Wednesday, July 2, 2008

Gas prising against housing market

Commute is costly. Off-island residents are having trouble selling their homes.

Single-family homes off the island of Montreal are becoming harder to sell, in part because of high gas prices, and some homeowners are throwing in free cars and SUVs to entice potential buyers.

Montreal mortgage brokers and real estate agents say most buyers are looking for homes on the island.

"Off-island houses, like in Hudson or in the swank neighbourhoods of St. Lazare, are not selling,". "People don't want to commute all the way to downtown and pay for soaring gas prices." To sell their houses faster, some homeowners are offering buyers the keys to their SUVs to "seal the deal." A Canadian Real Estate Association survey made public in March found that "the distance to work is the biggest 'driving' factor in consumer consideration of buying a home." And the survey, by IPSOS Reid, was conducted before gas prices spiked in April.

Montrealers might be interested in moving closer to where they work because of gas prices, but the evidence is anecdotal.

Homeowners willing to commute into town will make up for the price of gas with the lower real estate taxes, off-island home owner Dan Loiselle said.

"The taxes here (in St. Lazare) are a fraction of what you'd be paying in Beaconsfield or Kirkland," Loiselle said.

His 4,000-square-foot home in St. Lazare, complete with an in-ground pool, has been on the market since 2005. The price has fallen to $795,000 from $925,000.

"It's the quality of life in St. Lazare that will sell the house," said Loiselle, who plans to keep living in the off-island town. "There are parks, beaches, sand dunes, trails - things you would not find close to downtown." Loiselle said he knows someone in the neighbourhood who threw in a BMW 325 to close a deal on his house.

"I'm not giving away a car. If someone can afford an $800,000 house, I don't think a used car will make a big difference. But I have included a $2,500 gas card on top of the normal commission for the agent who sells my house,"

"If we're having trouble selling, it's because less people are buying homes priced above half a million," . "Many new development projects are building houses (priced) between $350,000 and $400,000. That's the bread-and-butter market of construction now." David Meyers, a real-estate agent with Remax who is responsible for several homes in the St. Lazare area, said the cost of gas will start affecting the housing market only once it reaches $2 a litre.

"At the moment, I don't see any clear trends," Meyers said. "But consumer confidence in Canada is at an all-time low" because of the ripple effects of the sub-prime mortgage crisis in the United States and other economic factors.

But I think it's too soon to tell if high gas prices have hit the housing market." Experts say gas prices won't ease any time soon: CIBC World Markets predict gas will hit about $1.86 a litre within the next two years.

Gas prices might influence not only how far people are willing to commute to work, but also how far they'll travel on vacation.

A poll made public Thursday by Royal LePage in Toronto found that one in five cottage owners in Ontario would consider selling their vacation property if gas prices continue to rise.

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