So what's the issue with the Vancouver real estate market? Everything's fine, right?
Here we are, May 2017 and the Vancouver real estate market rages on. Talk to any local and they'll be hapy to impart detailed knowledge about the market. Real Estate is a sport here and everyone is a pro. The market keeps climbing. Condominium prices have never been higher and detached prices are said to be on the rebound. So what's the issue? Is there an issue? I suppose it depends on perspective.
In a healthy market local buyers can find homes to buy (that they can actually afford), a reasonable number of sellers list properties at prices that relate somehow to past comparable sales and realtors have time to do the detailed work that achieves their clients' goals and protects their interests. Work that preserves and protects the value of what, for many, is their largest asset, and ideally work that keeps everyone out of court.
The reality in the current Vancouver market is very different. Despite record prices, listing supply is as low as I've seen it in my 14 years in the business (at least for condos and detached houses under approx $3MM) and demand is so high, it appears mania has once again ensued. Buyers are competing in multiple offer situations. Some sellers are so emboldened thay are responding to single offers with over asking counter offers. List prices bear little resemblance to the recent past and many homes are selling in a matter of a day or two - not enough time for proper due dilligence. In my Coal Harbour office we have an ever-growing list of buyers but nothing to buy them. Add more than 2 criteria to a search and poof, there's nothing to buy.
This is good news if you're a potential seller. Not so much if you're tring to buy something, or God forbid, get into the market as a first time buyer. One would think that with supply and demand dynamics as they are, sellers would be lining up and buyers would be cautious, however, the opposite appears to be the case. So where are all the sellers? That is the $64,000 question. Buyers, however, are plentiful. Fresh air, clean water, rule of law, relatively stable economy. What's not to like given the state of global affairs.
It all comes down to supply. Many local sellers are leery to list as there's nothing to move to, non-resident sellers don't like exchange rates and capital gains tax and for both groups there's an incentive to wait - prices keep going up. Why would you sell now if you don't have to? Good question. When you look at real supply, things are even more grim than the number suggest. A certain number of listings are simply testing the waters due to lack of supply. For Coal Harbour, add to this the dwindling "effective supply" due to the number of long-term overseas investors who bought properties for the long term hold. These properties are effectively out of the rotation resulting in an even lower ongoing supply.
When you see waterfront list prices jump from around $2000/sq ft to $2900/sq ft, something's clearly up. An 02 floor plan sale just posted at One Harbour Green, for $2678/sq ft - a new record by over $300/sq ft. Whatever else can be said about the current market, for those ready to sell, it's the perfect storm.
With the BC election less than a week away, things could change iminently. Polls are reporting that "It's anyone's race", not that polls have a good rep lately. All indications are that if the NDP is voted in, it will be bad news for the real estate market given their promise to raise the property transfer tax to 13% for properties over $3MM, double the non-resident purchase tax to 30% and institute a new empty home tax. If the liberals win, I suppose it's busniess as usual.
Stay tuned and hang on, it could be a bumpy ride.