Focus On ‘Local’ for Real Estate Prices

Posted: November 6, 2009 in 1

forsaleCanadian property owners intent on following real estate price fluctuations using mainstream media reports from centres across Canada may be searching too far afield for the information they need. Local details should be more significant than national patterns. Local real estate professionals and local news are excellent resources regarding real estate prices on specific streets, in particular condominium complexes or in certain subdivisions.

By now most people are familiar with the “location, location, location” mantra of real estate value, but too often this triple-whammy criterion receives a dismissive giggle rather than the serious consideration it deserves. Paying attention to local changes, improvements and patterns is crucial when determining real estate value for many reasons:

  • Competition: If three similar properties were for sale on one street, an individual property owner may receive a slightly lower offer from a buyer who is comparison shopping. In an area where houses rarely come up for sale, a single listing may be snapped up at a price that reflects the rarity of this event.  
  • Changes: A new neighbourhood development may drive area prices up or down depending on how well this project is integrated into the neighbourhood. Employment creation or job loss in the area may drive prices, respectively, up or down.  
  • Total cost: Condominiums, houses and other properties that require little additional cash outlay, other than the relatively minor cost of redecorating, may exhibit more price stability that real estate where major renovation, modernization or accessibility up-grading is essential to property enjoyment.  
  • Demographics: Population shifts on a local level may result in a net migration into or out of the area and a parallel impact on housing demand.  

These and other factors affect local real estate prices, but there are also elements within each individual transaction that reflect positively or negatively on the final sale price. Learn the context for a sale price before using it as a benchmark for pricing your real estate. A property owner may accept a lower sale price and still consider they’ve received full compensation when there is perceived monetary value in other aspects of the sale, or the seller may demand a higher price when asked to make concessions to a buyer’s needs:

  • Closing Date: If the seller has already bought and wants to match the closing date on the new property, this may allow a buyer to negotiate on selling price.  
  • Conditions and Financing: When the buyer asks for few, if any, “subject to” concessions from the seller, including assistance in financing the transaction, there may be more room for price negotiation.  
  • Inclusions: If the seller is not asked to include appliances, lighting fixtures, furnishings and other items in the transaction, a seller who will therefore not have to replace these items in their next property may be more flexible in negotiations.  

Continue to track Canadian and North American real estate news, since buyers and sellers can take their cue from media hype, but search for local relevance. The insight and knowledge contributed by an experienced local real estate professional may prove invaluable in keeping abreast of shifts in pricing climate.Just as an average increase in area or regional prices does not add equal value to every property in the area concerned, an average decrease in prices does not forecast doom for every property owner. Facts matter when markets shift. Solid, reliable, intelligently-presented local real estate information is essential to owners and buyers intent on keeping a “pricing” finger on the real estate pulse — locally, that is.

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