A Shift In Buying Patterns · Keys to Success are Simple
A clearer sense of understanding seems to be developing amongst the real estate market following the wake of confusion onset by the government’s intervention over the last two months. This month, yet again, we have seen very promising sales reported however we still have yet to see our normal volume of sales; this can be largely attributed to listings that have prices far above their fair market value.
Competitive Pricing is Key to Success
A home that is listed far in excess of its fair market value will struggle to sell, regardless of the market conditions. This month we have seen a decrease of total listings from last month, down to 469. Even with the relatively high supply of inventory, Buyer’s are still finding it difficult to source product that is worthy of purchasing. Buyers are reluctant to submit an offer far lower than the list price even though that offer may be in fact much closer to the true market value of the home.
October’s sales levels, once again are down similar to that of September’s. We have seen 24 sales this month whereas the same time last year we saw a staggering 115.
A positive, and arguably the most significant change that we have seen this month is the decrease in the average days on market. Even though there are very low numbers of sales in the detached market, these sales have occurred extremely quickly. We have seen a decrease of 44% in the average time it takes a home to sell from 50 to a mere 28 days compared to 2015.
This realization again confirms my notion of the importance of competitive pricing in this changing market. Detached homes that are priced at their true market vale are selling much quicker than they were in the more active market of October 2015. Homes that are made to be attractive to Buyers by way of competitive pricing are rare and are selling almost immediately.
In months past Buyers have been taking a “wait and see approach”; it is now clear that Buyers are willing to break the hold pattern for the right product. Buyer’s are actively looking to buy and will act quickly when presented with a purchase that reflects the true market value.
Advice as a Buyer
Ensure that you are working with a proactive agent who is constantly monitoring the market, as homes that are competitively priced will not last long. It is important to be aware of new homes that are brought to the market immediately as there will likely be many other parties who could be competing for the same.
The “hold pattern” that many Buyers have exemplified in the past months no longer can be considered a viable or correct response. Buyers must ensure that they are ready, willing and able to capitalize on an opportunity to purchase a home at a fair market value as they are few and far between in today’s market.
Advice as a Seller
Given the dramatic reduction in sales, all while the active listing count holds relatively steady means that competitive pricing will be a major key to success; homes are selling at rapid rates when they are priced at their true and fair market value. Buyers are actively seeking out homes to purchase and it is important that your home attracts the serious Buyer who has been following the market; you may only get one initial chance to attract this Buyer.
The days of setting a list price high with hopes of the market climbing and essentially catching up to the exorbitant list prices are over. The homes need to be priced according to the current market values or else you could risk the listing becoming stale and ultimately sitting on the market, which only further serves to compound the negative connotations surrounding today’s market. Sellers must be realistic if they want their home to sell.
Comparative Analysis
During a recent trip to Southern California I visited the area of La Jolla, specifically that of Birdrock and noticed many similarities to that of Central West Vancouver, specifically Dundarave; gently sloping streets, modern construction and ocean views characterize these two areas.
Although no two homes are perfectly comparable especially given the different geographic location, it is interesting to note the similarities in home pricing based on a square foot basis. As it turns out, Dundarave’s sale prices are only an average of 8.3% more expensive than the comparable examples that I have chosen in Birdrock.
Vancouver, along with La Jolla boasts some of the most desirable real estate in the world. Vancouver is constantly being critiqued for having over inflated prices, but few take the time to compare Vancouver on a larger scale. West Vancouver, similar to that of Birdrock are areas that have extremely limited supply and high demand; it is not unreasonable to assume rising price levels beyond more common areas given their unique characteristics.
In today’s real estate market I would conclude that the exorbitant list prices on homes are long overdue for a correction rather than a blanket reduction on the final sale prices of homes.
Contact Jamie Harper
