The ‘right price’ keeps changing

Yesterday we heard from a Vancouver Realtor about why condos aren’t selling.

They’re overpriced.

And now there’s this article in the Vancouver Sun Buyers on the Sidelines as Market Slows.

Its all about the market slowdown – we’re now seeing the lowest number of sales since 2000 in Vancouver.

Nice houses that are priced right are selling within days, some in bidding wars. But anything priced too high or considered undesirable is apt to sit idle in this market, which is, according to the Real Estate Board of Greater Vancouver, witnessing the lowest total sales for the region since July, 2000. The Board reported 2,098 property sales in July, a drop of 11.2 per cent compared to June. It’s a drop of 18.4 per cent compared to July, 2011.

There are many anecdotal stories around the Lower Mainland about houses that have sat on the market for months, priced too high for the more price-conscious market. A six-year-old West Vancouver home on a 21,000-square-foot lot overlooking Capilano Golf & Country Club was originally listed at $3.695-million three months ago. The owners have reduced the price by $400,000 and it still hasn’t sold.

“There is a lot of product but it’s not selling for the price that people expected or hoped for,” says real estate finance expert Tsur Somerville, who is director of the University of B.C.’s Centre for Urban Economics and Real Estate. “People aren’t buying at the prices that are being set.”

Well here’s a funny thing about ‘the right price’ in a correcting market: it keeps changing.

I live in a BC market that is several years into it’s correction and I can tell you that the places that are selling are moving only at prices that are lower than the ‘right price’ a year ago and far lower than the ‘right price’ several years ago.

Sort by:   newest | oldest | most voted
xyz
Guest
xyz

2008… Someone very close to me was working in collections…

He spent 99% of his time on the clock calling Realtors.

He has a much better job now but surmises that is EXACTLY what his ex-coworkers are doing now.

xyz
Guest
xyz

@Anonymous: I have 2 wok’s I’ll give you one for a cut on the profit.. hahah

Realtor says
Guest
Realtor says

“we are going to see sales grind to a near dead stop.”

Ain’t gonna happen 🙁

Bag it and tag it
Guest
Bag it and tag it

@Realtor says: Sure, I’ll speculate. You’re a twit! How’d I do??

HFHC
Guest
HFHC

Tonight I will try to share as much info as I can with you guys. Computer has been kicking out of the system lately….maybe they have found out I’m sharing the information.

Anonymous
Guest
Anonymous

@Realtor: My realtor’s phone is ringing off the hook today. Sudden interest in viewing listings. Anyone care to speculate?

Those are probably just repo guys coming after your beemer. Be careful at your showings.

N
Guest
N

@paulb:

People are really putting the brakes on. And these sales numbers reflect a market that is still unaware of the unfolding crash. For example, a couple of weeks ago I hung out with a guy who doesn’t have a day job, he just renovates and flips. He was oblivious to the shift in the market, and quoted Global as saying prices were up (HPI). Another friend, who took out a home-equity loan to cover his daughters down payment was even less aware (basically unaware that there is such as thing as a market that can change). When the truth gets out to the masses, we are going to see sales grind to a near dead stop.

Anonymous
Guest
Anonymous

@xyz: Just add a wok in the kitchen and flip it for 12 million.

Realtor says
Guest
Realtor says

My realtor’s phone is ringing off the hook today. Sudden interest in viewing listings. Anyone care to speculate?

xyz
Guest
xyz

@Realtor says: Yup and just wait to see what the 9M buyer gets for it in a flip.

3X Gains or 3X Losses…

Should be interesting…

xyz
Guest
xyz

Ouch looks like the majority of long weekend sales and pre July 9 sales are cleared out

paulb
Member

New Listings 175
Price Changes 110
Sold Listings 53
TI:18826

http://www.paulboenisch.com

Realtor says
Guest
Realtor says

That $9M sale was bought in 2009 for $3M. Nothing done to it at all.

