Property listings and sales down
ECONOMY
Posted By SARA ROSS, THE PACKET AND TIMES
Posted 1 year ago
The uncertain economy over the last few months has had a drastic effect on the real estate market, which has seen local listings reduced by 1% a month for the past seven or eight months, said David Nicholls, broker and owner of Prudential Lifestyles Real Estate on Coldwater Street.
The market is also seeing a large reduction in the number of sales.
The real estate market has been troubled to say the least, Nicholls said. "You get dressed every day, you come to work and there's just not a lot happening. It's been difficult for a lot for real estate people."
From 2005 to 2006, the average prices in the Orillia area increased by 4% to $240,519. In 2007, the average building sold for $258,718, an increase of 7.5% from the year before. The year 2008 saw an increase of only $97 to reach an average cost of $25,8815.
The real estate market escalated "beyond belief" in the past several years, and now it's "correcting itself," Nicholls said. The formerly high market prices have some sellers listing their houses at prices not reflecting the reality of the current "soft market," he said, adding high listings could sit for three or four months.
"These are sales and listings, which three years ago would have sold in a week, but people are not buying at over-inflated prices, so the houses listed are coming down," he said. "If you had a house that was really worth $170,000 and sold for over $200,000 several years ago... it would probably have to be at $184,900 in order to get any action now."
Nicholls, who has been in the business for more than 20 years, said the reduction in house prices, which occur periodically over the years, are not as worrisome as the lack of business.
"It's the inactivity that's disturbing," he said. "People... seem to think with all the pessimism in the world that they don't want to make a purchase of any sort, whether it be a car or a home. They're very worried about the world and unfortunately it has an effect on all of us."
In 2007, agents on the Orillia and District Real Estate Board completed 1,051 building sales. Last year, they made a combined total of 806 sales, a 23% difference, said Dan Stoutt, president of the Orillia and District Real Estate Board and broker with Re/Max Orillia Realty.
He said 2007 was the best year on record for home sales in Canada, but the 2008 total number is still lower than it's been in five years.
Members of the Orillia real estate board, which included about 185 agents several months ago, has been affected by lack of sales and decreasing sale prices, Nicholls said.
"Of those who were on the board six to nine months ago, it's safe to say that probably 10% of them have chosen to either leave the business, or find part-time work for sure," he said.
Real estate agents earn their wages through sales, which means if there are no sales, there's no pay, Nicholls said.
"When you go a couple months without a paycheque it affects everybody's livelihood," he said. "It's a very sad state of affairs for people who are in real estate."
With listings staying on longer and prices dropping, a shift has occurred, turning local real estate into a buyer's market, Stoutt said, adding that hasn't happened for about six years.
"As far as affordability goes, it hasn't been this affordable in a long time," he said. "And listings are taking longer to sell, so consumers have a little more time on their hands in terms of shopping around."
Recently, the Bank of Canada cut its lending rate to a record low of .5 percent, which has allowed banks to lower their prime rate, making mortgage rates more affordable, Stoutt said.
The affordability has encouraged a lot of first-time home buyers to step into the market, he said. This is a reason why the majority of homes selling are in the lower price bracket of $150,000 to $250,000, Stoutt said.
"First-time home buyers are basically what's going to fuel the next little while," he said.
The outlook for the Orillia area is positive for the future with new developments like the building of Lakehead University's permanent campus.
"It goes to show you, why would Wal-Mart expand and there's new companies coming and new restaurants coming downtown -- people aren't bailing on the town," Stoutt said. "Things are starting to happen, even though it's slowly; I think Orillia will start growing."
In the fall of last year, the Canadian Real Estate Investment Network (REIN) ranked Orillia second, tied with Barrie, in its Top Ontario Investment Towns 2008/2009.
"I see a lot of growth potential for sure," Don Campbell, director of REIN told The Packet in the September.
The "tell-tale signs" of how the local real estate market has fared in the economic slump will come out in the next 60 days, Nicholls said.
"In the winter there's always a slump and after March break people start thinking real estate more. We're just going to find out really where we sit," he said. "In the spring if we get a little bit of good news coming out of the automotive industry I think things will stabilize. There's just a lot of unknowns right now.
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Housing sales
Number of housing sales by agents on the Orillia and District Real Estate Board 2004 1,042 2005 941 2006 926 2007 1,051 2008 806
Average housing prices in the Orillia area
2004 $209,621 2005 $231,015 2006 $240,519 2007 $258,718 2008 $258,815
