Spring is here - finally!
Another month is in the books and things are chugging along, albeit in a
somewhat challenging way. Downtown condo buyers seem to be suffering
from information overload. Media articles, viral emails and general
water cooler talk seem to be more focused on the possibility of a real
estate price-correction than on actually purchasing real estate. Many
buyers have sidelined themselves, convinced the market will at least
correct downward later this year and into the next. Sincerely-motivated
buyers are still purchasing but more and more we are hearing from people
who "aren't in a rush". Downtown buyers are out looking at listings but
are very slow to act - unless they perceive a real deal.
I might sound like a broken record to some of you but the fact is that
in any residential real estate market, you must be priced for that
market, not for what happened in the market the previous year or what
you think might happen the next. Properties always sell, in any market,
no mater how bad things might seem. It just depends on pricing.
Downtown Vancouver real estate stats for May 2010
Click the link below to view a summary of real estate activity in Downtown Vancouver through May 1 2010:
Downtown Vancouver real estate sales stats May 2010
The Fairmont Effect
I have referred to this in the past and we are seeing this trend alive
and well in the downtown and Coal Harbour real estate market this year.
Here's how it works: Potential sellers do some market "research" before
contacting a potential listing realtor. They inevitably discover a
number of vastly over-priced listings, in another building (The Fairmont
Pacific Rim in this example), in the local area on the Realtor.ca
website. They conclude that this is what this type of property is "going
for" and that their property is just as good, if not better than those
listed in the other building. They decide to list their 5 to 10 year
old property at the same, inflated price as those on the public web site
(referred to by many as MLS). What's the result? Long, frustrating
listings without sales at the end. In a potentially downward-trending
market, this can be costly. Here's an example of nonsensical pricing: At
The Fairmont, you can find 11 almost identical listings price anywhere
between $818,000 and $998,000. How can this be? The answer is
motivation. Many sellers don't actually care to sell. Rather, they list
at outrageous prices just in case they snag a sucker. The bottom line is
they don't care if they sell. This is a prime example of how you can
not take list prices in any building to determine the list price of your
own property
Here's the reality: Most condo buyers prefer newer product, even when
it's actually inferior to older property and even when the older
property is in a better location in the area. The simple truth is that
heavily-branded new buildings such as The Fairmont command prices that
can not be matched by owners of older condos. New, new, new. That's what
buyers demand in Vancouver.
How comparative pricing really works
Sellers need to keep in mind that buyers, working with realtors, have
access to the same information as the sellers' realtors do. This means
that when it comes time to writing an offer, buyers will not look at
active listings in an unrelated, newer building, they'll look at
recently sold, similar properties in the complex. What many people miss
is that each tower downtown (with say 250 units) is like its own
neighbourhood and each building has its own pricing history. As much as
sellers want to compare their property to other listings in the area, of
a similar size or # of bedrooms etc, this simply doesn't work in the
downtown Vancouver condo market - there's simply too much difference in
age, amenities, view etc between different buildings in any one area.
The reality is, you will likely not have to look too much farther than
to recent sales within your own building in order to set the list
pricing for your listing. That, and you'll need to understand who the
buyers are for your type of product, how those buyers perceive your
property and what value they will assign it compared with the
competition. This leads me to my next point......
Hiring an area expert to sell (not just list) your property
It is critical as we proceed into what appears to be an
increasingly-challenging, rising interest rate market, that you hire
someone who understands the intricacies of the sub-market within which
your property exists. We are entering what will likely become a downward
trending market in which over-pricing can be very costly. Don't choose
your realtor based on the suggested list price. Anyone can inflate this
price just to "buy your listing". Hire someone who has recent experience
in your area and who you trust can do the best job. The market is the
market and will value your property itself, regardless of your list
price. Your list price is only a tool to get buyers in the door. If you
over-price, buyers won't come to see your property and therefore we
can't negotiate with them. Hire the right listing agent, price right and
get sold.
Please contact Shaun
directly shaun@shaunkimmins.com
to
discuss whether it's a good time for you to buy or sell and please feel
free to comment on this or any of my other Blogs or
visit me at my Century 21 In Town
Realty website.
Downtown Vancouver real estate stats for May 2010
Blog by Mike Cook | May 7th, 2010
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