) Forget that. In this market there is no inner circle deal that you can’t get by doing a bit of schussing out.
hi, ozzie. you gave me courage to buy my first home in east van in 2002. i loved it. I sold, profitably, in april 2008 to try coast living. i'm now renting in gibsons, and find i'd like to live here long term. to get great value, how long should i wait to buy again? gillian
Ozzie Jurock: Thanks. We expect the very overpriced market in Gibsosn to keep declining about 15 per cent this year. BUT as I keep saying, you are not buying Gibsons, you are buying your new home long-term. Take your time and make a lot of offers. Your best deal will come from a seller that MUST sell.
I will be getting married in August, and my wife and I were thinking of buying either a house or condo around August, or renting with the the thought that prices may continue to decline. Which do u think would be the best option.. rent initially as house prices may still decline? and also should prices rebound- which, houses or condos, stand to appreciate more quickly?
Ozzie Jurock: Personally, I always hated renting. We see the Toronto market reversing for most of this year, but you are not buying the market you are buying your new home.
A house has always been the best investment any Canadian couple has made for 50 years. I would stay close to the market, get my team together: My Realtor, my mortgage broker (get pre-approved for a 4.17% 5 year term (YES!) and make offers. Your best deal comes from the work you do not from waiting for a mystical market decline. Prices will not rebound quickly.