What is a ‘Buyer’s Market’?
I wish my economics professor broke down supply and demand for me in relation to real estate as I probably would have understood it a lot better back then. This law of supply and demand states that a supply increase amid a constant demand puts downward pressure on prices, creating a ‘Buyer’s Market’. A demand increase amid constant supply puts upward pressure on prices, creating a ‘Seller’s Market’. Fort St. John is currently in a Buyer’s Market, if you haven’t noticed all the for sale signs on people’s lawns.
We have over 700 listings currently in Fort St. John including residential houses, duplexes, land and mobiles. Since January, we have only seen 200 sales to July 31st. Last year, during the same period, we saw half as many listings with twice as many sales. The slowdown in the economy due to lower oil prices and waiting for more local jobs with BC Hydro’s Site C dam has caused some buyers to put their home shopping plans on hold for the time being. If you have a stable job, have some money in savings at the moment and plan on staying in Fort St. John for at least 3-5 years, then there is no better time than right now to buy!
Let’s look at the numbers behind that reasoning. If you think you will stay here for the next 3 years and rent, you will probably want a nice place. There are some great deals out there but a nice place is still approximately $1500/month for a 3 bedroom, 2 bath house. $1500 rent for 3 years would mean that you will be giving your landlord $54,000! Holy down payment Batman! Wouldn’t you rather put that money back in your own pocket?
The real estate market was busy in FSJ for many years. For 5 years we experienced 8-10% appreciation each year. We had people making $50,000 on their homes in the hot seller’s market in one year. There were however, some buyers that were being pushed out of the market as they were not able to afford the high prices and bidding wars.
Oh how times have changed! We have seen prices dip approximately 10% depending on the home. Some sellers are more motivated than others. Those Buyers that were historically pushed out of the market, are able to make some great buys!
1. Get a great deal. In a buyer's market, the seller has to work much harder to generate interest in his/her property. A buyer expects a home to be in excellent condition or priced at a discount, and could often secure a purchase agreement for less than the seller's asking price for the property.
2. Buyers can command concessions. Realtors look at properties every day. We live it, we breath it. We see the great deals out there - and there are quite a few - so make sure you are working with a great Realtor to let you know what’s available to help you get the best deal. Some developers such as this one (http://www.century21.ca/eli.chi/Property/BC/V1J_0G8/Fort_St_John/8620_82_Street) have not only reduced the price by $25,000 but are also offering to cover your closing costs up to $2,000, and include the fence and landscaping (another $10,000 value). Talk about getting your money’s worth! Ben Graham taught me that “Price is what you pay; value is what you get”. #OMChi!
3. Contingent offers are more acceptable. Sellers are more willing to accept an offer that is subject to the sale of the Buyer’s existing property. In the glory days, you wouldn’t even think about making an offer unless you already had your home sold. These days, sellers need to be more flexible but you can still protect yourself as a Seller by adding a time clause so you don’t risk losing a potential Buyer. Ask your Realtor for more information on this.
4. Request for repairs are more negotiable. If the home is in need of some repairs, Sellers will often credit the buyer for the repairs or fix the problem(s) noted by a home inspector. It’s recommended that if you are thinking of selling your home, you get a home inspection done so you can proactively take care of any potential problems that may arise.
5. Buyers control the transaction. Buyers can ask for longer subject removal time frame and extend closing deadlines – terms that would be automatically rejected in a seller’s market. Taking two weeks to satisfy the conditions of your contract are typical and you should have seen a mortgage specialist beforehand so unless there are uncontrollable circumstances, you should be able to remove your conditions in that time frame.
When you are hunting would you rather be out there when there are lots of people hunting, or less people? Obviously when there’s less competition. If you were on the fence before about buying a home and you are trying to ‘time the market’, it would make sense to be shopping when there is more selection and sellers are competing for your business. NOW is that time! Call me and let's start shopping!