Mortgage 101 – Transparency in Transactions

Todd Veinotte and Clinton Wilkins bring relator Keith Kenny on to discuss the Halifax real estate market and the importance of accurate listing prices.

Todd Veinotte
Todd, welcome back to Mortgage 101, your guide to home ownership with Clinton Wilkins and myself, Todd Veinotte. Thanks, everybody, for tuning in and listening. We appreciate it very much. And Clinton, we have a guest.

Clinton Wilkins
We do have a guest. We have a local real estate professional expert who is gonna just be grilled by us. We’re gonna find out all kinds of great information about what’s going on here in Halifax. We haven’t had a licensed real estate person on in a long time for an update. April is one of the busiest months of the year, as we know, in terms of real estate transactions, so I’m very, very excited just to hear about what the State of the Nation is here in Halifax. So, Keith Kenny, tell us a bit about yourself.

Keith Kenny
Thanks so much. My name is Keith Kenny. I’m an owner realtor with Century 21 Optimum out of Dartmouth. I’ve been doing real estate for 13 years, and I’m excited to be here to chat with you today.

Todd Veinotte
What inspired you to want to get into real estate? A little bit about yourself.

Clinton Wilkins
It’s the hardest gig. I don’t think I could ever do it. What do you do? So that’s why I’m very curious as well.

Keith Kenny
Yeah, you know, to be a realtor, you have to be somebody who enjoys the unknowable and constantly varied everything. And every transaction, every individual, every house you walk into, is something new. And that’s exciting and fun, but also very challenging, of course.

Clinton Wilkins
Yeah, I’m sure, like, the challenges are probably non-stop. I know, just even with doing mortgage transactions and I deal with clients, maybe we’re saying five hours, that’s how long a normal mortgage transaction takes. But I’m sure some of the interactions that you have with clients, it’s 40 hours plus, plus plus. I can’t even imagine the scope of the work sometimes, just to get one transaction completed.

Challenges of Real Estate During COVID-19

Keith Kenny
Absolutely. Agents who are running through COVID could be showing 60, 70, 80 houses, writing 25 offers and still not getting a deal together, people not getting it together. So there are certainly challenges. But you know, the different houses, the different people, emotional people, it was a tough market for realtors just managing expectations and making sure people they get didn’t get too demoralized over it.

Todd Veinotte
Okay, so what have things been like since COVID? Have things settled back into a normal pace?

Keith Kenny
So what we’re seeing right now is we’re seeing a slight increase in inventory. People are feeling confident about the market, but they’re often opted, cautiously optimistic. They’re not certain what the Bank of Canada is going to do. They’re not positive how we were going to be impacted by the current political changes and situation, but what we are seeing is an increase in inventory, which is making people finally feel comfortable that if they’re going to downsize or upsize, that now it might be the right time to put their home for sale because there is additional inventory that they should be able to purchase.

Clinton Wilkins
I think part of the issue was people thought, hey, if I list my house for sale, there’s not another property to buy, or there’s not even an apartment for me to go into. So I think that slowed down some sellers that would have normally sold. I use the analogy of the little old lady or the little old man who didn’t sell their place because they couldn’t downsize, and there was another place for them to go to. And that was the first rung, oftentimes, in this home ownership ladder for first-time homebuyers to get into; we had hundreds and hundreds and hundreds of people pre-approved. I know some clients made several offers that just didn’t get into the marketplace. Do you think that, going back, we’re looking at 2021, 2022, do you think there was some fatigue from these buyers and they eventually just gave up?

Keith Kenny
Yeah, absolutely. As a realtor going through that scenario, there’s nothing that’s going to prepare you for it. You try to give somebody an informed, logical decision and opinion on value, but you just couldn’t catch the market. And you’re hesitant to tell them to go too high, because you don’t know where the ceiling is going to be, right? So you’re constantly catching up. But ultimately, it’s their money. And you want to be a long term agent that’s going to talk to them in five years, and you want them to have a secure investment. COVID was tough. It was tough to tell people to spend 20, 30, $50,000 more than the asking price and feel comfortable, but that was going to be okay.

Clinton Wilkins
Eventually ended up being the value of the home. As you know, the value is what a seller and a buyer can agree upon. There are appraisals, the bank, the insurer, they all need to agree that that’s what the value is. But the needle certainly has moved. Where do you see the pricing now? Like, I know, the growth was like double digits here for several years in a row. Where do you see the prices in 2024 compared to what we kind of saw last year?

Keith Kenny
We’re still seeing single-digit growth here, especially since it slowed a bit. It slowed a bit, and I think it will slow even more. What people are seeing more is that the listing price is way more important than it ever has been. So that’s important to get right. It is 100% because if you’re sitting on the market for 30 days, back in 2018, 30 days was nothing. Now people are thinking, Well, what’s wrong with that place?

Clinton Wilkins
I see that all the time, and even clients come in to see me. They hate that there’s a property that’s been for sale. It’s been listed a while. We’re gonna get pre-approved, and at that point, they try to go in with that low-baller. Again, I almost feel it’s 2019. In a way, it’s 2019 with not as much inventory. So I feel like it’s getting more balanced. Are you seeing that buyers are going in with more conditions now than they were?

