The discussion in the thread below got me thinking (thanks to Roger for all the links to info) about the state of the market, the impending correction, the past 6 month downturn (though slight) and the current talk from both our realtor and the MSM.
Our realtor expects roughly 10% gains this year. CMHC is predicting 3% gains this year.
Here's my dandy downfall of the week: downtown condo, originally listed for $235K, 3 price reductions of $230K, $225 and today $220K, BC assessment $237K, DOM 51; I've walked through this one, its OK, a bit dark but certainly not the worst one out there. It has a lot of upside compared to down.
Here's my question: has the release of the BC Assessment valuations created a new sense of over-inflation in some segments of the market? Or has it simply turned buyers off completely so that places like the Dandy Downfall have to change their prices south to get a sale?
Busy time in the RE market is just around the corner... I'm hoping the correction has started.
2 comments:
HHV wrote:
"Here's my question: has the release of the BC Assessment valuations created a new sense of over-inflation in some segments of the market? Or has it simply turned buyers off completely so that places like the Dandy Downfall have to change their prices south to get a sale?"
I think the BC assessments are fairly accurate for the selling price that a house would have sold for in July 2006 which is the date they made their market evaluation. However, they are painting their picture with a fairly broad brush because they only have access to raw data like recent sales, house type and comparables based on square footage. They don't get inside to see the interior and the amenities of a particular property (which may be superb or a real dump). So some assessments are high and some are low but the median is probably fairly close.
My observation in this market is that the houses typically sell for way more than assessment because the sales take place once the news is 8 months old and in an advancing market there has probably been significant appreciation over that period. I believe that the market started flattening last fall and selling prices, on average, should now be close to assessment in a given area.
Agents for the last few years have been setting the price well above assessment and it was working. Recently this trick has only been successful if the place was a creampuff. Buyers are starting to balk at high prices for dumps and agents are recommending price reductions. At the top end there are also price reductions because the number of buyers with 250K down payment and high incomes is thinning out.
These observations are typical in a market which is turning from a sellers to a buyers market. Softening will take place at the high end and low end "dandy downfalls" first but the properties in the middle will fall months later.
Your second question is are buyers turned off. You bet they are. They feel that they missed out (which they did) but they can't bring themselves to mortgage their soul for a "diamond in the rough waiting for your updating ideas". Now they are seeing price reductions which makes them more nervous because they don't want to buy in a falling market so they are waiting for the bottom. The more people wait the worse it is for the sellers.
The cocktail parties and water cooler chat this fall should be interesting. In the past people have gloated over their rising dot.com stocks and the increasing value of their house. This will be replaced by quiet conversations about how far the market will drop.
Just my biased nickels worth from recent house seller and a new renter.
Roger
HHV asked "What Month is the Best to Buy"
Ozzie Jurock would say any month where you get the best deal. The price you pay often has a bigger effect on your profit than the selling price. You can get good deals anytime but you need seller motivation.
A motivated seller is under pressure from one or more of the following: financial pressure; divorce; fear of falling prices; long time on the market; weak buyer interest; moving to another city; purchased second property; estate sale issues; declining health; age; house problems and competition.
A good time period is in the September to December time frame. Listings are at a peak in September and lots of them have been up for sale over the summer. Sales per month peak around May and keep falling off to a low in December (see your graph in masthead). So in September you have peak supply and demand has slacked off considerably from the spring. Agents are hungrier then and will help "facilitate" a deal especially if their listing is about to expire. December doesn't have as many properties but everyone is in the malls and there are few buyers. One of my buddies in Victoria has made several good buys in December.
Roger
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