For a buyer, December can represent a good opportunity to shop for deals and, in some cases, downright bargains.
The real-estate market is always exceptionally slow for the entire month of December. I’ll probably go three to four weeks without seeing some of my colleagues, hearing from a number of my clients, and spotting hot new listings for houses and condos. But for a buyer, December can represent a good opportunity to shop for deals and, in some cases, downright bargains.
Real estate is cyclical, like many other industries, and the two annual peaks of activity (in April and May, and September and October) are levelled out by the valleys (the end of August before Labour Day, and in December, especially during the holidays). Many buyers aren’t active right now because listings are scarce and they’re busy with holiday commitments; many sellers hold off on listing because buyers aren’t active. It’s a chicken-and-egg game, but those buyers that do stay active can try their hand at deal-chasing.
The slow period at the end of August only lasts for a week or two, and then turns into a boom period for real estate after Labour Day. But the slow period in December can drag on for over a month, and this means potential losses for some sellers. That’s why it might be worthwhile for active buyers to take advantage of the situation, and see which sellers are looking to cut their losses.
There are still quite a lot of condos for sale right now, and it makes sense for a buyer to identify a couple of units that would be great options if they were the right price. The condo market has slowed since the spring, and some sellers are starting to get nervous. As a buyer, why not seek out these nervous Nellies and see if they want to play ball? Many pundits are predicting that the market will recover in the spring, so perhaps now is a better time than ever to be an aggressive buyer.
Put yourself in the seller’s shoes for a moment. If your condo is still on the market in the middle of December, there’s an excellent chance that it won’t sell until January. Take the average one-bedroom condo and think about what it costs to carry the property each month. It’s maybe $1,500 for the mortgage, $500 for maintenance fees, $100 for utilities, and $200 for property taxes—plus, the hot-water tank and heating/cooling system might be rented. If the unit is vacant, then the seller is bleeding $2,300 per month, and carrying the property for six weeks through the holidays might not be the most desirable option.
The higher the price of the property, the more it costs to hold onto it, and the more a seller will likely want to get rid of it in the “last chance” market before Christmas, rather than waiting until mid-January. Waiting doesn’t necessarily guarantee a sale either, since the market typically explodes with new listings in January, and there’s more competition among sellers.
Taking all of this into consideration, I think most sellers would love to get rid of their condo today, tomorrow, or next week, and they might look more favourably on that “low” offer than they would have back in November or later in January.
I don’t think the same approach can be taken if you’re looking to buy a house, since there is, and will continue to be, a shortage in supply. Houses are worth a lot more, on average, and thus the monthly losses don’t have the same impact as with condos.
As a buyer, the only thing you’ve got to lose is a little time. Find two properties that have been on the market a long time and that may be vacant, and make a low offer just to see what kind of response you get. You might find that seller who puts a psychological value on not having to worry about the vacant investment property over the holidays, and who is willing to take $10,000 less for the property. I’m generally not a big advocate of lowballing, but this is the time of year when, if you sit patiently on the dock with some bait in the water, you’re bound to get a few bites.
David Fleming is a Realtor with Bosley Real Estate in Toronto, and author of the best known real estate website in the city: www.torontorealtyblog.com. A constant thorn in the side of condominium developers, David’s sarcastic, opinionated, outlandish thoughts can be read daily, although for some people, that’s far too often.