McClelland Minute - December 27, 2009

Year End Wrap Up

Hopefully 2009 will go in the books as the year that this region started climbing out of the first recession of the millennium!  I sure hope so, as it has been a difficult time for a lot of people just to keep food on the table and the bills paid.  It also forced real estate values to correct themselves.  In the city I estimate there was a downward adjustment in some types of residential properties between 7% and 12% that reached bottom in the first half of the year.  Most of the rural communities in the Midwest didn’t fare as well with good houses in some towns selling at 15% to 20% below peak.

We read of increased confidence in real estate in the larger centres of Canada, and that same attitude has been steadily building in Lloydminster since about mid-June.  Starter homes were the first, followed by bareland acreages.  There continues to be a large inventory of condominiums, $300,000 + homes, established acreages, and recreational properties.  Distinctive houses over $400,000 and decent lakefront cabins continue to sell; go figure!  My dad always said that people with cash have more opportunity in down times than in good.

Quality farmland is always in demand, and sale prices are steadily increasing, particularly in Saskatchewan, especially if there is surface lease revenue coming with the parcel.  It has been fairly quiet on the commercial front though, not a lot of new stock, but limited amount of vacant space considering the times.  I think we have a lot of skilled entrepreneurs out there making a go of it, plus some landlords have provided concessions in order to keep good tenants.

We also have noticed some distinct trends in customer behaviors of late.  First of all, almost every offer to purchase will be a “low ball”.  There are two types of buyers in the market – bargain hunters and serious ones.  You usually can’t negotiate with the bargain hunter; they walk away at the first sign of a response that doesn’t meet their view of the world.  Realtors can often put together a deal with the serious buyer though, but it may take six to eight counter offers and several days to get it done!

Understandably, sellers can get quite agitated in this type of market.  Life events happen, relationships breakdown or move to secure work is necessary, often forcing people to put their homes up for sale even if they don’t want to.  If a first-time home buyer bought at or near the peak, they may not be able to pay out their mortgage, never mind the associated real estate and legal fees.  I expect we will see foreclosure activity increase in the months ahead. 

I have also noticed that customers expect Realtors to be like Wal-Mart; available to serve them 16 hours a day, seven days per week.  We had two requests to show properties on Boxing Day this year.  Sundays and special family times like Thanksgiving or Mother’s Day are largely ignored.  Apparently we live in a world where technology makes some people believe that all they need to do is ask, and it shall be, with no regard to the impact their request may make on someone else.

Having expressed that criticism, I have also noted how more people are educated on the fundamentals of real estate, particularly younger adults.  An informed consumer is a better client in my opinion.  They appreciate the logic that goes with valuation; the finer points of how to present a property, and are more realistic in their overall expectations. 

Thank you for your comments on this column throughout the year; I look forward to what 2010 offers all of us.  Have a Happy New Year!

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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