Friday, March 26, 2021

Sellers Nervous?

Sellers are a bit nervous. Not about the market but about their ability to acquire a new house once they sell their current house. This is more than just a local phenomenon. There is a serious shortage of resale housing nationwide. Seller however are likely overplaying this fear a bit.

Locally and in many markets across the country, sellers are FIRMLY in control of the market. Sellers can ask for a longer closing period of say 45-60 days (rather than a more traditional 30-45) and then ask for a 60 day rent back to get nearly four months to find and purchase their replacement home.

Sellers can also consider new construction which typically has a build out time and that give them time to prep and sell the current house before closing on the new house. Tactics like this can make a seller feel much more comfortable about the tension they may feel pondering the move and the process of finding and successfully entering contract on the next home.

Meanwhile for beleaguered buyers frustrated with multiple offers and a seemingly impossible uphill battle to buy there is hope. Buyers can offer sellers more time or other concessions to help seller make the transition. Buyers moving from a rental unit can simply stay month to month a little longer to accommodate a seller that needs extra time to finish the purchase of their next home.

These tight inventory markets can be stressful. Strategies for success can alleviate much of the pain of buying and selling in a hyper tight market.

Friday, March 19, 2021

Listings are in Short Supply

Here we are tickling the end of March and listings remain a rare commodity. I keep thinking our spring rush of new listings is just around the corner, but thus far no such rush. Every Realtor® in the area seems to have substantially fewer listings at the moment. This has placed significant price pressure on buyers that really have little bargaining room. 

Sellers are grinning all the way to the bank, but they should be advised that as prices creep ever higher buyers will fall out of the market and that can act as an equalizer. Now is a great time to sell, especially if you intend to move to a less expensive market. 

Buyers need to present the strongest offer they can. It's not just price, strong down, big earnest money, flexible closing terms to meet the sellers exit needs. It's a tough road to haul right now, but buyers that persevere will get a great house even in this tight market.      

Friday, March 12, 2021

Are Vancouver's High End Renters Going to Buy?

Vancouver has a significant community of high end renters. The Waterfront and other upscale Downtown apartment buildings seem to have no trouble renting small units well over $2,000 a month and some spacious units over $5000 a month. There is no shortage of high end renters. Incomes required to support these rents are plenty to support a rather nice condo or home purchase. So one might ask, why are these renters, renting? Will they soon become buyers?

I have spent a fair time contemplating this issue. Sometimes people rent because they can't buy. Perhaps they lack a downpayment, or the credit score to obtain a loan. But these people are not those that are renting the expensive luxury units on the waterfront of Downtown. Buildings like Holland's Coen and Columbia, the new Aria, Riverwest, and Rediviva all have strict income and credit requirements that likely match those of a mortgage lender, they might even be tighter. So these renters are clearly choosing to rent. 

Those that are capable of buying but choose to rent fall into a number of possible categories. 

  • Short term residents: Sometimes a highly paid person has a project they are overseeing in an area and want to live in a nice place while they finish the contracted project.
  • Leery of buying: There is a group of people that are old enough to remember the last hard crash in 2009-2011 but too young to remember the boom bust cycle of real estate and economics. real estate is nearly always a good long term investment, not so much short term.
  • Do not want the responsibility of ownership: There are people who simply do not want to invest the time and money into maintaining a home they own. Even condos have some interior maintenance issues, but honestly this one is tough to reconcile.
  • Mobility: This was an oft cited reason young professional millennials cited for not buying in a series of well reported studies over the last few years.
Short term residents will always be a piece of the equation.

The leery of buying crowd is an increasingly smaller group, but they are still out there. 

Responsibility of home ownership is curable. Many condos have HOA and building setups making the maintenance as low as renting or in some case lower.

The mobility crowd is still a thing, but I feel like that group is about to shrink substantially. The pandemic has created a new and potentially sizable group of remote workers. Some companies have embraced the idea of the remote worker. They have weighed the commercial real estate cost savings against any productivity losses and found the result favorable. Other companies have come to the opposite opinion and will likely return to traditional office work as soon as the pandemic is over. But those that have embraced will create a new group of buyers, some of which may find interest in high end real estate.

Kirkland Tower on the Waterfront will be the first test of this. Downtown Vancouver has a handful of very high end condos particularly those at Viewpoint in Vancouver Center. But most of the high end condo units are older now pushing twenty years. Kirkland will offer the first brand new modern luxury high rise condos in Vancouver since George W Bush was president. I feel like those 40 units are gonna go FAST!

Only time will tell and the time is coming soon. Kirkland will likely complete that project by summertime. You can follow all of the exciting activity in Vancouver's urban living seen here: 

Friday, March 5, 2021

Investment Value vs. Utility Value

I have written a fair bit about the utility value of your home and how that is more important for most people than the investment value. I dedicated a chapter of my 2010 book, "Don't Panic" to this idea. There are still a great number of people that tend to put too much emphasis on the investment value of a home they plan to live in. 

Part of the allure of home ownership versus renting is the investment potential. This should not be overlooked, however the primary purpose of your personal residence is utility. You own or rent a home primarily to provide shelter and safety for you and your family as well as a sense of personal place. This should supersede the investment potential of the property. 

I do recommend buyers consider the investment value as part of the equation, but not the primary driver. Nearly every home in any given region will have similar investment potential. There are some locations and or other external facts that can make one property a better investment potential as far as appreciation in concerned. But buyers of a personal residence rarely take advantage of the investment opportunity of their home. They tend to make the home their own to their personal taste rather than the neutral taste of the broad market. they tend not to rent out surplus space in the house. Yet investment value or potential is often something they stake a disproportionate level of concern over when buying the home.

Buyers should buy the house they can afford that offers the best living situation for those that will live in it. As a Realtor® I will take great care in checking the surrounding area for potential detrimental external problems, noise, crime, new development, proximity to essential services, etc. But in the end and short of a compelling external factor, the best home is the home one can afford that provides the best location, floor plan, proximity, and general utility for the buyer.

There are a few trends in real estate surrounding new homes. When buying a new home it is often sound advice to try and buy a house in an early phase preferably phase 1. The reason for this is that developers almost always raise prices in each new phase of development so buyers in the first phase have a quick uptick in value as comparable homes sold just a month or two later might be 5% or 10% more expensive. Barring a significant downtown in pricing, buying at the final phase of development is generally not a great idea. That said, if the house is right, the price makes sense and it's a good fit for you and your family, buy it!