The housing market warnings are everywhere. Housing starts were down 19 per cent in January, and off 30 per cent from their peak just five months ago, while residential building permits dropped 11 per cent in December from November. Sales of existing homes were down 5.2 per cent in January compared to the same month last year. The softer economy, along with the government’s tighter mortgage rules, are hurting the demand for homes and decreasing the incentives for builders.
“Canada’s housing market is clearly in correction mode,” Bank of Nova Scotia economists Derek Holt and Dov Zigler said in a recent report.
Working in the real estate industry seems pretty risky right now – but is it really? Small business owners tied to the real estate market don’t appear too worried. In fact, a number of entrepreneurs involved in the appraisal, staging, moving and buying-selling business view the uncertainty as an opportunity to grow their independent businesses.
Now that the market has cooled, a growing number of home buyers and sellers are looking for a more precise value of their homes, says Marco Cupido, owner of Toronto-based Frontier Real Estate Appraisal.
“When times go bad, we get busier,” says Mr. Cupido, who has been in the appraisal business for 15 years. “People are more sensitive about property values right now. I get a lot of phone calls from people who want a second opinion on what their property is worth.”
His recent appraisal work, particularly in downtown Toronto, indicates that property values are dropping.
Mr. Cupido describes 2012 as “crazy busy” as compared to 2011 which was just “okay.”
Still, it’s not only falling home values that have led to more people seeking appraisals, Mr. Cupido says. Rising divorce rates have also been good for business as couples are suddenly forced to figure out how to split the value of their property.
The home stager
A seller’s worst fear is that their home will sit on the market too long. Colleen and Doug Reid, owners of Calgary-based Reidesign Home Staging, believe it’s one of the main reasons why their industry has seen growth in recent years.
“When things are really easy and homes are selling, people are less inclined to go that extra step to stage it,” says Mr. Reid. “But when the market is a little tighter, the advantages of staging are easier to see and understand.”
Home stagers use décor, furnishings and landscaping to improve the appearance of a property, with a goal of attracting a higher price.
The couple says business has also picked up now that most home buyers are checking home listings online before visiting a house in-person. There are also more people selling homes without an agent, which means they need to be more competitive when presenting their property.
“Those are the people that really need to grasp home staging,” Mr. Reid says. “They are competing with real estate agents that know the market and are using stagers as well.”
While a number of home staging companies have cropped up in Calgary since they started their business three years ago, the couple says business remains steady.
“It’s strong market here that we feel there’s plenty of work here for everyone,” says Ms. Reid.
Ericson Martin, president of Montreal-based We-Haul Movers, says he isn’t concerned about a slowing housing market because his business caters mostly to renters and students.
In his experience, which includes about 15 years in the moving business in the Montreal area, the advantage of being a small business is the ability to offer lower rates to his customers. When the market softens, he is able to adjust accordingly.
“I am small enough that I don’t have tremendous overhead, which means I can adapt.”
Frank Saniuk, owner of Vancouver-based Four Sails Reality Inc., says home sales in the city may be down, but his business is steady thanks to the influx of wealthy Chinese buyers. It also helps that his independent real estate company is focused on properties in upscale West Vancouver.
“The high-end real market is still active because of the Chinese. They are still buying and looking,” says Mr. Saniuk. “If we didn’t have the Chinese buying the market would be significantly slower.”
Mr. Saniuk says his business was steady in 2011 and 2012, even though overall sales in West Vancouver were about half last year as compared to 2011. He credits his 36 years of experience selling real estate, and having an independent agency, for giving him an edge over younger agents and larger firms.
“In the more challenged markets, people are looking for seasoned people who know how to sell and have that background,” he says.
He believes new realtors working for larger companies will be hardest by slowing sales. “If I were going into real estate today, I would think long and hard about how and where I would develop my business and have a solid game plan to go forward.”