Mark Albert


Hold onto your hat

07 January 2019
Mark Albert

Hold onto your hat...this coaster going down..but the next up is just ahead.

Yes, we are experiencing an adjustment in the market and yes, that adjustment has seen fewer sales, more time on the market and prices down from their peak, but not falling below grade.

Let’s look at three clients*, dealing with the 2018 market, in consecutive order, whose identities will remain unknown, .

*Some details have been modified to include other real experiences

Mr. and Mrs. Milehigh

Mr. and Mrs. Milehigh had bought their two storey 4 bedroom home in the GTA, July of 2008.  The home sat on a pie-shaped lot and backed onto a rather busy thoroughfare*, separated from the property by a cement block berm.

*Take note here – busy thoroughfare plus a 21 foot front lot with no front yard and compromised backyard, streamlines your market. That translates to - there are buyers who will eliminate this home based on one or both of these “features”, without even stepping inside. Now that doesn’t mean that there is no market. Obviously, the Milehigh’s bought the house because they prioritized other attractive features. Based on my experience, 25% to 35% of the market will eliminate this home based on this small pie-shaped lot/backing onto main street combination.

Mrs. Milehigh loved the location as it was nestled into a crescent of neighbours who shared her community and religious values. It was easy to access transit and a short walking distance to what Mrs. deemed most important. The house had an oversized garage, a finished basement and 4 washrooms, including one in the basement and a main floor powder room.

Listed at $460,000. 00, ten years ago, we had been able to negotiate a purchase price of $447,000.00

In 2017, The Milehigh’s decided they were done with this house and neighbourhood and now wanted to downgrade to something smaller and more comfortable – a condominium and more downtown.  The Milehigh’s were aware of the escalating prices and I had acknowledged that their home was cresting the $800,000.00 price point.  We were agreed, it was time, but…

Before putting the home on the market, the Milehigh’s wanted to find a suitable new 2 bedroom/2 washroom condo.  We began to look. What became apparent, was that the condo market was appreciating at a rapid rate and the prospect of buying a condo for half or less than half  of what they hoped to redeem from their own home sale, was very slight.  Some failed bidding attempts and some changes in my clients’ requirements had us consume a number of months in searching for the next Milehigh residence. 

All the while the detached housing market was heating up. Boiling in fact.  Prices were escalating almost weekly, at one point.  We knew that the Milehigh home had now far exceeded the million dollar level and was climbing.  

“Sell, sell, sell” said I.  “We’ll figure it out later. Maybe you can rent or stay with friends, between buying and selling, but let’s cash out now! Take the money!”

You know how you hold onto your hat when riding the roller-coaster because you might lose it; but you insist on keeping it on because it enhances your look and protects you hair. Heck, it makes you look taller. Well, it’s all good going up but you are likely to lose what’s sitting on top of your head with that strong downward force.

We had sat at the top of the market and lost our hats on the way down. The force of change blew those top extended price points of the market away. The accessory hat.  The whip cream on the fruit. Gone.

 Was it a really going down or just a small dip.  The Milehigh’s chose to wait just a bit longer. It was just a bit.

“Okay, maybe you’re right”, said Mr. Milehigh, “let’s put it on the market for close to what they got down the street just a couple month’s ago - $1,350,000.00.”

“But”, I said, “the market has changed now and that last sale didn’t have our pie-shaped lot and was not as close to the main street.” 

Mrs. Milehigh chimed in, “Since we haven’t found our new home, can we put it on the market without a sign* on the lawn, so as not to alert our neighbours?”

*Here’s a fun fact.  Secret agents are not in the real estate business. If there is no sign on the lawn, there is no small promotional billboard to look up or call about.  What’s more, the neighbours may have friends or family interested in their neighbourhood and on a crescent street or the reason for most traffic going by the house for sale.

Mr. and Mrs. felt confident that their house price would still hold up.  We listed at their price.  Their home. Their money and investment.  I offered only advice and opinion, which may be seen as unproven conjecture. They liked their math better. 

Well that hat blew off as we traveled down the rails of the market.  It was the centrifugal force, we one car in the train and it was headed down the hill. The thing about the hill going down is it may not match the one we came up on, so we don’t know how fast or far down it will go.  Though we applied the breaks, coming down tens of thousands at a time, we had to follow the trending market.  Now remember where we started this coaster ride.

We got off the ride, pride and profit in tact at $1,050,000.00.

That’s more than doubling the price paid.

I would still call that a happy ending.