Happy new year!
I want to wish you the very best for a healthy and happy 2019. I’m so grateful to my clients who allow me to do what I love in helping them make important life transitions and find new homes. The new year is always a good time to take stock – whether its relationships, career or lifestyle, evaluating where we’re at and laying out our hopes for the future can focus the mind and help turn dreams into reality.
If your plans this year include buying or selling local real estate, it’s important to have a clear sense of where the market is and where it’s likely to go in the months to come.
2018 was a transitional year in the Vancouver real estate market that saw the development of an overdue correction in both prices and market conditions. Sales fell to their lowest level since 2000, with 24,600 properties changing hands in Greater Vancouver, a drop of 37% from 2017 and 25% below the 10-year average. Listings fell slightly with about 53,600 properties listed for sale, 2% below 2017 and 7% below 2016. In spite of the lower number of listings, greatly reduced buyer demand saw inventory climb to the highest levels we’ve seen in the last 4 years. This has led to the development of a buyer’s market, especially for detached homes (with a sales-to-listing ratio of just 7%) with the market for condos and townhomes remaining more balanced (at 14% and 12% respectively).
Prices have fallen accordingly, particularly in the detached market where year over year prices are down between 8-12%. Prices have begun to soften in the strata market as well, with condos and townhomes down between 1-3% from where they were a year ago. Homes that are priced at levels more in line with local incomes are holding up better, while more expensive properties are seeing bigger price drops.
The reasons for this are well known and the result of a combination of multiple factors. Last year we saw the imposition of more stringent financing requirements (stress testing), higher transaction costs (especially for foreign buyers) and new initiatives aimed at curbing speculation (empty homes taxes, property tax surcharges, etc). Add to these raising interest rates, increased difficulty in getting capital out of China, the ratcheting up of tensions in international trade and uncertainty in capital markets. In hindsight, it’s not surprising that the double-digit annual gains in local home values appear to be behind us.
Most importantly, the nature of the market has changed. No longer are properties selling in a week or less, multiple offers have become rare, and buyers have less pressure and more control in the sales process. In what is good news for local residents, speculators and those using real estate solely a place to park capital have vanished from the scene – allowing a more rational market to develop. In many listings we’ve seen a stand off, where buyers are unwilling to pay asking prices in anticipation of falling values, while sellers are reluctant to adjust their expectations and discount their properties from market-high 2017 values.
Where the market will go from here is of course the big question. My expectation is that we will continue to see lower sales volumes for the next year or two, although I don’t expect prices to fall much further. However, it will likely take some time for the bottom of the current market cycle to become apparent and prices to stabilize. In the meantime, there are opportunities for both savvy buyers and motivated sellers. And given that most sellers are also buyers (and vice versa), trading in this market has its merits with more choices and less stress.
For sellers, it is now especially important to be priced competitively, and to have a high quality marketing plan to ensure that your property is a prospective buyer’s first choice. Having some flexibility in final terms and dates can be the key to a successful sale. Remember, all real estate is local – the value of your property is specific to your neighbourhood, block and improvements, and to the number of other similar properties competing for buyers’ attention. Call me for an up to date market evaluation and to find out how our proven marketing system can get you top dollar, quicker.
For buyers, having the very latest sales information to determine comparative value, and the ability to receive listings as soon as they are posted on the MLS system is key to getting the quality home you want. Pre-qualification for financing and the ability to fast track due diligence will make your offer more attractive. I’ll work with you to make sure you see the latest listings for properties that match your needs and budget. Once you decide on a place, I’ll guide you through the process and work with you to craft an offer that gives you the opportunity to secure it on your terms.
Give me a call to get started; I’d be pleased to help!
My best for a great 2019!