Canada's Most Expensive Properties Currently Available

While the southern Georgian Bay region is increasingly becoming home to some pretty spectacular properties, we still lag behind other parts of Canada in terms of luxury real estate and values.

  The Huffington Post has just published a slide show of some of the most expensive residential properties currently listed for sale across Canada.

 Perhaps we are not that far away from seeing multi-million dollar homes 
of this magnitude in our market as well.

How Is Our Local Luxury Home Market Different?

The Canadian luxury home market is reported to be surging ahead significantly in many markets across the country.  According to a recent article in the HuffingtonPost, sales above $1.5 million in Toronto were up 18% in 2013 while sales over $2 million in Vancouver increased 38%.  Given the high cost of just a moderate home in these two cities, $1.5 and $2 million may not be good benchmarks to track luxury home sales activity.  I have seen some pretty ramshackle homes in places like the Beaches of Toronto going for $800,000.

 As previously mentioned herein, 2013 was a good year for luxury home sales in the southern Georgian Bayarea especially above $1.5 million.  I think this indicates to some degree, similarity with Toronto (GTA) for example where $750,000 to $1 million doesn’t necessarily buy you anything really special so you’ve got to get up over $1 million or higher in order to truly buy something luxurious with the features and quality of workmanship that belies what Buyers in this niche are looking for. The big differences I have noted between the local luxury home market and that of say of the GTA lies in a couple of distinct areas.

  First appears to be the amount of available inventory.  ReMax has released a report which says 1,908 properties over $1.5 million sold in the GTA last year with 1,000 luxury properties currently listed.  If these numbers are correct then the GTA has little more than 6 months worth of available inventory.  As of this posting we have 105 listings on the Southern Georgian Bay Association of REALTORS® MLS® system which represents 48 months of available inventory in a market segment that is somewhat fickle. The total value of the current local housing inventory over $1 million is $181.9 million so again that is 5 years of inventory. 

  

  Secondly, the 26 sales in our area last year represented $36.3 million or roughly 5.8% of total sales volume yet in terms of units, 26 sales in less than 2% of total single family homes sold.  By comparison, the ReMax report indicated that luxury home sales in Oakville last year were 5% of units sold double that of our local market.  In terms of dollars, Oakville’s luxury home sales amounted to 16% of total dollars sold or three times what we experienced here.

  What does all this mean?   Luxury home sellers in southern Georgian Bay need to understand that this is a much smaller market segment that places like Toronto, Oakville and other urban centres.  As such, they can expect a much longer days-on-market here locally than luxury property sellers in the aforementioned cities.  Secondly, the luxury home market here has at any given time, a much higher level of available inventory for sale.  This again will result in much longer days on market but also makes the whole issue of pricing your property much more important.  

  If you are looking to buy or have a luxury property in this market area to sell, I would be delighted to discuss and share my knowledge with you in confidence.

Pricing Your Luxury Property To Sell

So you’ve decided to sell your home, condo or perhaps it’s a vacant lot.  As per my prior post, the #1 reason that properties sell or fail to attract a buyer is PRICE.  Sure, we can debate the matter location, condition and the desirability of the neighbourhood etc. but at the end of the day these are all factors relative to price.

  No matter how well maintained and up-to-date your home is or the fact it is in a great location, price is ultimately the most significant factor in securing a Buyer.  Today’s Buyers are forever fearful of over-paying.  Further, the Internet has enabled Buyers and Sellers to become very knowledgeable and informed.  Via their online searching and comparative shopping, they get a good sense of values. They know which properties have been listed for an extended periods of time and they determine by looking at photos and virtual tours which ones are physically worth going to view. 

