There is a common saying in business; “Success Leaves Clues.” What this means is that to be successful in any endeavour, rather than re-inventing the wheel, if you research successful people and businesses you can come to understand why they, in such competitive environments succeed when others did not.
I joke (on a pretty regular basis) that I have a crystal ball, however it is rarely accurate, when asked what I think will happen to the Real Estate Market in Durham Region. All kidding aside, if you dig deep you can get enough insight into which direction the market is going to make some very educated guesses.
Let’s start with how things can be misleading.
The common metrics we use in Real Estate revolved around the principal of “supply and demand.” Supply meaning how many homes are for sale, and demand defined as how many homes are sold. The source of these metrics come from the MLS system we use that is hosted by the Toronto Real Estate Board.
In the past week there have been 361 homes listed for sale and a total of 149 homes sold firm. Is this an accurate example of “supply and demand?” Once we dig in it might leave you scratching your head.
The media is known to use these metrics describing where the market currently is and to use them to predict future trends, however they are only a couple of statistics that, in my opinion do not tell the entire story. On the daily/ weekly statistics page on the Realtor portal of MLS the metrics used are:
- New listings. (Homes newly listed for sale)
- Conditional sales. (Homes sold condition)
- Firm sales.
- Terminated listings. (Homes removed from MLS not sold)
- Suspended listings. (Homes that have stopped selling/showings)
- Price changes. (Price decreases and increases)
Let’s first look at the supply side of the above statistic. In Oshawa during the past week, we had 162 homes “newly” listed. These new listings are sometimes not as accurate as they appear. New listings and terminated listings have something in common. During the same week, Oshawa had 138 homes terminated. A commonly used strategy is for a Seller to terminate their listing and relist it immediately, at either a higher, lower or at the same price. Over the past week, Oshawa had 52 listings that recently terminated relist. This means that of the 162 new listings, only 110 were new and 52 were old listings that came back online. This is somewhat misleading.
When you look at the demand side a metric that can be seen as slightly misleading are conditional sales. During the same week in Oshawa, Whitby and Clarington there were 46 homes sold conditionally. When you look into the conditions, only 15 were sold conditional upon financing and/or home inspection, the others were mostly sold firm awaiting the Buyers deposit. (For some reason the Real Estate board allows Brokers to show a home sold firm as conditional if the Buyers deposit has not be received. In all fairness these should be added to firm sales)
It is easy to see how confusing it can be for the public to really grasp what is happening in Real Estate. A common theme in media today is how our market has become sluggish, slow and stagnating. This past weekend one of our open houses in Courtice had 60 groups of people tour in 2 ½ hours. I am including a link for a weekly video I do, helping people understand the local market. Success leaves clues, sometimes you need to dig a bit to find them. I like the term “Beer Market.” Having an adult beverage may make the Real Estate market easier to understand.