I get asked all the time, “How is the real estate market in London, ON?”. Generally they expect a short answer containing “busy or slow” but there’s really a lot more to it. Unless you live in a large city like Toronto or Vancouver it’s relatively difficult to get a clear picture on how the market is flowing in your locale. The media tends to focus on these larger markets when sharing general market trends, but the bottom line is that some markets are booming while others can be quite lethargic.
If you are looking to buy a home and then sell yours in London, ON or anywhere for that matter; the real question is “Is my real estate market fast or slow?” Even within a specific city there are multiple districts and areas that sell relatively quickly and others that move more slowly. As with any market analysis in any industry, these answers are determined using statistical analysis. It’s what Realtors refer to as average listing duration. Basically, this factor represents the average length properties remain on the market before selling (using days as the indicator). Average list duration can be determined for specific property types (2 storey, bungalow, condo…etc.), multiple areas or all combined. In a proper market evaluation you don’t combine property types, usually if your property is a 2-storey you compare only 2-storey properties in the given area(s). This factor also includes how close to listing price the properties sold for, based on %.
This value is very important in assessing how your property fits into the market and what a reasonable time-frame is for selling your home. Of course there are many other factors like the condition of the property in question, list price, closing flexibility, and so on. Naturally, if the right buyer comes along you could sell really fast. If your home needs more than average work and the price doesn’t reflect that, it could take longer, there is no easy answer.
So if there are so many other factors why does this value matter? Well, we all want and hope to sell fast but if this isn’t the case then it’s a good indicator to help you make decisions as to whether a more aggressive approach is needed in marketing your home. This could include price reduction, closing adjustment, staging…there are many options available.
This value can also help you answer the burning question “Do I buy first or sell first?“. Again, average listing duration is a guideline and anything can happen but let’s consider an example which has occurred many times over in the real market.
So let’s say you’ve decided to move to a new area in the city because it offers more space, great schools, and it’s closer to friends. If you’ve chosen to buy first then you are like many others and the process begins. Having found something, you put in an offer, it’s accepted conditional on selling your home, and your home goes on the market shortly after. Unfortunately, another buyer puts in an offer on the place you want to buy, and since yours hasn’t sold you can’t waive the conditions, which results in you losing the property. You take your place off the market and the cycle begins all over.
What went wrong? Will it happen again? Possibly so, there’s no definite answer. If it happens multiple times it gets real frustrating because you feel like you’ll never get the chance to move. Also, will buyers question your property because it keeps going on and off the market?
How can this situation be potentially avoided? Well there are lots of options but one explanation could be as simple as considering the average listing duration factor. What if the area you want to move to has an average listing duration of 30 days and your current area has an average listing duration of 90 days? If you keep waiting to put your home on the market until you find one you want, chances are, statistically speaking, you will keep missing out on your dream home. If you insist on continuing with this process you will likely need a more aggressive listing price on your home in order to attract buyers at a faster rate and beat the average sale time-frame.
I’m not saying you should buy or sell first, it’s a decision everyone has to make for themselves, but make sure you have all the information ahead of time so you can try to prevent the frustrating scenarios and make your home shopping experience a pleasurable one. Have your Realtor inform you of the average listing duration for your area so you can have reasonable goals and expectations for selling your home and determining current market conditions.
Sutton Group – Select Realty Inc.
A blog helping people understand more about Real Estate in London, Ontario and Canada