Wednesday, November 19, 2008
Seller throws in a free car — and still the house doesn’t sell
By Melissa Leong, National Post
The homebuyer who purchases the spacious, two-storey detached brick house on Westlake Avenue will get a new fridge, a gas stove, a finished basement — and a new car. The owner, who has been trying to sell it for two months and repeatedly lowered the price, decided to list the three-bedroom home in East York for $379,000, with a purchase bonus of a vehicle worth up to $15,000. “It’s at really good-market value. Here we are giving a $15,000 car away and we still haven’t got the property sold,” said Michael Clarke, the real estate agent who introduced the incentive more than a week ago. “It’s a sign of the times.”
Expect to see more creative marketing strategies, he said, as Toronto’s housing market continues to cool from record-breaking sales and prices in 2007 to its current sobering state.
“There are more listings out there. It’s tougher to sell your house. I don’t blame them for doing it,” said John Pasalis of the car promotion. He is the founder of Realosophy.com, a Toronto-based real estate Web site. “Consumer confidence is really at a low right now. Buyers are cautious and uncertain. A lot of people are just waiting to see what happens.”
Last month, home prices suffered their sharpest decline in 17 years, dropping 13% in October from a year ago, while the greater Toronto area experienced a price decrease of 10% from a year ago. The Toronto Real Estate Board (TREB ) reported that sales fell 35% to 5,155 compared with the same month a year ago and 25% from two years ago. There was a 32% rise in Toronto MLS listings last month compared with a year earlier, and sellers are waiting an average 37 days before they can sell their homes (a week longer than a year ago). It is a buyer’s market. There is so much inventory. They don’t have to be in a line-up to buy like last year,” said Maureen O’Neill, president of TREB, which releases its mid-month report tomorrow.
“The good news is that [sellers] are getting 97% of their list price.” The areas in the city that have experienced the largest drop in average home prices are those with more expensive homes, Mr. Pasalis said. “If you look at some of the worst-performing neighbourhoods, it is really houses in the above six, seven, eight-hundred-thousand dollar range that aren’t selling well,” he said. “You’re having fewer sales of higher-priced homes and it’s dragging all of the averages down.”
Bear in mind, Mr. Pasalis said, the average home prices last year were artificially high because of an increase in million-dollar home sales as buyers tried to beat the deadline for the land transfer tax and people upsized to larger homes by taking out 40-year mortgages. Buyers in today’s market should be more conservative, he suggested. “They should be buying in a location where they could be comfortable for the next five years and not overstretch their budget. They need to be a little more defensive than homebuyers were previously.”