 I would hazard to guess that when most Sellers decide to sell and contact a REALTOR®, the scenario unfolds like this.  The REALTOR® arrives at the property with little if any information to review with Mr. and Mrs. Seller other than perhaps a couple of MLS® data sheets for some other sales in the area.  They take a tour of the home with the Sellers then sit down to discuss price.  The REALTOR® will have a price in mind that they have arrived at based on the comparable MLS® sales they may have printed off in conjunction with their just completed tour.  Mr. and Mrs. Seller will also have a price in mind.  The Seller’s price will be based on the following:

• What they paid for the property plus any money they have since put into it.
• What they feel the home would cost to replace if you were to build it today.
• What they need to get out of the home in order to move on to the next home they wish to purchase.
• What their neighbours have told them their property is worth.  This price is usually high as the neighbour is selfishly protecting their own interests and  the perceived value or their property.

  The fact is, none of the above matters and is of little consequence to a Buyer(s).  The property is ultimately worth what a willing Buyer is prepared to pay.  For the most part, the most they are willing to pay is an amount equivalent to what other comparable homes in the area have sold for.  The REALTORS® job is to analyze the market, look at what has sold, what hasn't and also take a look at what is currently listed for sale as that is what the Seller(s) will be competing with.

  In order to effectively do the necessary legwork to establish price, as a Market Value Appraiser I prefer the two stage listing approach.  The first visit is to gather information about the subject property which can then be used to compare it to other recent sales in the area.  Differences in lot size, location, the size of the house, number of bathrooms, features, finishes and other criteria all need to be reviewed, with dollar adjustments made for the many differences that are bound to exist.  Only then can you arrive at a realistic selling and listing price.  In some instances and this is especially true with higher end homes, they may be no good comparables.  Nonetheless, conclusions can and still be drawn in order to arrive at a realistic price that will resonate with Buyers.  This entire process takes some research and skill.  It’s not a matter of pulling a number out the air so-to-speak or simply listing it for what the Sellers want.  Doing so will probably result in the property being listed for an inordinately long length of time coupled with the need for multiple price reductions in order to secure a sale.  When this scenario unfolds, the property may in all likelihood, sell for less money than it would have if priced correctly at the start.

  If you are interviewing a REALTOR® with the intent of listing your property for sale, the onus is on the REALTOR® to provide you with the following information:

• A summary of other properties in the area that have sold?
• How do they compare to yours in terms of location, size, condition & features etc?       
•  How long did it take for these properties to sell?
•  What was the listing versus sale prices for these properties?
•  What other area properties are currently for sale that you will be competing  with?

  There are other questions to ask as well but I think you get my point.  Selling your property is more than having a REALTOR® walk through and throwing out a price with nothing to substantiate it.  Doing so will inevitably result in an unduly lengthy days on market, the need for multiple price increases and in the end, a sale price lower than what you mind have attained early on had the property been priced so as to be in the market versus just on the market.

  Pricing a luxury or higher-end home is often a much different matter than what I have described above.  Finding a comparable sale(s) to a $1 or $2 million plus property can be a challenge. If you are the owner(s) of a luxury, high end property I will in the next post on my luxury home blog  “Southern Georgian Bay CarriageTrade Homes” talk about the process used to arrive at an appropriate price for that distinctive one-of-a-kind property.

  One closing comment.  Everyday I see REALTOR® ads offering "FREE Home Evaluations."  With about 100,000 REALTORS® in Canada there are tens of thousands of "FREE Home Evaluations" being offered.  As a seller, insist on obtaining one that is done thoroughly and professionally utilizing some of the guidelines I have explained above.

Why Is My Luxury Home Not Selling?

We are now almost one and a half months into the new year.  Despite the relentlessly cold weather we have been having, spring will indeed come and with it, an upturn in the real estate market as traditionally happens once the better weather arrives.  

  As previously reported, 2013 was the best year in six years in terms of the number of properties sold through our local MLS® system.  Further, it was also a “record” year in terms of dollars sold with almost $625 million in properties changing hands via MLS® sales in our market area.  Luxury home sales in the area were also strong last year with 26 properties selling over $1 million.  With all this positive news, some sellers are probably asking themselves; “Why is my house (or condo) not selling?”  

  Earlier this week I completed an update course in order to renew my MVA (Market Value Appraiser) designation.  This designation must be renewed every two years and it requires taking some additional courses relative to appraisal in order to do so.  The course I completed was titled “Pricing to Sell” and it reinforced some of the various appraisal methods and steps taken in order to accurately value a property.  As I worked my way through the materials it really struck me that a large percentage of REALTORS® are not aware of and or do not follow the necessary steps to establish accurate property valuations.   

