Is it just me, or was it FOURTEEN degrees outside on Wednesday?

My calendar says January, but the thermostat says mid-March.

Perhaps this is the reason for the unusually…um…unusual January real estate market we are now experiencing…

The real estate calendar is usually very predictable.

We essentially have 8-9 months of the year that we would call “busy” and then a whole lot of down-time.

For the most part, December is a dead month.  The “Fall Market” is in full swing the day after Labor Day, as summer has concluded, the kids are back in school and the parents at work, and people can buckle down for the important tasks at hand, such as buying or selling a home.  September, October, and November are therefore the busy months, but by the time December rolls around, people’s minds are elsewhere.

Nobody buys or sells real estate around Christmas time, and as we have seen in recent years with retail outlets stocking Christmas decorations the day after Halloween, the “Holiday Season” comprises the entire month of December.

This slow period leads into January, when people get back on track after some much-needed time off, and it usually takes until February for the market to pick up.  There is yet another lull around March Break and Easter, but then April, May, and June comprise the busiest period of the year.  This brings us back to summer, when again, most people would rather enjoy the warm weather and vacation than plan their real estate ventures.

2008 does not seem to be following the “traditional” trend.

In fact, what we are experiencing today and tomorrow can be traced back to last month.

At my office, for example, we have averaged twelve deals in the month of December over the last five year period.  Would it surprise you to hear that we DOUBLED that this year?  How about TRIPLED?

In actual fact, our office did a whopping seventy-two deals in the month of December 2007, which is SIX-TIMES our average.

Perhaps this is a function of the consumers’ desire to avoid the new Land Transfer Tax, but that can’t be the entire reason.

And this unusually busy December has continued into January.

Traditionally, agents urge their seller-clients to hold off on listing their properties for sale until February, as the buyers aren’t actively looking  until then.  However, barely one week into 2008, we are beginning to realize that the buyer pool is enormous, and the sellers are still waiting.

This has created, in my opinion, a severe shortage of product in the real estate market, and a huge opportunity for any seller that was going to wait until the “Spring Market” to list their property for sale.

I am guilty of the old-fashioned thinking as well.

In November and December, I spoke with four different sellers about their properties.  I told each one of them the same thing: “You would be better suited to wait until February when we absolutely know the buyers will be active.”

I can admit when I’ve made a mistake.

I’m now urging these very same sellers to get their properties out on the market, as the demand for product is large, and the supply is in an extreme shortage.

For example, I have a client with a property in the trendy Yorkville area.  She owns a 1-bedroom, 1-bathroom unit of just under 600 square feet.  This very same unit at 18 Yonge Street or one of the miserable concrete-behemoths downtown that I loathe, might sell for say $259,000.  But in Yorkville, her unit is worth well over $300,000.

Ask me how many 1-bedroom units there are currently for sale in Yorkville.

NONE!

There is not one, single 1-bedroom unit on Scollard, Yorkville, or Cumberland Avenue.

If my client brought out her unit today at $299,000 and held back on offers, perhaps there are four, five, or twenty buyers just waiting for that unit to come out!  Perhaps she could create a feeding-frenzy with all the young, posh, Yorkville-wanna-be’s that would like to purchase her unit.  Could she get $320,000?  $330,000?  $340,000?

Rest assured, when March or April rolls around, there will undoubtedly be an increase in product in all areas of the city, not just Yorkville.  Clearly, you’ll get more money for your unit in January when it is the only unit on the market, then in April when it is competing with 2-3 other units also for sale.

Perhaps it might be difficult for Realtors to convince their clients to bring their properties out on the market “early,” based on our previous advice on the subject and suggestions that February/March is the right time.  But those who do heed our “new” recommendations will reap the rewards of taking on perceived risk, even though as Realtors we know there is no real risk involved.

It’s the old “chicken or the egg” philosophy.  Which comes first: the buyers or the sellers?  Sellers wait for the buyers, but the buyers won’t look unless the sellers are in abundance.

Not this time around.

The buyers are out there, whether the sellers are out there or not.

So what does this mean for the market as a whole?

All signs point to another very strong year in the Toronto real estate market.  All kinds of sales records were both set and broken in 2007, and while I won’t predict that the market will go ahead and continue along the extreme upward trend, I will say that any “correction,” “dip,” or the media-favorite “crash” is light years away.

In the coming weeks, I’ll probably talk more about my outlook for 2008.

But for now, if you’re a property owner or a perspective buyer, you can sleep well at night…