Sunday, August 22, 2010

Is it a buying opportunity?

The question sent a shiver down my spine for so many different reasons.

Coming out of the blue as it did from the little red-headed girl; it said so many different things on so many levels. I wasn't aware she was looking at real estate and the question spoke to a number of things going on behind the scenes in her life.

Of course she didn't tell me she was looking at real estate. But it's clear buttons are being pushed. 'Buying Opportunity' is one of those R/E coded catch-phrases and it was out of character.

I lament for those who may be drawn like moths to a flame believing that we may be on the cusp of such conditions.

We aren't.

While August is shaping up to be another horrendous month for sales (perhaps the second worst of the last 15 years), I do not believe we are going to see the dramatic drop in prices - those significant reductions so many yearn to see - for a while yet.

Last week I told you about a colleague who had been fortunate enough to sell his condo after only a couple of weeks on the market.

He was lucky... and he knows it. Nothing else has sold in his neighbourhood since.

So I asked the question: what would you have done if the property had languished on the market?

Bought 10 years ago for $300,000, he wasn't prepared to accept anything under $800,000 today. With no mortgage outstanding, I was curious if he would move on the price?

"Absolutely not. If we couldn't sell it at that price we were prepared to rent it until we got our price."

It's an attitude I suspect is prevalent. Seller's believe their property is 'worth' the record levels set by the market at the beginning of the year. With sales plummeting, listings are also starting to shrink as sellers take their properties off the market.

Having watched the market resuscitate in 2009/2010, I believe sellers will try and out wait what many see as a temporary downturn.

We are looking at a slow, painful autumn and winter as sellers dance with a slow market melt and wrestle with what will become a new market reality.

And acceptance is going to be a slow and difficult process.

As for conditions signalling a 'buying opportunity', house lust is a dangerous affliction. It blinds the afflicted to what they would normally be able to see.

And I fear the little red-headed girl is blind to a great many things at the moment.

I offered my two cents worth, but deep down I know house lust not only renders it's victims blind, but deaf as well. Not to mention how it becomes a lever for other subtle machinations.

All you can do is say your piece and offer your advice.

After that it's their choice.



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