  The #1 reason that properties do not sell is PRICE. I know this may seem like I am over simplifying things but let’s look at the follow scenarios:

1 - The home make simply be just over priced.

2 - The home may be priced too high for the neighbourhood.  Having the most    

      expensive home in the area is not a good thing.

3 - The house may be dated and in need of renovation and upgrades.

4 - The house may be situated in an area that for some reason has become 

      undesirable ie: increased traffic or it has been re-zoned so as to allow 

      commercial uses etc.
5 - There is a lot of housing inventory on the market to compete with.

6 - Market conditions have changed, perhaps interest rates have gone up or the 

      economy has slowed down.

  Every one of these six reasons is in some way tied to price.  The first two are obvious, but what about the other?  If a home is dated and in need of some renovations, the price needs to reflect that.  It needs to be priced in such a way that if the buyer is in fact interested in the property, they will want to purchase it at a price that will allow them to undertake and finance the required.  Some buyers may just simply not want to get into a "project" and there is little you can do about that.  

  As for items #4 and #5, if a home is situated in an area where the land use and zoning have changed or say a new highway went in, you may need to price it lower in order to attract a buyer.  If there is an abundance of inventory listed for sale as there now is, you may have to lower the price to attract a buyer.  As of this post there are 104 properties listed for sale over $1 million.  If the economy has slowed or interest rates have increased etc. then again the price may have to be adjusted to account for those factors again in order to attract a buyer.  One way or another all of these reasons tie back to the issue of price.

 At the end of the day, maybe you made a bad choice in the REALTOR®  you selected to list and market your property.  That too may relate back to price.  Did they prepare a comprehensive evaluation which they reviewed with you to arrive at the current market value of your home?  Many times they don't instead just throwing out a price at which to list the property without doing any research or worse, they listed it at a price dictated by the seller.

 As we approach spring and head into the prime selling season, I am going to spend some time talking about price as it is the most crucial component in getting your home or other property SOLD!  In my next post I will review several ways in which a property evaluation can be prepared in order to arrive at a realistic market price.  There is a difference between having your property "on the market" versus "in the market" and my desire is to show you how you arrive at the latter.  Stay tuned.....

The Luxury Segment Is The Main Driver For Economic Growth

From time to time we have all heard and probably lamented over the old sayings “…. the rich get richer” or “the haves versus the have-nots.” Due to sweeping economic changes like reductions in the North American manufacturing sector etc., the middle class appears to indeed be shrinking.  If anyone doubts this trend, the New York Times just ran an interesting article attesting to this and while it speaks to the U.S. let’s face it, we are pretty much cut from the same cloth here in Canada.

  One only needs to look at our own local economy which has changed dramatically in recent years with many of our manufacturers closing their doors only to have those higher paying jobs replaced by minimum wage retail or service sector employment.  Not surprising we are not alone in this situation as across Canada and the U.S. those businesses that cater to “middle-of-the-road” consumers ie: retailers such as Sears are struggling while high end stores like Saks Fifth Avenueand Neiman Marcus are flourishing and for the first time, are moving into Canada staking their claim of the growing high end retail sector in this country.  

  As further reported in the New York Times article, General Electric is experiencing a significant growth in sales of its Cafe´ upper end appliance line.  Whether or not they actually cook is irrelevant.  Affluent Buyers or those building a luxury property obviously want and are prepared to pay for high-end appliances with features like double ovens, hot water dispensers and more.  This fact relates back to my prior post wherein I stated luxury properties need to have the requisite amenities such as these in order to both attract a high net work buyer as well as to substantial your asking price.  I have found that among affluent Buyers, quality has now become more important than quality.  A 6,000 or 7,000 square foot home with middle of the road features, finishes and amenities will not command the same level of interest as a 4,000 square foot residence that has been superbly finished and contains the latest in high tech features.  
How does your home stack up?