In a report released Wednesday, Dec. 3, 2008, Re/Max said Canada's average house prices will fall three per cent in 2008 and another two per cent next year. This decrease comes in spite of gains in 22 major cities across Canada and has been driven mainly by smaller centres where manufacturing, automotive, forestry, oil, gas and mining downturns have stalled the economy. More optimistically, some cities such as Ottawa, are predicted to merely see prices remain flat next year.
A report that averages the whole country becomes quite meaningless because results are so different in each region. I've been asking many local realtors over the past few weeks how things are doing here in Kingston. They all tell me we are just fine. Similar to Ottawa, our local economy is stabilized by the large number of government and military jobs.
In fact, the Kingston & Area Real Estate Association reports that the 3rd Quarter unit sales are up over the same quarter of 2007 by 2.2% and the Median Sale price year over year is up 3.8% to $216,000. No recession here.
Like most problems, looking at things another way reveals an opportunity. To first time buyers lower housing prices will be good news. The panel on Bankrate.com predicts this week that mortgage rates will continue to drop, more good news for first time buyers.
As a seller, how do you attract the first-time buyers and make this your good news too?
Simply answered, understand your target buyer and make the product (your house) appeal to them.
So what do we know about first time buyers? They are young with an average age of 30. Their average income is typical of the average for their area - they are working on their careers. Their average family size is 2.7 persons - they are just starting families. Not surprisingly, the homes they are buying are smaller and less expensive that those chosen by move-up buyers.
In past, many first time buyers were willing to buy a home they could fix up. Not so much anymore. The rising prices over the past ten years made it so they can't afford the repairs and renovations required in any older home where the purchase price would fit their budget.
Over three quarters of them have mortgages and one third have borrowed 95% of the value of the home. The zero down mortgages were discontinued in October so over half of first timers have to use up their savings for the down payment. They realize they won't have a lot of money to put into fix-ups. High carrying costs have changed their buying strategies.
Location, as ever, is important. The summer's skyrocketing gas prices made the cost of the commute a big issue. Energy consumption is becoming more of a concern too, cited by 90% of buyers.
Assuming you have a house that is in the price range which would be affordable for first time buyers, you can greatly improve your chances of selling by making it move-in ready and attractive to busy young professionals. Low maintenance and energy efficient improvements will be important.
Here are some other features which will appeal to first timers - in no particular order.
- a backyard or play area
- central air conditioning
- a garage, large if possible
- three bedrooms, two bathrooms
- hardwood or laminate flooring
- granite or granite look countertops and updated kitchens
- fresh paint, neutral colours, no wallpaper or dark wallboard
- clean neutral carpeting
- ample storage space, closet organizers
- upgraded electrical and mechanicals
- open concept floor plans in the kitchen, dining and living areas.
Basically, it's what we stagers have been telling you all along. If you think it's too much work to fix up, so will the potential buyers. The theory that the new owners will want to pick their own finishes doesn't work anymore with today's first time buyers. They'll pass you by for the turn-key property.
Buyers want move-in ready homes and they are willing to pay a premium for them. Well prepared homes sell ahead of the competition and for more. The first step in the staging process is to go over your home in detail with an objective buyer's eye and get a solid plan of action. That's where a stagers' objectivity, experience and market knowledge can help sellers be competitive in any market, recession or not.
