The British Columbia Real Estate Association published a piece today calling for MLS sales to pull back 3% in 2010 and then climb back 4 % in 2011. They cite erroding affordability as being a factor despite improving economic conditions. They take the safe stance and call for sales near the 10 year average this year as well as next.
In addition, the Assciation forecasts prices to climb 6% and remian mostly unchanges in 2011. They say that over the past 3 quarters consumer demand has driven the market but that higher inventory paired with high prices have somewhat dampened the real estate market's fervor. As a downtown condo owner, do you believe this?
Caution - all things are created equal
It's one thing to consider affordability issues when analyzing a locally-driven market segment that rises and falls with local incomes but I want to make a critical distinction that not all sub-markets in Vancouver's real estate market are locally driven or constrained by affordability. This is particularly true of the luxury waterfront condo market in Vancouver's downtown core. Here one must look at who is doing all the buying: Almost all our showings along the water are to Chinese and Iranian buyers. International purchasers are most certainly not directly affected by local affod=rdability issues, however, they may be indrecty affected by comparable sales registered on behalf of buyers who are affected in this way.
My point?
You can not determine where a local real estate submarket in Vancouver is headed by reading generalized stats from Provincial or Federal real estate associations. We simply do not have a homogenous market. We have a multi-cultural, multi-pricepoint, multi-property- type, multi-location real estate market. To say it's multi-faceted would be an understatement.
Coal Harbour is the best example I can think of. Waterfront condos here are not locally-driven and the owners do not typically qualify under the banner of affordability. Buyers and owners here are more concerned about relative value and price-trends than they are about actual current prices or affordability. For example, if the market believes a $5,000,000 condo at The Fairmont will be worth $6,000,000 next year in a rapidly-rising market, there'll be a line-up to buy it. Is it affordable at $5,000,000? Not to most prople in the world, or indeed most people in Vancouver, but with a shrinking middle class and a rapidly growing upper class in many emerging markets and including China and Iran, and with a potential profit of a cool $1M, it's affordable to a lot more people than most locals want to believe.
Look past the big headlines
Yes, east side Vancouver detached houses are still going crazy. Does that mean to entire market is doing the same thing? In the minds of many, yes. In reality, no. There are between 10 and 20 months of active inventory (total active listings divided by # of sales over the last 30 days) in most condo price categories in downtown Vancouver right now. With that much selection, price reductions as far as the eye can see, and a questionable global economic recovery under threat of derailing, can you expect your condo listing to attract multiple offers and go over asking? I think not. You need to look through realistic eyes and speak with someone who understands the economic drivers behing pricing in the area in which you own real estate. If you listen to the optimistic pie-in-the-sky many hungry agents are still spouting, you are well on the way to an expired listing.
Don't just list
I can not say it enough times. Don't list your condo until you want to sell it. Listing at some ungodly price just in case there's a sucker out there doesn nobody any good and if fact, you are hurting yourself by flooding the market and scaring away buyers. Real estate prices are all about scarcity. I heard Bob Rennie say that and I agree. Where's the scarcity when you have 36 active, over-priced listings at The Fairmont?
The Plain truth
You might not like it but this is what you deserve and this is what I'll give you. When it's time to sell, call me and I'll show you how to sell - at market value. If you want a long, glamerous listing, I would be glad to recomend any number of real estate stars who can list higher than anyone else on the market. I imagine that the agent who just listed a $4,500,000 property at The Fairmont for $8,000,000 would be more than glad to take your listing. Just don't expect a sale.