What has been a fool proof way for realtors to meet a host of new people in a friendly and informative way since the dawn of organized real estate? Open houses. What has been a low stakes, casual, go at your own pace for a market participant to view homes in their area since the dawn of real estate? Open houses. A real win-win arrangement if you ask me.... if done right.
I have particular views about open houses that I have formed through experience, trial and error and general feedback. There is absolutely a way to do an open house right, from both participant's perspective.
Now, my goal today is not to talk about my opinions on open houses and the people that attend them, but rather to provide some insight into our current market based on my own experiences of hosting open houses over the past few months.
At the end of the summer, I made it my goal to do as many open houses as I could. Anytime our office had a new listing, I was eager to see if there was availability for me to host. Open houses have been a great way for me to meet new clients in the past while exposing our office listings to as many buyers as possible, and it appeared that buyers were again interested in visiting open houses this fall. Earlier in the year, that was hardly the case. Why? We'll talk about that.
Like I said, I believe there is a right way to host an open house and to me, that is very low pressure on my behalf and asking for very low commitment from visitors at said open houses. The folks that are interested in the house or might be interested in working with me generally make themselves known because of how I conduct open houses. I also invite communication and feedback that might not fall into that category, which again is fine. Honesty is important and I appreciate hearing truthful feedback from the folks that I meet on weekends.
So let's dive in and learn what we can from my experiences recently.
First of all, there are a lot of people that would really like to buy real estate right now. A LOT. Majority of the open houses I have hosted have been busy to very busy, which is in stark contrast to the warmer months earlier this year. Why? A few reasons in my opinion. Housing prices have remained fairly level throughout the year and don't look like they are going to fall any further, at least to a meaningful extent. Interest rates have remained level for three months and it doesn't look like there will be further rate increases on the horizon (and potentially a few rate decreases next year if we all behave). Those two things combined give consumers a bit more confidence when it comes to major life decisions.
They also shift the narrative of "I'm waiting for prices to go down" to "prices don't really seem to be going down anymore and I want to buy before they go up". That's a reasonable thought to have at this point in time. There will be a flurry of activity as soon as buyer's start to sniff a rate reduction as everyone hurries to buy a house before prices sky rocket. I can't stress this enough. There are a ton of people that want to buy houses in Canada right now. A TON.
Granted, a lot of those folks also have a home that they need to sell and are unwilling to do so unless they know for certain that they will get the house they want. So, they are unwilling to list their house for sale. These folks are finding it difficult to make a decision on how to move forward.
There are other buyers that want to have their cake and eat it too. These folks would love to buy a house at the current price, but don't like the interest rate that their bank is offering them. These folks want to buy a house without competing against other buyers and offering above list price, but they aren't willing to take advantage of current market conditions if it means 6% for a 5 year term.
There is no urgency to our market today and both of these groups of people can wait. Until we experience a dramatic change, there is no pressure for either of these groups. Meaning, in this market, only the people that HAVE to do something are going to. There are a lot of people that WANT to buy and/or sell right now, but they won't. Those sellers hoping and wishing with their houses on the market at ridiculous prices are wasting their time as they compete against actual sellers who realize what today's market is.
Let's look at the flip side to this coin, because there is a world in which both of these two people feel much more pressure to participate in the market, and it's coming.
Here's how it will start. There will be chatter about a rate reduction in spring of next year. Buyers that want to take advantage of attractive prices will buy before this happens, but on a variable rate mortgage. Most people will wait until an actual rate reduction happens. Once that first rate reduction is announced by the BoC, buyers will hear the bells go off. Time to buy. Prices will start to increase. Not drastically, but steadily. We will return to a seller's market. Those with houses to sell will have confidence that they will achieve a sale price that allows them to buy the home they like. They buy first and then list their home. Buyers that don't have a home to sell will get a little nervous as inventory dwindles and they see prices increasing. The fear of missing out leads them buy something, anything, that they can live with. It's 2021 again.
Back to the open houses. There are a lot of them. More than I have ever seen. More than I think this market can bear. On any given weekend, there are upwards of 300 open houses in the City of London alone. Sellers have never faced this much competition, at least since I got my license in 2017. In a hot market, there are a lot fewer listings on the market and there are far fewer open houses for buyers to attend. In my opinion, there are hundreds of listings in London alone that should just be taken off the market at this point. The sellers don't REALLY need to sell or aren't realistic about prices. These homes will never sell and just clog up the market for real participants.
Eventually these listings will expire, and like I said, it will be the 2021 market again.
Last but not least, I am finding that most of the people that are attending open houses right now aren't going to do anything in the market. And that's okay. My goal is to expose our listings and meet as many people as I can. In the future, when market conditions are different, I know these people will find the time that is right for them. Chances are the house that they visited in the fall of 2023 will be sold, but they can always reach out to the charming young man they met at that open house who was just so knowledgeable and friendly.
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