If you’re like many Canadians, you may still have a perspective of the real estate market influenced by media coverage of the 2008 crisis. However, real estate is always subject to cycles, especially around growing and expanding communities like Kamloops. The reality is this area is now facing a looming shortage of housing inventory. If your a buyer moving to the area it is key to find a local experienced realtor who can get you up to speed on your knowledge of Kamloops real estate market, its not all doom and gloom as we show in this article. IF you are a seller then the local "know-how" of a realtor is key in getting your house listed at the correct price with the best exposure possible.
From the Bank of Canada to local real estate firms, the level of homes for sale, or housing inventory, is a closely watched factor for determining a local area’s real estate market health. Ultimately, what affects the level of housing inventory boils down to two items:
- housing prices
- market perceptions of builders, buyers and sellers
When the market went through the changes it has over the past few years, many builders were forced to stop developing lots and building new homes. At the same time, many homeowners today find they don’t have sufficient equity in their home to sell.
On both a local and a national basis, the housing inventory is an important part of determining the vitality your local housing market. Most professionals consider a four-to-six month supply of homes for sale to be a good target. Too small a housing inventory slows down economic activity and creates a seller’s market, while too large an inventory depresses prices and creates a buyer’s market.
The Kamloops Housing Inventory
If you’ve been in Kamloops for any time, you know that our area has a regular influx of new residents. This growth normally means a steady source of buyers and increasing home prices. However, you also know this area deals with real estate cycles like every other area. Fortunately, you generally see a faster recovery from the down swings faster than many other metropolitan areas.
In fact, most Kamloops communities have seen a steady recovery from the housing crisis, and homes in a number of areas are approaching the former 2008 highs. Local prices are also rising faster than most national home values.
As just noted, it also takes time for local builders to begin buying and developing land for new homes, an activity now gaining some momentum in the area. You’ll see some areas with builders working where there has been less activity for a few years.
All of this leads to a low housing inventory in the area.
The Kamloops Real Estate Market
While rising home prices are generally a good thing, artificial pressure from a low housing stocks creates long-term issues for the overall marketplace. Currently, Kamloops prices are increasing because of the large number of buyers in the market. Interest rates for mortgages remain very low, and fewer buyers are putting homes up for sale.
When there are too many buyers and too few sellers, people moving to the area often have to settle for less house than they desire. They also pay inflated prices compared to what they would with a normal four-to-six month supply in place. In some areas, sellers actually auction their homes to the highest bidder, further tilting the scales against the buyer.
The professional real estate structure, from builders to real estate agents to lenders, depends on a steady stream of transactions at reasonable market values to sustain a healthy local market. Achieving a normal housing inventory in the Kamloops market may time based on current trends.
What does that mean for you as a buyer?
Inventory is low and demand is high, which is pushing prices up with each passing month. Buyers are getting anxious and so are sellers, who are questioning whether they’re getting top dollar. Sellers often change their minds on the asking price and re-list higher after receiving a flood of offers.
1. Look for 'expired' and 'withdrawn' listings. A good agent will scour the MLS for homes that were listed in the recent past but never sold. Many homes failed to sell because they were seen as overpriced at the time. Does their last list price seem like a valid price today? Chances are, the owner doesn't realize how much the market has picked up and might still be open to selling the home. Have your agent contact the owner with a letter expressing your interest in purchasing the property. Show the owner you're serious, and you'll likely get a response.
2. Check rental listings. Why would a buyer go after rental listings? Here's why: The owner may have lived in the home at some point but had to move for a job transfer, divorce or life change. At that time, their home could have been underwater or the market simply wouldn't support the asking price. Instead of listing it with an agent, they just decided to rent it and "ride it out" for a couple of years. Their current tenant might have given notice and, without knowledge of the changing market, the owner simply wants to rent it again. Go see the home. If you like it, find out if the owner would be open to selling. Make it easy, and they may be on board.
3. Don't ignore overpriced listings. The No. 1 complaint among real estate agents everywhere is working with a seller who's unrealistic about their home's price, especially in this tight market. But as a buyer, you might use it to your advantage. After six weeks or less in some markets, an overpriced home loses its luster. The seller doesn't clean as often. Weeds grow in front. And it just may not show as well. The fading curb appeal, along with an unrealistic price, will keep buyers away.
How is this good for the buyer? Many sellers won't list their home at a lower price but will sell it at a lower price. Go in with an offer before the first price reduction, if possible. Once they do drop the price, other buyers will take notice again, and you may have competition.
4. Off-market or pocket listings. Some homeowners want to sell but don't want to or can't list. Maybe they simply don't want the hassle of keeping a clean home and dealing with showings. Or perhaps they're just very private. Especially in the luxury market, some owners just don't want to publicly list their homes. In many markets, real estate agents regularly network with each other about potential deals. Some areas have dedicated websites for agents to share off-market properties, also known as "pocket" listings. Also, brokerage firms generally release upcoming listings to their agents a few weeks before they hit the MLS. Work with a well-connected agent and make sure you're privy to these potential opportunities.
5. Be Prepared. Make sure your are all approved for your mortgage and secure in the knowledge that you can make an offer knowing that you are ready to buy and even offer to make the offer without the subject to sale giving the sellers more confidence in you as a buyer. Have a deposit ready to go, again when a seller sees a combination of larger deposit and a clean offer to buy they are certainly going to be more interested in you.
Most active buyers spend months looking for a home the traditional way. Until prices rise enough to bring more sellers and inventory into the market, these buyers will likely keep facing tight housing inventory. That's why it's important to make sure your agent is trying every way possible to uncover opportunities for you. Be open to using non-traditional methods to beat the competition and take advantage of low interest rates and favorable pricing.
CONTACT DANIELLE TO CHAT ABOUT YOUR REAL ESTATE NEEDS
What does that mean for you as a seller?
1. Be On Your Game. Even in a sellers’ market, traditional real estate rules still apply. In short, sellers must still put their best foot forward if they’d like to get the most for their home. Houses that are shown in top condition are much more likely to sell—quickly—in a sellers’ market than those that have been haphazardly cleaned and organized. With that being said, don’t get carried away by assuming that you can overprice your home simply because the market is currently favoring those looking to move, if your staying in Kamloops then the price is relative as you will have to buy as well. At the end of the day, buyers will always flock to well-priced homes that show well. If it’s not priced right or shows poorly, it won’t sell. Use a realtor to make sure selling your home is going to maximize your financial return and let you already be ahead of the game when it comes to the steps outlined above for buyers.
2. Don’t Drag Your Feet. If you’ve been lucky enough to receive multiple offers on your property, it’s important to move forward with the most qualified buyer. Waiting too long can cause a loss of momentum, so pay attention to the buyer who is not only working with a local agent and has their loan lined up, but the one who makes an aggressive offer and expresses serious interest in your home.
3. Choose wisely. If you receive a slew of offers don't be solely focused on the most money, sometimes it's better to see past the amount and see what the buyers are offering in subjects in their offer. A clean offer with no subject to finance means that the buyer is confident of having the means to buy your home and maybe their offer is a matter of a few hundred dollars different. Use your realtor to explain all the angles and make sure that you have all the facts as usually your realtor with be given lots of information from the buyers realtor as to their situation, ask lots!
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