I drove past my favourite target this morning for the first time in over a week. I wasn’t surprised to see another price reduction, but I was surprised to read “Last one, Best one” on the sign.
For me, this crack shack became condo exemplifies all that is going wrong with Victoria real estate. Now please don’t misunderstand me. I’m glad the Larges went in, bought the place for a song, spent the better part of two or three years fixing it up while the market went insane and then attempted to sell them for a ridiculous price. In the end, the corner of Bay and Quadra has at least one less problem home.
The REALTOR who they hired to market this place hasn’t impressed me. First he dared to tell us Bay and Quadra (or maybe he meant Central Park) is Victoria’s Yaletown. Then he advertised it as a BIG PRICE REDUCTION and told us property only goes up in value in Victoria, all in the same MLS listing. Now after over 7 months on the market, he has told the two buyers of the units already sold that they paid more for less, but they should be “proud of their home.”
The real estate industry loves to tell us stories about how people like you and me are doing similar things all over town. After all, we’ve all bought run down properties and fixed them up haven’t we? It’s called gentrification, or urban density, or green living or whatever buzzword they tell us is in vogue. There’s just one problem: only 3-4% of Victoria’s properties change hands every year; which means that in the last boom, we’ve seen at most 32% of Victoria’s properties bought and sold. And this also means that neighbourhoods aren't changing fast enough for you and me to notice the difference within the time frames we will live in them.
That number may appear high at first glance, but remember there was also a lot of new construction and a lot of home flipping happening in the last eight years too. But people bought the hype. And they bought the run down properties with the intention of holding for a year and cashing out, moving up or whatever they were thinking.
Buying a home, whether a house or a condo, in this town, at this time may prove to be the single biggest purchase any of us will ever make. When you go to buy a car, do you see the sales person as friend or foe? Do you see the business manager as honestly trying to help you get into the car of your dreams? Or do you view the whole process as a necessary evil to living a convenient lifestyle? A healthy bit of skepticism of the advice being doled out to you by the industry "experts" is a good thing, IMHO.
This post isn’t about attacking the real estate industry. It’s about dissecting the hype. Many Victorians have, and continue to buy into, the “real estate always goes up mantra.” It doesn’t. It isn’t right now. In fact, all over town, property values are dropping. We haven’t seen YOY price drops yet, but we will. We have seen drastic price drops in the past two months. (H/T Roger)Drastic MOM price drops are not normal, even in a bear market. This one fact leads me to believe we are in for one hell of a ride down. Strap on your seatbelts, put on your helmets and keep your eyes wide open, no better learning opportunity for real estate purchasing may happen again in your lifetimes.
Aside: I’ve had good response in e-mails, Thursday is definitely on. I will send out an e-mail with details Tuesday evening.
Update: e-mail was just sent (5:50pm), if you didn't get it (or have yet to e-mail me in the first place, not too late) send me an e-mail and I'll give you the super-secret details.