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Nov. 25, 2020 | Wednesday
Local News
Letter: Why are NOTL house prices so appealing for buyers from the GTA?
Letter

Dear editor:

Unquestionably NOTL is a very desirable destination to live, work or retire. For this reason, to no one's surprise, we have witnessed a population growth year-over-year. Home prices can be driven by many factors, but not always.

Typically supply and demand is the key driver, and now in Canada, as in other countries, price increases are being affected by COVID-19 as city dwellers migrate to the suburbs and more rural areas, affording them more green space with back gardens etc.

Additionally, with more people working remotely from home, NOTL is very appealing.

Accordingly, one would expect that the housing prices would be substantially higher. The sense from visitors, buyers and potential buyers is that houses in NOTL are a steal.

We hear such comments from buyers relocating from Toronto, Ottawa, Oakville and Burlington, etc. who typically pocket 30 per cent or more from their former home sale as an investment toward their retirement. I am not suggesting here that our prices should be 30 per cent higher, however, are NOTL prices a contributing factor to an increase in Airbnbs, as second-home buyers are renting out their potential future retirement homes and in the intervening period generating an alternate income stream?

From my personal experience, a very sought-after and desirable area in the Coachella Valley in California, (home of the largest outdoor music festival in the world), property prices in PGA West, the western home of golf and home to the former Bob Hope Classic, are 35 per cent to 45 per cent less than in 2006.

There are similar stories across the United States, in Florida for example. My father was a home builder/developer in Northern Ireland. I grew up around and am familiar with the industry, although my own background is in aeronautical/mechanical engineering and as a former international business owner.

The anomaly around the PGA prices in relation to the national trend, whereby prices have recovered to, or are slighter higher than, their pre-2006 boom levels piqued my curiosity.

I subsequently engaged in several deep and thoughtful dialogues, from within my PGA golfing community, with Tier 1 top performance realtors, as to why prices in this sought-after community were still grossly depressed.

Collectively they responded: "There are too many realtors (agents ), working the small La Quinta, PGA West market. " Consequently this puts pressure on the agents to aggressively squeeze the listing prices to move the inventory.

Deciphered: "There are too many agents sitting around the table and the commission pie is too small. As commissioned agents, if we don't sell, we don't eat."

In conclusion they added: You have heard the old saying, "If you price your home right, it will sell, usually in a few days or a matter of weeks. Code for if you want to give your house away, it will sell. We call it order taking."

I was astonished at their frankness, and as a friend and knowing my background, their counsel was clearly given in good faith.

From our own experiences we have often been told: "We can list the house at your price, however, if it doesn't sell in two weeks we will have to reduce the price. (If it's priced right it will sell.) Guess what, they often sell at your price. Realtors, of course, will often overprice your home, to get the listing. I use the realtor's price as a guide price and where possible, personally research the area in detail ... being cautious to test the comparables against potential estate or divorce selling prices and factor them out.

In conclusion, I have reflected on my golf associates' conversation many times and the attendant comments that our house prices in NOTL are a steal. It prompts the question: "Are there too many agents working in our small market, thereby depressing prices?"

Samuel Young

NOTL

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