We are in a slow Vancouver real estate market. Yes, it’s a buyer’s market but what exactly does being in a buyer’s market mean for sellers? That’s a question that I wanted to dig into a little bit. Why won’t homes sell in a slow real estate market?
As readers of the Vancouver Real Estate blog, and local residents not living in a bubble, know the Vancouver real estate market has slowed down dramatically over the last six months. We all know this. We see new evidence of this at every turn. In fact, you can read my latest analysis of the Vancouver real estate market MLS statistics right here.
What isn’t as evident or clear is exactly how this slowdown is affecting us. One affect that is quite self-evident is that homes become harder to sell in a slower market. General real estate wisdom says that a home does not sell in a slow market simply because of price. If it hasn’t sold yet it means that the price is not low enough.
However, it’s not always so simple. A good Vancouver realtor will tell you that there can be other reasons why a Vancouver home won’t sell. For instance, we generally believe that condos with rental restrictions, that are expensive, that are older, are not freehold, or are tenant occupied are harder to sell. In a slow market, most realtors would say any properties with these characteristics would be more difficult to sell. However, is it true?
To answer this question, I did an analysis of the MLS statistics for Vancouver in November 2008. This research was done exclusively for condominiums in Vancouver East and Vancouver West.
Let’s put our hypothesis to the test and see what the results were:
As you can see, the results aren’t as clear-cut as we would have predicted. The majority (3 out of 5) of our categories bucked our prediction.
Tenant occupied properties are only slightly more likely to have sold (14.37% of sales were tenant occupied while 13.42% of all active listings were tenant occupied).
Older properties (defined as more than five years old) were actually more likely to have sold last month (64.67% of sales were in older buildings while 54.82% of all active listings were).
Condos in buildings with rental restrictions were also more likely to have sold last month (31.14% of sales were condos that had rental restrictions while 25.39% of all active listings were).
The two categories that followed our prediction were the expensive listings and the properties that were not freehold ownership.
Non-Freehold properties were less likely to have sold (5.39% of sales last month were not Freehold ownership while 8.13% of all active listings were listed with ownership other than Freehold).
Expensive condominiums (defined as those asking more than $1,000,000 CAD) were much less likely to have sold (4.19% of sales were priced above $1,000,000 CAD while 12.05% of all active listings were asking above $1,000,000).
If you are thinking of buying or selling, or just have questions, contact me here or send me a quick email.
Copyright © 2008 by Sebastian Albrecht, Vancouver Realtor with Royal LePage Westside “What Won’t Sell in Today’s Vancouver Real Estate Market”
|
|
|
|
|
|
Related posts:
{ 2 comments… read them below or add one }
Good Post. I don’t disagree in general, but I feel that in the end of the day it really is price that sells, and that is the only real factor. The price simply has to match the other factors such as location, rental restrictions, age etc. For this reason I think it is hard to get an accurate read from the stats. I do think all things being equal, rental restriction, age, tenanted, etc. do make it more difficult to sell a unit, but that can be countered to some extent with price.
Good point, Keith. You’re right, of course. Price can overcome just about any potential objection. If the price is right, it will sell. Who would pass up a 500 sq ft condo with rental restrictions, 20 years old, tenanted and co-op ownership that was $20,000?
My point in the post was to look at the objections that we assume make condos more difficult to sell in a slow market. I think that price was reasonably removed from the equation because I compared each item’s sales to it’s share of active listings.
Everything else being equal, if rental restrictions kept homes from selling in a slower market then we should see a lower percentage of these in sales vs their percentage in active listings. That’s not what happened. What was surprising was that some of these “problems” were actually selling better than their share of the market.