Put all your eggs in real estate people… 3X your money 🙂

Dan in Calgary
Guest
Dan in Calgary

@Moivng to the States”, “Time to move instead of waiting for Vancouver to sink…”

When we moved to Calgary in 2007, we had already waited for the market to correct for some time. Glad we didn’t wait any longer, it would have been painful. It’s still going to take some time.

VMD
Member

@Anonymous:
since the topic of “rent” and “house value” comes up…
I’m currently in the market for a newer and larger condo to rent.

My current 1B+Den unit has a Price-to-Rent ratio of 283 months, or 23.6 years.
a 3BR unit that I might be interested in sits at 25.4 years P-R ratio.

According to Investopedia
Price-to-rent ratio of 1 to 15 = much better to buy than rent
Price-to-rent ratio of 16 to 20 = typically better the rent than buy
Price-to-rent ratio of 21 or more = much better to rent than buy

It might be interesting to see what kind of P-R ratios we’re seeing for bachelor/1BR/2BR/3BR units in this city.
I’d hazard a guess that ground floor bachelor units would have the lowest P-R ratios (thus best return for investors)..

Vote Down The Facts
Guest
Vote Down The Facts
@FlipFlop: Rob Chipman has been posting that exact info on his blog for a long time now. You can still get some of the older figures (from before his site redesign) using WaybackMachine. For example, here’s what he said precisely 4 years ago, for the week ending Aug 15th 2008 : “This week there were 1,279 new listings, with an average list price of $644,453. There were 438 sales, for a sell/list of 34.25%. Average list price of sales was $516,384; average sales price was $501,212, a difference of $15,172, or 2.94%. Average DOMs was 49. There were 16 overlists (3.65%), with an average list price of $552,894, and an average sales price of $652,163, $99,269, or 17.95% higher. DOMs for overlists was 39.There were 929 price changes, of which 15, or 1.61%, were increases. Average original price of price… Read more »
FlipFlop
Guest
FlipFlop

I always liked the data point that was around in someones summaries a while back (Paulb, or VHB I would assume), which was a daily % below ask on the selling price.

I seem to recall that number getting up around 4 or 5% as SHTF in 2008 (versus hovering around 1-2% typically.

I would think it would track price changes quite well.

Any chance of bringing that one back?

Anonymous
Guest
Anonymous

@Anonymous: #63
you were asking a renter the value of your house?

Anonymous
Guest
Anonymous

@VMD: I have a wok. Does that make my kitchen a “wok” kitchen? How much does that add to the value of my house?

VMD
Member

@oneangryslav2:
tracking the amount of listings with “wok kitchen” could be interesting
http://www.ecorealtyinc.ca/search?q=wok

Anonymous
Guest
Anonymous

@Anonymous: Right, and that would be just as meaningless as the 12% “pricedrop” the bears keep talking about.

Anonymous
Guest
Anonymous

@oneangryslav2: How about just taking the number of 8s in the selling price and subtracting the number of 8s in the asking price as in HFHC example posted just before you.

That would be a -2 but could have been a +2

A properly goofy superstitious buyer should have payed 9,188,888 for that place.

Anonymous
Guest
Anonymous

@HFHC: Woohoo! 9 million dollar sale is gonna push up the average! Boom times are here again!

I can only hope condos stop selling altogether, and then the average price will skyrocket!

oneangryslav2
Guest
oneangryslav2

@HFHC: Your data point has inspired me to come up with my own HAM statistic. So, the statistic is meant to gauge the intensity of HAM-buying over time. The higher the number, the more HAM-intense buying has been. So, here’s how it is calculated: take the number of 8s in the sold price of a property and divide that by the number of 8s in the initial selling price. In this case, it would be 1 and 3, for a Selling Price HAM (SPHAM) Index of 0.33. Do this for all sales in a month and take the mean for the final monthly SPAHM Index.

[Before VDTF chimes in about the problems with the index, of which there are many, I’m just kidding.]

HFHC
Guest
HFHC

ASKING 11,888,000 SOLD TODAY 9,180,00