July 29th 2010,
Is the Real Estate Market in Downtown Vancouver in dire straits for the Condominium Hi-rises? My savvy Real Estate Investor clients are saying “Vancouver has gotten too expensive.” This is because the asking price for pre-construction in most buildings over the past 3 years is equal to, or lower than, the current re-sale price. The days of buying up pre-sale then selling upon completion for immediate and guaranteed profit are over. However, this means that the days of being able to own a condo instead of renting are here.
In the past several months the market has been cautious. Most sellers are unable to command the peak re-sale prices achieved in the Spring of 2010 and inventory remains strong. The average Buyer is waiting to see that happens with prices. Everyone wants to wait and see how low the downturn or price-adjustment will go. The best tactic here is to look for property now and write an offer that is 20-30% lower than current asking prices. This way, you will get your home at a price that others will look back at as being the low.
Why is it a Buyer’s Market still? There is too much inventory in Downtown Vancouver that is owned by Investors. The percentage of units owned by investors versus the percentage of units lived in by owners varies building-to-building but is a ratio close to 50/50 throughout Downtown. With the global economy in a delicate state, many investors need to pull out the capital they invested. As such, there is an abundance of investor-owned condominiums on the market today.
In new buildings the asking price per square foot is too high. For example in the recently completed Atelier on Robson, there are 33 units for sale. The average asking price for these units is over $650/square foot. This is expensive when compared to the $550/square foot average price of properties that have actually sold over MLS in the past 2 months.
With fewer investor buyers active in the market, a buyer looking for a home gets to be picky. To all you renters out there, if you are sick of your roommate or actually want to own the walls that you look at everyday, there is opportunity to Buy a property that you love for a monthly cost that is less than or equal to what Landlords are charging for rent.
To all the investors out there: Be careful. If you need to sell a property that has been used as a rental in the past you must consider renovating or asking for a lower price. Since everyone who buys eventually wants to make money, consider buying with the intention to own for at least 5-years and consider buying either mid-range view units and renovating or buying in emerging neighbourhoods such as Gastown, Crosstown, Chinatown, or Cambie.
Leanne Martin, 778.386.1411, www.leannemartin.ca