Vultures and Cool-Aid: Coal Harbour and Downtown Vancouver real estate sales stats to July 31 2010

Another month in the books. A few of the lyrics from Johnny Cash's Ring of Fire come to mind right now:

I fell in to a burning ring of fire
I went down,down,down
and the flames went higher.
And it burns,burns,burns
the ring of fire
the ring of fire.





Greed glands are pumping
Unfortunately, many would-be sellers' greed glands have been pumping wildly this year.  The sad result for many, especially at the high end the luxury downtown Vancouver condo market, has been painful losses as the market corrects. It's painful to watch, especially when it was so clear where the market was headed.

The problem this year? Simple - Over-supply combined with over-pricing combined with declining demand. Bingo, prices are falling. Countless sellers claiming not to be in any rush to sell have listed at stratospheric price levels based on others' over-priced listings after researching "what properties like this one are going for" on www.realtor.ca only to find their  listing languishing and losing value as the market slips away. If I only had a dime for every time I have had to watch this....

In my opinion, 2010 has been the year in which seller's en masse drank the cool-aid. This is the first year I have seen where sellers are totally unwilling to recognize reality and sell at anything less than unrealistic, record prices. Amazing returns are no longer enough for many. Seller motivation is at an all-time low in my opinion.





The Vultures are circling
While many Sellers are hanging on to their value-hallucinations, buyers are waiting, watching and taking an "I told you so" stance on the beginnings of the correction we are seeing. "Why buy now when this property will be cheaper in 6 to 12 months?" Good question, why would you? The answer is, you wouldn't. Not if you are awake. This brings me to the stats.

According to the Real Estate Board of Greater Vancouver, sales were down by approx 45% over July 2009. REBGV Stats Package_July2010-1.pdf

Coal Harbour Real Estate listings and sales to July 31 2010 - Coal Harbour Monthly sales stats.xls

Coal Harbour enjoyed a better July (versus June). June saw 12 sales total and July saw 23 - a 92% increase. Total listings increased just 2% to 252. You can see from the stats page (link above) that all sales were below approx $1.5M while all price categories above $2M saw further listing (supply) increases. 9% of active listings sold in July - the lowest of any of downtown's sub-areas. Buyers are overwhelmed with choice. The result is the luxury sector has gone very quiet and I once again point to over-supply and over-pricing. I don't see the situation improving until supply lessens and demand returns. Interest rate hikes are certainly not helping.

Downtown Vancouver Real Estate listings and sales to July 31 2010 - Downtown Vancouver Monthly listings and sales.xls

There were 1420 total condo listings in all of Downtown to start the month. There were 185 sales in July 2010, down from 233 in June. 13% of active listings sold. Contrast this with 361 sales for July 2009 and you get the picture. Luxury condo sales in all of Downtown closely mirrored sales activity in the Coal Harbour area.  Sales over $2M were down. The vast majority of sales were less than $2M while the number of listings in all price categories above $2M increased. Again, bad news for luxury condo sellers and with interest rates forecast by many to continue their march upwards, sellers will have to come back to reality if they wish to sell.

Conclusion?

Get motivated to sell (price right) or get out of the market (de-list)! If you don't like what you see, that's OK, hold your property until a later date and enjoy, but don't list your property at some crazy price in hopes of snagging a sucker. There are no suckers in the downtown condo market, especially in the luxury condo market. Does anyone really think that buyers at the $4M plus range are emotional and impulsive and fooled by clever staging? I think not. These are the savviest, most analytical buyers in the market. They know business cycles and are only interested in buying something that represents good value and safe investment.

Price is not important, value is. Wealthy buyers have the money, they just won't over pay. Remember what Warren Buffet says, "Price is what you pay, value is what you get." This is the key.

Contact Shaun and his team of Downtown condo experts when it's time to buy or sell.