Please find below another opinion I sent to an owner of a luxury waterfront condo in Coal Harbour.
Downtown Vancouver’s Luxury Condo Market
Vancouver’s downtown condo market has become increasingly challenging for sellers in 2010. Uncertainty surrounding interest rates and global economics continue to cause would-be buyers to hold off, wait-and-see. At the same time, many sellers have over-priced their listings in hopes of adding to already inflated asking prices. The result is increased active listing supply and decreased buyer demand. Prices have begun to reflect this change in momentum and it appears that a buyer’s market is emerging once again. Only sellers willing to base their pricing in the reality of similar past sales have any hope of selling in the current market.
Current Downtown Condo Stats
As of May 31, the MLS showed 1736 active condo listings in downtown Vancouver. There have been 168 sales in the last 30 days. This results in there being 10.3 months of active listing inventory. In Coal Harbour a similar inventory glut exists: 274 active listings and only 16 sales in the past 30 days meaning there are 17 months of active listing inventory.
The ‘Fairmont Effect’
This is a term I coined last year and - in my opinion - is something that has caused terrible damage to the downtown condo market this year. This is the effect that the raft of unbelievably over-priced active listings at The Fairmont (35 or so on any given day) has had on the perception of other downtown luxury condo owners as to the value of their properties. It has been the catalyst for the worst and most widely-spread over-pricing I have seen in my real estate career and has caused many sellers to miss the market. The good news is that properly priced listings stand out as bargains when, in fact, they are just properly priced. Here in lies the opportunity.
Comparable Coal Harbour Activity (2 bedrooms, 1500+ sq ft, $2M-$3M)
In the above price category there are currently 24 active listings in the MLS. In the past 30 days there have been 0 sales (the last sale was Carina #802 in April 2010 – see area sales section of this analysis) and there have been just 5 sales in this category since January 2010. At approximately 1 sale per month we are looking at approx 24 months of active inventory in your condo’s category.
*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.
Current Callisto sales activity
There are currently 5 properties listed at Callisto. There have been just 3 sales in 2010 and there were 7 sales in 2009. What’s the difference? The combination of low consumer confidence and seller over-pricing.
It’s simple: Decide when it’s time to sell and price realistically for the market regardless of the pricing of other townhouse listings in the area or even within the building. This pricing must be based on recently sold similar properties. There are droves of hungry realtors willing to quote any price just to “buy” your listing. Unfortunately as you’ve seen, all that achieves is a long, stressful, unproductive listing and no sale. In a declining market, this is likely to cost you real money.
It might sound funny, but for many people Real Estate is basically a sport in Vancouver and the participants are price and value savvy. They know what market value is on any given property. Buyers’ agents have access to all the same information listing agents do so there’s no pulling wool over anyone’s eyes here. In this year’s less frenetic downtown condo market buyers will simply take a wait-and-see attitude when presented with a listing they consider over-priced. Right or wrong, in terms of their offer prices, most current condo buyers are hedging into the anticipated pricing decline that many pundits are predicting will start later this year and extend into 2011. The only way to achieve a meaningful response from buyers is to price right.
Philosophy on pricing strategy
I practice a two-pronged approach to pricing:
- Identify the realistic market value of your property and be careful not to fall victim to the “my property is better than any other property” syndrome. Buyers will not have the same affiliation with the area or the property as you do. The bottom line for many buyers is price.
- Decide how to get to that value. Here you really have 2 options: A. Price below market value and you reduce the time required to sell while increasing the likelihood of a multiple-offer situation and a higher sale price. This option must be accompanied by some supporting marketing tactics that I would be pleased to outline for you. B. Price above market value and the process will take longer, there’ll be less buzz, less competition and less chance of a final sale price above market value. In my opinion and experience option A consistently produces the best results for sellers.
You have a wonderful property at Callisto and given the most recent sale of #802 at Carina next door, the direct translation of ‘dollars per square foot’ puts your property at a value of $2,554,703 or $1,509/sq ft. Unfortunately our market has cooled since then so I would recommend respecting the $1,500/sq ft mark and relisting at $2,538,000. My assessment last year recommended a $2,528,000 list so I think we are in the same listing range now but how long the market holds is anyone’s guess. Most experts are calling for a 5 to 10% pull back this year with a long, flat period to follow as interest rates rise and the global economy stumbles along.
Please browse the enclosed information supporting my recommended list price of $2,538,000 and feel free to browse my team website at: www.shaunkimmins.com . There you’ll see that I was the top selling realtor in Coal Harbour in 2008 and 2009 and you can browse my current listings and recent sales. I look forward to hearing from you if you do decide you would like to relist and sell your Coal Harbour condo.