Ally posted on April 25, 2011 09:37
In Conversation with Don Campbell: There is no Canadian Real Estate Market
April 25, 2011 Editorial Team, Property Wire
One of the biggest mistakes real estate professionals and consumers often make is gauging their actions against national reports about the state of the real estate market, says Vancouver’s Don Campbell. He says there is no Canadian real estate market and the sooner realtors understand that, the better.
National averages make zero sense, says Campbell. Instead, real estate professionals need to look at the trends in their city or town. “You might see in Windsor, the average price is down 18 to 20 per cent, while in Winnipeg, it’s up five to seven per cent so looking at the national average wouldn’t tell you if it’s good to buy in Winnipeg or Windsor.”
To be an effective realtor in today’s market it’s important that agents and brokers become an information source rather than just a property seller, he says. Smart realtors need to access the numbers within their selling area, the numbers, Campbell says, that no one is reporting on. So don’t let dire six o’clock news reports about the state of real estate in Canada get under your clients’ skin because the local picture is probably not as bad.
Campbell goes one further by suggesting that realtors can look like market geniuses by ignoring local housing statistics by learning how to predict what the market will be like in 18 months.
“What they need to focus on is GDP growth, job growth and population growth numbers,” advises Campbell. “Those three numbers will tell you exactly what the housing market is like 18 months from now. You don’t need to educate consumers about those three, but people are drawn to people who predict the market accurately. Consumers will be drawn to them and they will get most listings.”
Whatever you do, warns Campbell, looking behind you to predict the future of the housing industry is not a good idea.
“If you’re analyzing the real estate market by looking at housing statistics, it’s the equivalent of trying to drive across the city staring at your rear view mirror,” he says. “You will crash because they’ve already happened. The only way to know is by looking at the growth in GDP, jobs and population.”
It’s a realtor’s job to figure out whether the market they work in will over-perform, under-perform or will be just right, says Campbell
For a more detailed analysis of your market, Campbell recommends looking at the average income of the people who are moving in. If the average incomes are growing faster than the provincial average, you’re in a market that will over- perform.
“If you want to choose where you’re going to fish as realtor and then the fishing will be easier if you go to where people’s incomes out-perform the provincial average.”
It also doesn’t hurt to get intimately involved with your market. Study, watch, and learn all you can about it. If the market you work in is mainly retirees, gear all of your business marketing materials to retirees. Start using words like freedom and lock it up when you go south and safe, he suggests. Figure out the watchwords people are concerned about and use that language when dealing with your clients.
“The unfortunate thing is I don’t see people change their marketing materials to speak to a potential target market and then they wonder why they’re quiet while others are so busy,” says Campbell. “For example, if you’re targeting retirees, don’t use the word retirement. After all, McDonald’s doesn’t say, ‘Hey hamburger eaters...’ “
Campbell advises realtors try their hardest to get into the heads of their clients. “If you’re a realtor enter the conversation already going on in head of your target market. Just find a way to enter that conversation and figure out how you can offer a solution. Talk about the benefits of their lifestyle.”
Campbell thinks it is key that they take time out to listen to the long-term plans of their clients. Don’t waste their time sending them listings that haven’t shown an interest in. “If they are buying a home from you really listen to what they’re looking for. If they’ve said they want a lake view property don’t go sending them properties that have a city view because they are $10,000 cheaper than what the client indicated they wanted to spend.”
The advice for mortgage professionals is much the same. Mortgage brokers need to find out how many properties their investor clients plan to own. The reason this is key information is that the majority of secondary lenders will only lend to customers who have four or fewer properties.
So if your client intends to have more than four properties, it’s good to know this at the beginning so you can advise that they seek mortgages with secondary lenders for their first four and then move to chartered banks for subsequent properties.
“A lot of mortgage brokers don’t ask that question,” Campbell says. “Your job is to make sure you get the right mortgage from the right people.”