The Market's Hot and Then It's Not

02/07/2003

What a volatile spring it has been. The markets fast - the markets slow – One week the phones are ringing off the hook and the next you’re checking your pager to see if it still works. Sales are still quite brisk, but as veteran prospects become active Buyers their numbers are outpacing their replacements. Or to put it simply, new prospects are not filling the void as existing prospects move through the buying process. If this trend continues, sales will slow, and the numbers of unsold listings on the market will increase, eventually creating a robust inventory, and prices will drop.

At first I wondered if it was just our local market that had the hick-ups, but Realtors in Ottawa have been singing the same song. Just the other day I was on the phone with a Realtor from St. Thomas, Ontario whom we have been sharing a relocation client with. Betty, a seasoned agent of 38 years described their market as weird. When I asked her to define weird, she replied, “It has been spitting and sputtering here for the last two months, almost like a car that is running out of gas!”

What’s causing the market to act this way? Is it SARS, Mad Cow, West Nile or a High Dollar? Who knows, perhaps it’s the combination of the bunch or maybe it’s just time for an adjustment. After all the prices have been rising steadily, since 1998, that’s five years of steady growth. The boom in the 80’s only lasted four.

So what’s in store for us? Another six years of pain and suffering like we experienced in the 90’s? I think not. The key difference between our pending adjustment now and the hangover we experience last decade is that although the parties last about the same length of time, the booze we drank in the 80’s was much more potent than the “Millenium Cocktail” we indulged ourselves in this go around. What I mean to say is, our adjustment should be just that, an adjustment, not a complete meltdown of the economic machine.

Five years ago I was in New Orleans, where I attended a lecture about the future of the North American economy. The Speaker predicted that early on in the first decade of the new century the stock market would crash and mutual fund sales would drop significantly. Real Estate, on the other hand, was expected to flourish, until the beginning of the middle of the decade (2004ish). The speaker noted that this down turn should not be feared, but looked upon as a stabilization – a new platform from which to leap to new heights. After a short lived adjustment, the real estate market was expected to be very strong until the end of the decade. How they know this stuff, I’ll never know, but it would seem as though his predictions are batting a thousand so far.

So what should we do? My suggestion is that if you’ve been sitting on the market for any length of time and really want to get on with your plans, take steps to make your home more attractive to buyers. Consult with your Realtor and explore the possibilities of improving the condition of your home, reducing the price or offering an incentive to Buyers, like a rent-to-own or a low money down vendor-take-back (if your circumstances allow).

If you’re looking to buy, now is a fantastic time with interest rates so low. Look upon your purchase not only as a home but also as an investment. And as with every investment, it is important the have an investment plan. If I were buying right now, I would plan to take a very long-term mortgage, at least 5 years and maybe 10. And be absolutely sure that your mortgage is portable so you can take it and it’s low interest rate with you when you sell. Thanks for listening.

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

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