Pricing Strategies and Market Perception

Keith Kenny
So buyers feel a little bit more aggressive in their comfort level in going in at a lower price. But that’s the challenge we run into, is that sellers are still a little bit overconfident, and they remember those dreams of their neighbors selling for $150,000 over asking price, and they aspire to achieve that, even though, right now in the market, it’s possible, but not likely. So they are holding the line as close as they can.

Clinton Wilkins
But I think on some of these days, the listing prices were just not even close to the market price, and that was almost this artificial demand that they were trying to build up. The people were listing homes for 300,000 that were going for 450, which was probably a $400,000 house with over asking, right? Like, I think they were just artificially too low.

Keith Kenny
And I think that was created to try to get people to create a frenzy. But my thought process always was, it would be better to price closer to where we think we’re going to sell, because we want to get the right people in. If I price my house at 300, I think I’ll get 450, the folks who are coming in with at 30, 25 like that’s wasting everybody’s time. So they’re taking up the people’s time. They’re giving them false expectations. The mortgage broker is not getting business. The Realtors are taking up their time. And it was a little bit frustrating.

Todd Veinotte
Yeah, what’s the price point now? That is the most coveted price point right now,

Keith Kenny
Anything below 600,000 in HRM is very popular. Absolutely. It’s very competitive, and it depends on the neighborhoods and that kind of thing. But the majority of the opening price points in HRM right now are 633,000.

Todd Veinotte
What is the average home? Are you seeing any real, absolute gems that just sell for less than you would ever have thought, or is that kind of a unicorn that doesn’t exist?

Keith Kenny
Sometimes you’re surprised. I always tell my clients that I’ll tell you what I think, and I’ll do what I’m told, because sometimes people write an offer that you think there’s no chance this is going to come together, and you never know what the seller’s dealing with. On the other side, it could be an emergency. They might need to leave quickly. And at the end of the day, I’ve seen some prices where you kind of scratch your head and say, that’s interesting, but you don’t want to look into it too deeply because the pictures always look better than reality. You don’t know if the inspection brought up something or whatever.

Interest Rates and Market Demand

Clinton Wilkins
It’s a flip of the coin too. Sometimes you’re like, I can’t believe people paid that much for that home, and I see that. Then we were saying this the last so many years, and then suddenly, now all these people are coming up for renewal. We’re doing appraisals, and they have so much equity in the homes. I’m like, that was a really good deal at the time, and a lot of this is perception. It’s the same thing with the interest rates. When the rates were low, the prices were increasing, and I think that’s my biggest fear. We’ve seen the rates go down significantly, even over the last year or so, I mean, rates are down about 2%, but my concern is now that we’re starting to see rates edge into the 3% range. The guy is sure they’re high threes, but they’re edging with a number that starts with a three. I’m just concerned that we’re gonna see more and more demand in the marketplace, and with this limited supply, we’re gonna be back in this, you know, super seller’s market again.

Keith Kenny
I hope not, we need a bit more of a balanced market. It needs to be manageable. We need to see more people getting into the market, being comfortable with the house. But the way I explain to my buyer clients, when I’m working with them, is, look, if you are going to buy a house and you’re being relocated because you’re in the military in two years, the price is a huge factor right now. But if you’re buying a family home that you’re going to get married and raise a family in for the next 10, 15 years. I mean, an extra 15, 20, $25 000 is not going to make a big difference. So if it’s the house close to your mom that you know went to the school that you went to, and you want your kids to go there, let’s go in. Let’s get this house.

Todd Veinotte
And part of doing your job is to make sure that you have those thorough conversations. You don’t want remorse. That’s the last thing you want.

Keith Kenny
Right, and you know, all realtors do is they’ll always tell the buyer their honest and professional opinion up front. Ultimately, the buyer decides what they want to do, right? And that’s, that’s our job. We facilitate.

Todd Veinotte
Eyes wide open, that’s right, transparency, everything on the table.

Unique Market Conditions and Buyer Behavior

Keith Kenny
That’s right. If you want to buy a one bedroom house for a million dollars, I’m going to tell you, it’s going to be hard to resell. But if you want to spend that money because it’s right for you, then Todd, let’s go buy that house.

Clinton Wilkins
Luckily, I haven’t seen too many of those. And you know what, if you want to get a mortgage, they might have a hard time getting that one approved. One bedroom, one bedroom for a million bucks, a one bedroom house. The bank starts asking a lot of questions when there are fewer than three bedrooms, to be honest. That’s a big red flag, because normally, like that in a condo, sure, one bedroom, that’s a whole different kettle of fish. But in a freehold like a standalone property, typically they want three bedrooms. And in Nova Scotia, there are still a lot of split entrances and the bedrooms are in the basement. So sometimes that doesn’t do that. Doesn’t count on the count. So it’s certainly interesting.

Todd Veinotte
Keith, we’ve got lots of questions and you’re great guest. We’re gonna make sure you’re sticking around for the next segment of that time. Mortgage 101. Your guide, home ownership. We’ll be right back.