Real Estate in October - Yuck!

04/11/2004

There has been an interesting occurrence in the market this past month. After a pretty respectable September, the market seemed to go south on us in October. Although the stats are not published yet, most realtors, I’ve spoken to, all say the same thing. They are writing too few deals and too many of those never get past the conditional period. In our office alone, during the month of October, we had 10 conditional deals fall through (that’s over two million dollars of market value). To put that into prospective – our usual number of “Fall-Through Deals” are limited to one or two per month.

Typically, a deal falls apart during the conditional period due to a major structural defect in the home that the Buyer is unwilling to accept and the Seller is unwilling to remedy. Faulty or questionable electrical and septic systems are also high on the list of, “Deal-Killers”. However, this past month not only saw an unprecedented number of deals fall apart due to all the usual suspects, but for many other non-main-stream reasons as well, such as, “The Buyer Just Changed His Mind” for no apparent reason!

Although strange, this occurrence is not totally foreign to us. In June of this year a similar pattern developed. Although slightly less bold, and not quite as noticeable due to the shear volume generally associated with high season, of which June is right in the middle, a quieting of the market did occur. Not only that, but again, high numbers of deals fell through. The reason – simple – it was the federal election. The uncertainty prior to Election Day seems to manifest itself into the real estate market in the form of indecision.

It was last week while watching the National on CBC that I drew the obvious parallel between June and October. “It’s the Americans”, I exclaim out of the blue” Sandy thinking I had flipped my lid says, “What are you blaming the Americans for now”? “No – no, it’s not the Americans, it’s the media – don’t you see, they sensationalize everything. Every time we turn on the TV it’s the presidential election this - the presidential election that. “How is the election going to effect us?” Lets talk to Americans and tell them what we think as Canadians.” (like they give a damn) Honestly the angles are non stop.”

After much discussion, my wife finally saw my point. There is a major event happening that is going to affect us and the national media, having nothing better to do, blows the issues out of proportion which in turn creates uncertainty and that affects our market. It happened a few years ago with the Quebec Referendum, just like it happened in June of this year and now in October.

Here’s the good news, history shows us that once the decision is made, life goes back to normal, regardless of the outcome. You see, it’s the fear and anxiety (on a subconscious level) that is created by the uncertainty of events like elections. This feeling of dis-ease tends to paralyze the activity of people as it pertains to our market (the same thing happens to the stock market on a more frequent basis). Once the event passes, the fear of the unknown also passes and life goes on as normal. An old cliché comes to mind to sum it all up, “There is nothing to fear but “FEAR” itself”.

Bottom Line Ironically, I’m writing this column on November 2nd, Election Day south of the border. I firmly believe that November will be a catch up month. Meaning that all the people who wanted to buy in October but did not, due to the uncertainty, will make up for it this month and next. So to all of you Sellers still sitting and waiting for your Buyer in shinning armor to rush through the door with a wheel-barrel full of cash, I say to you, “Make sure your home is competitively priced and hold tight – November is going to rock!”

Till next month this is Rob Thompson saying, “Good Luck and Good Selling!”

Rob Thompson has been helping families make the right real estate decisions since 1985, and continues to do so with his team of professionals in the communities of the 416 and 31 corridors.

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