Don't mistake brains for a bull market

So what's going on with the luxury condo market in Vancouver? Good question.

Downtown-Vancouver.jpg

The brains that be will tell you all is well. Maybe that was the case in years past but the hard numbers tell a different story. No wonder so many buyers and sellers are confused. In this day of blogging and Twitter, everyone is a reporter, everyone is a news source and there's really no way to verify anyone's claims. Take this morning's Globe and mail article

In it, "Condo marketer George Wong says he’s sold $150-million worth of property to buyers from mainland China in just the last two months." What??? Malcolm Hasman, the city's top luxury Realtor would probably be lucky to do that in a year, selling the most pricey real estate in the city. Hmmmm.

An excerpt from the article:

"And unlike the buyers from Hong Kong in the 80s and Taiwan in the 90s, who had a huge impact on property values, this third wave from Mainland China is projected to be far bigger. This wave of buyer is newly rich and seeking luxury properties on the city’s West Side, in downtown condo properties, and to a lesser extent, in Richmond and Burnaby. Buyers from Mainland China are even buying up recreational properties in places like Kelowna.

“They’re injecting fuel into it, causing [luxury prices] to rise a little faster than they usually would,” says West Side realtor Ryan Dyer. “There are definitely some fast-paced sales going on. A lot of the really highly sought after properties have been snapped up pretty fast.”

Magnum Projects’ George Wong has benefited first-hand from the buying spree of the Mainland Chinese. “We’ve sold about $150 million in the last two months,” says real estate marketer Mr. Wong"


Well, I'll buy one thing: they might be buying large west side homes, but I can tell you they are not gobbling up luxury Coal Harbour real estate, that's for sure. Maybe I should send my resume to Mr Wong. Sounds like good times. For the rest of us dealing in the reality of downtown condo real estate, here are some sobering facts.

just-the-facts_edited-1.jpg

Hard facts from the MLS:

As of June 22 the MLS shows 1766 active condo listings in downtown Vancouver. There have been just 134 sales in the last 30 days meaning there are approx 13 months of active listing inventory. In Coal Harbour a similar inventory glut exists: 272 active listings, 137 sales since January and only 8 sales in the past 30 days meaning there are approx 12 months of active listing inventory.

Comparable Downtown & Coal Harbour Condo Activity ($700K+, 1 bed)

In the above price category, in all of downtown Vancouver, there are currently 27 active listings, there have been 9 sales since January and 0 sales in the past 30 days for a total of 18 months of active inventory. There are currently 10 such active listings in Coal Harbour, there have been 0 sales in the past 30 days and there have been just 4 sales in this category since January 2010 for a total of 17 months of active inventory in your condo’s category.

Comparable Downtown & Coal Harbour Condo Activity (1200-1400 sq ft, $1M+)

In the above price category, in all of downtown Vancouver, there are currently 91 active listings, there have been 40 sales since January and 4 sales in the past 30 days for a total of 14 months of active inventory. There are currently 40 such active listings in Coal Harbour, there has been 1 sale in the past 30 days and there have been just 18 sales in this category since January 2010 for a total of approx 13 months of active inventory in your condo’s category.

Fairmont listing & sales activity

There are currently 31 active listings at The Fairmont. There have been 6 sales in 2010, 0 in the past 30 days. There was 1 resale in 2009.


ruleofthumb.jpg

*Inventory Rule of Thumb

In Vancouver’s real estate market, 0-4 months of inventory = upward price pressure, 4-8 months of inventory = flatter pricing and anything over 8 months of active inventory = downward price pressure. I am seeing between 10 and 20 months of inventory in most price categories. This supply and demand ratio is now being reflected in reductions in both listing and sale prices.

Inxconclusionetch.jpg

You have a simple but tough decision to make: To sell or not to sell. It’s that simple. Listing high, along with the other unsupported hopefuls, will prove fruitless and potentially costly. If you completed a presale condo purchase after 2008, selling at current market value will most likely be unprofitable. Your best day on recent completions is probably to break even (when including your purchase and selling costs).

The market has probably slid 10% since Fairmont completions and resales began If you want to sell, you need to be priced right and if you don’t, I strongly suggest de-listing, or better yet, not listing at all, and holding the properties (perhaps as rentals – although this too has also become a challenging endeavor).

scary market.jpg

Where the market is headed in the next 3-5 years is anyone’s guess but given the dreary global market conditions and current forecasts, we are potentially looking at a long road to recovery once things do finally settle from their current downward trajectory. Be wise, don't list until you are ready to sell. When you are ready to sell, price right and employ a local area-expert Realtor.

It's that simple. Call me.

Blog Archives

Tags