Over the past little while there has been many comments and questions based on that stats that I post every month. These questions include:

• What is going on with this market?
• Will it speed up again?
• What is going to happen to prices? Will they increase, or continue to fall?
• Who is going to support all of this new development?

The truth is we don’t know. The one thing people sometimes forget is that Real Estate is a market based business. There is no exact science that tell you how, and when your house will sell. The market is purely opinion, based on proof from previous sales in the very recent past. It is merely a hypothesis, or an educated guess. The best we can do is look at what has happened in the past, and combine that information with what is happening in the present in order to determine the best route to take to sell your home. At ECS I teach a Personal Finance Class. Today we covered the topics of economies and the idea of supply and demand, it was then that I had this light bulb click and figured out that based on this that I could explain the housing market

It is the goal of every market to remain in a state of equilibrium. This means that the supply and demand are equal. The amount of goods being supplied (number of houses) is exactly the same as the amount of goods being demanded by the buyers. At the given price, suppliers (sellers) are selling all the goods that they have produced (houses) and consumers are getting all the goods (houses) that they are demanding. The real hard task is determining what that given price is.

Now many agents will argue that price is not always what the problem is and sometimes they are correct. There are some additional factors that could change the demand for your home, which can be very frustrating. These include:

• Buyer(s) taste and preferences
• The psychology of the buyer
• Expectations of future incomes and additional expenses
• The number and characteristics of buyers
• Changes in the amount of substitute and complimentary homes on the market

On the flip side some things will continue to influence the supply of homes and this can become very frustrating for the buyer, this can include:

• The psychology of the owner
• Renovation and production costs
• Costs to relocate
• Closing costs etc.

Overall, price will be the determining factor in what sells your home. The bottom line is, if you have had no action on your home you need to reduce the price. Think of it like a retail store:

• You see a sweater that you really like on sale and notice that there are many of them on the rack. The next week the same amount is on the rack, and the owner has decided to reduce them to try and get rid of them. Two weeks later you go in and there are still the same sweaters on that rack reduced even more and the owner continues to reduce until they are gone or they will end up as a door prize at the next fundraiser you attend.

If you want to be successful in this market you have to be in that constant search of equilibrium. You need to find the price that best matches you with a buyer and this may mean that you as the supplier will either:

A)    Continue to reduce your home or;

B)    Remove your home from the market and hope that it will sell better in the busiest season, the spring.

The August stats were welcomed with open arms and I was quite excited to see them as I knew this would breed some new life into this market. Lets be honest, some of the main economic drivers of this market just aren’t as active right now. It doesn’t mean that it won’t come back, but being realistic is the only choice you have if you want to be successful in this market. This means that the idea of “MAKE ME AN OFFER” does not work. You must list your home within the recommended listing price in the market that we provide to you. August showed some very promising numbers as the number of sales increased, and the number of days on the market decreased and our median price increased compared to last year. But there are some things that need to be kept in mind when looking at these. Those states are based on 142 sales for the year, a 33.3% drop from last year. Of course this means your medians will increase and the number of days your home will stay on the market decrease. The volume isn’t there for it to be a direct comparable. In addition to that listings continue to be 37% higher than this time last year, and by the way, if we compare median price to the month before it has actually dropped 10.6% to 292 000 for the month alone.

In other words there is no room for greed by anyone in this market. Do lowball offers work? No. Usually you will end up offending the seller and then make it harder to negotiate later on if you are still interested in this house. On the other side, should sellers be flat out refusing offers with no counter? The answer here is no as well. The ‘ego’ the sellers could once have is no longer palatable and there is no room for it given these current market conditions. Everyone needs to set their ‘Greed’ aside and work together to achieve that sense of equilibrium that this market continues to see.

So to answer the questions at the beginning of this entry.

What is going on with this market?

The present state of the market in terms of sales is stronger than what we have seen over the past year. We have seen a constant increase in the number of sales as our YTD percentage continue to grow closer to the positive end of the number line. Also, prices have continued to drop in order for these sales to occur. We have seen many single family dwellings sell this year compared to multi-family condo units which have traditionally had a lower price point. This could have something to do with the increase in median price on the YTD end of the scale compared to the decline of the Month to Month comparison in terms of median price.

In addition to this the traditional economic drivers this community has been used to seeing over the past few years are slower. We have had major projects completed and severe weather conditions have slowed down other areas that also have a significant impact on the housing market in Estevan and the surrounding area.

Will it speed up again?

I am confident that we will start to see some more economic activity happen within our area and that this will have an impact on our market.

What is going to happen to prices? Will they increase, or continue to fall?

I can’t predict a market. If things continue as they are, I believe that prices will stay similar to current reduced prices that we see now, and they may fall as we all continue that search for market harmony.

Who is going to support all of this new development?

There is nothing wrong with a surplus of development and readily available land, lots and homes. The reason that we saw such a huge increase in pricing was due to a housing shortage. Many employers had an extremely hard time finding employees due to the crunch and the Energy City was too far behind to support the boom that we had. The boom will come back, it always does the next one just may take a little longer.

So for those of you who are buying, be educated on the market conditions and past happenings before you throw that low ball offer in. To the sellers, don’t be easily offended. In fact, use the offer and see if you can make it work to your advantage. Please listen to the advice of your REALTOR®, they are the ones with the eye on the market and you too also need to also keep an eye on what is going on. Everyone has their bottom line, it may just take a while to get there.