Saturday, March 28, 2009

Here are some West Vancouver list/sales prices

All this year, 2009. All SFH. Oiginal price in green, reduced price in black and sold price in red.


$1.098 List = $1.067 Sold

$1.168 List = $1.00 Sold

$1.549 - $1.298 - $1.198 Final List = $1.00 Sold

$1.375 -$1.250 List = $1.048 Sold

$1.379 List = $1.350 Sold

$1.980 - $1.588 - $1.498 = $1.395 Sold

$1.699 List = $1.510 Sold

$2.795 - $2.695 - $2.450 = $2.015 Sold


Some significant reductions in price and others probably wishing they had bought lower.

I stopped in at some open houses in West Van this week-end. Reasonable foot traffic, especially at the new listings which were priced sharply.

At one, older listing, the realtor was telling us there had been a reduction of several hundred thousand dollars from the original asking price. I asked him how he came by the original price since it was more than the assessed. "It was the fair market value at the time. Of course the landscape has changed a lot since then".

As I have said many times over the years (and I now see repeated on some sites), buyers rarely HAVE to buy- but sellers often HAVE to sell. A buyer could rent. But many sellers have to sell.. due to divorce, death, job loss, job transfer etc. It is this dynamic which will define prices in a falling market. How low do the 'have-to-sellers' have to lower the fruit to tempt the buyers into biting?

So I thought I would do a post soon on how I would value a house- if I was considering buying in this dropping market. Any interest in this?

In a rising market the strategy is simple buy as much as you can afford, bid strong and get on board asap.

In a falling market it is MUCH more complex. The asset is devaluing and while that may not upset long-term holders it is unpleasant to realise six months from now, that you could have bought a better/larger place for the same price or had a much smaller mortgage.

19 comments:

  1. For me to buy in a falling market, there would have to be a very clear monthly advantage ($) to buying rather than renting. Obviously, the advantage right now is in favour of renting.

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  2. > Any interest in this?
    Yes, that would be great!

    Not much could make me buy right now. Only something cheaper than rent (on 10 yr mortgage rates), fun neighborhood, low/modest crime, well-maintained, big south-facing back yard and with good mid/long -term densification prospects. Not realistic, but time is on the buyer's side and I am not urgent to buy.

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  3. This comment has been removed by the author.

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  4. It is M. We would need another 15-20% off, with mortgage rates this low, to get near an equilibrium. Generally there has always been a premium paid for owning. That may change if job security diminishes.

    Panda - I will put a post up in the next week or so, comparing the metrics of owning v renting.

    BTW folks I would like to get my readership numbers up to the levels before I disappeared. I dont try and sell anything but it is nice to have few a more eye-balls to discuss and argue with. So feel free to spread the word.

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  5. Very interesting stuff Fish. I have been surprised by the uptick in sales this spring but even more surprised by the lack of significant new listings. Based on my personal observations it seems like it is only extremely well priced properties that are moving while there is a huge glut of stale listings with unrealistic prices.

    One suggestion for increasing traffic would be to repair/renew the links with the high volume RE blogs.

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  6. . Generally there has always been a premium paid for owning.

    No, that's only been the case since the onset of the inflationary/bubble era in the 1970's. Before that owning was no more expensive and often cheaper.

    Once it's been beaten into everyone's heads that outsized price appreciation of RE is over, people will not be willing to pay more to buy than to rent, and that means it will not cost more to buy than to rent.

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  7. Patriotz - 1970-2009 is a long time :)

    Agree with your premise though, that the psyche is changing and friends who pitied us for renting, now envy us.

    However there are some costs ($ and emotional) to renting which some comentators forget to include...which I have learnt from bitter experience!

    1) Cost of moving.
    2) Lease extension being at the whim of your landlord.
    3) Up-rooting. Schools. Local friends and neighbours. Gym memberships etc

    So it is not only $ that one should include in that equation. However the current swing is strongly in favor of renting-

    - due to a depreciating asset
    - likely significant tax increases to pay for the olympics.
    - lower job security

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  8. Fishy,

    nice to see you around again. I would like to see the listing sales data as you showed in your old blog, if thats not much of a hassle. I am mostly interested in Surrey area.

    Thanks

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  9. Fist-time-buyer.

    I used to put up those 14 day list/buy numbers as an early warning indicator in 2007 and 2008. It showed an rising trend which eventually led to a drop in prices.

    Now that we are in a confirmed down-trend I am not sure they are worth following. However I will try and get some up for you from Surrey.

    I forgot to mention in the above post that two years ago I ran a search for West Van SFH under $1 Million and got a huge 12 houses, most of which were unliveable or lot value only. Today that same search yielded 48 houses. That 12% of the listings. Quite the change.

    I have friends who paid well over a million for homes that were on busy roads and cramped, and would probably have trouble raising a $800K bid now.

    The whole market has shifted down, though there are still some sellers and realtors who haven't got the memo yet.

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  10. I found my new Vancouver RE haunt.....keep the info coming about recent sales as I think it tells the true story of what is happening out there....

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  11. "So I thought I would do a post soon on how I would value a house"

    Tricky question. How much premium would you pay for a detached property? How would you value a house where there are no equivalent rentals to determine its fair price?

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  12. Jesse- Yup- it is not an exact science.

    BTW Larry Yatter just put up the average sales prices for March on his web-site.

    http://tinyurl.com/ce8frl

    Remember March 2008?- that was when the average price in Vancouver was $918,600. This is March 2009, and we are at $763,200. 16% less.

    $918K what were we thinking??

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  13. A $3.2 Million Dollar Foreclosure!

    http://tinyurl.com/cxsu7k

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  14. So I thought I would do a post soon on how I would value a house- if I was considering buying in this dropping market. Any interest in this?

    Great idea! BC assessment is one of the reference point, especially the neighbor's sales vs. their assessment gives some relative idea. But those data are limited to only in recent 2 years, but not very recent either. Anyone knows how to get old assessment history data?

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  15. wizardofozziejurockApril 1, 2009 at 10:54 PM

    Welcome back Fish! And thanks for the tip re: Larry Yatter numbers.

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  16. wizardofozziejurockApril 1, 2009 at 11:14 PM

    Oh, and by the way, the drop in SFH works out to 16.9%, so if there's any rounding to be done it should be 17%.

    It's also equivalent to a 20% gain.

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  17. Great idea! BC assessment is one of the reference point, especially the neighbor's sales vs. their assessment gives some relative idea.

    Assessment is just an estimate (which varies in accuracy) of market price, which is just what the latest fool is willing to pay for a property.

    I'm interested in what the property is worth to the buyer, i.e. its rental value or fundamental value as it is generally known.

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  18. The Assesment is really more of a 'snapshot' of a generalized market at a particular time. It depends on the cities or the municipalities cut off date. So in reality the Assesment could not be very practical for evaluating market price.

    BC Assesment for example may take comparables from outside your cachement for the purposes of building sample material, which doesn't give you an accurate picture of what happens in your micro market.

    Relative value wouldn't be good enough for me if I was selling my house, I want to know exactly. Independant and most recent sales information is crucial. Most real estate salesman don't understand evaluation at all and often give completly eroneous comparable market evaluations from often dated resources, make sure your information is current and relavant to your specific market.

    BC also assesses property at 'plus or minus 5%' due to the mandate of the courts. If an assesment is not 5% more or 5% less than an independant appraisal then there is no grounds for appeal of a tax assesment.

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