Back in the spring I wrote a blog about my concerns with the number of new builds and potential over saturation of the market. Well, it seems the National and Local Media have recently come to the same conclusion and the repercussions are being seen almost instantly! Basic rules of supply and demand are in effect. The more supply, the more fussy buyers can become. As the supply continues to grow, we have seen a correlating increase to the number days on the market it takes a home to sell.
There are a number of factors that can dictate when the fall market picks up. Weather is the biggest factor, but this year it seems once the media released its observation that the market is over saturated in Winnipeg, everyone suddenly wants to get their home on the market “now”. Sellers who have been waiting for the market to peak so they can get the best dollar for their homes are suddenly rushing to get their homes listed. Others who have been slowly getting their homes ready for months, are suddenly in a panic to get the house listed ASAP. The number of calls and booked stage jobs in the last week is more than 5X what we saw last year at this time! We’re scrambling! Sellers and Realtors are all looking for an edge to get their homes sold!
I have had a number of sellers ask me what we’ve observed of the market. It all depends on where the property is located and what the price range is. Homes in the lower price ranges in the well-established, mature neighborhoods are still selling relatively quickly. Usually in anywhere from 2-5 weeks. Rural and higher priced homes can take longer; anywhere from 2-4 months is common. Homes that have been updated and look good, sell faster than those that are outdated. Homes that are in serious need of updates will sell quickly as investments, if they are at the right low price. Yes, believe it or not, we have still seen bidding wars on staged and updated properties. Not nearly as many as in past years but we have still had a number of homes sell in bidding wars.
Homes that tend to sit longer are those that are in rural areas, which typically are in lower demand due to the additional travel to the city. I personally do not understand this. I grew up in West St. Paul. It is 20 minutes to Portage and Main. I now live about half way between Winnipeg and Lockport and still it takes me 30 minutes to get to the south end (using the perimeter) and only 20-25 minutes to get to Portage and Main. Our property taxes are 25 – 33% of what you pay in the city and we have 2-3 times the lot size. We played baseball in our back yard and still had tonnes of room for a pool and multiples decks! It’s quiet and peaceful and my grocery store is only 5 minutes away! Driving home every day – getting out of the city, is a wonderful feeling as we leave the stress of the city behind and head out to the “country”!
Homes in the newer developments also tend to sit longer. Many are priced higher so that rules out a big section of buyers. That is normal is any market! Higher priced homes just take longer to sell as there are fewer qualified buyers. Buyers expect more from a home in that price range and they can afford to be very selective. There are quite a few “knock down” and “build new” in well-established neighborhoods like Tuxedo or River Heights. Money isn’t so much as issue as the area itself and the detail that goes into the new home. These buyers are not interested in a new development. They prefer the new completely custom build in the old neighborhood!
Many new builds in developments were built as an investment and can take longer to sell. Unfortunately, walking through some of these homes (not all but enough to take notice), it’s obvious these homes were built on the quantity and not quality principle. Drywall seems are cracking, flooring is shrinking leaving large visible gaps, stucco is falling off a home not even a year old, windows are leaking inside because they weren’t installed properly. It’s really pretty sad. When buyers walk through and see this, it scares them off not only that house but potentially the neighborhood. They are paying top dollar for a brand new home that they can see has issues. Their Realtor will point these things out to them and then they start to think, what else is wrong that I can’t see….? There’s just no way buyers will pay top dollar for that kind of shoddy workmanship! I cannot count the number of repairs KAT Reno has been called in to do repairs on New Builds! Our home may be older, but the drywall seams and the stucco are as solid as the day they were put on! No surprises for us!
I have been shocked at the number of out of town investors that have built new homes here to take advantage of the housing boom. I didn’t realize that many out of town investors were building here. Ironically, not one was actually moving here, and they were all coordinating the building process from out of town. I’ve worked with many investors over the last 20 years and some will do what needs to be done and what is right, others will always cut corners to save money. There is simply no way you can stay on top of the building process and ensure the quality of the work being done from afar! How can you possibly stay on top of a complete new build from another province? When we do major renovation work for clients, we request they are available every few days if not daily to review the work and respond to questions. That just can’t happen with an out of town investor. Add a Builder who may be a little lax on his quality and knows there’s no one inspecting…. Let’s just hope if you are purchasing, you know who you are buying from! Will they stand behind their Build? Only time will tell…