Are Condos Cool Again?

How about that condo life? Are they back in vogue or is the rental side taking over the scene? Well I did some digging into the data and Condos might just be cool again. We are selling about 40 units a month in Vancouver and that is about 10% of the local sales. The median price for Condos is trailing the overall median by about a hundred grand. But with most condos having association dues, that mean buyers are paying about the same monthly payment for the median condo as they are for the median home.

Here in America's Vancouver the luxury condos have started to come back. In each of the last 6 months at least one condo unit over $600,000 has closed and several seven figure units have gone as well. The most expensive unit was a darling at $3.1 million. That one was sold in September in the Tidewater Cove development. In fact two $3 million plus units at Tidewater have closed in that six month window. A few seven figure units have sold downtown as well including a 3000 footer on the 11th floor of Vancouver Center 3.

With the waterfront apartment buildings coming online right now and more on the way, and the under construction units in the new Kirkland Tower on the waterfront, a little action in the market bodes well. A fair bit of condo activity is happening in that critical $500k - $1M area that will help pave the way for more units on the new waterfront.

Overall I'd say condos are in fact cool again. Millennial buyers are definitely showing a high level of interest in both luxury apartments and condo units. It seems our young people are staying in the city more so than their predecessors in Gen X or Baby Boomers.

As the market softens, the classic rules apply

Yes the classic rules of location, location, location, and 'curb appeal' are back. Those rules never really went away, but when the inventory was so tight that buyers had to take what they could get, those rules were temporarily ignored.

Inventory levels are starting to return to a more healthy level and that means buyers have choices again. Classic issues like, facing a busy street, outdated, functionally obsolescent design, or bad location are now affecting the price in a more traditional fashion. Some sellers and even some agents, have yet to realize this.

Getting top dollar for a house requires several things to happen. The house must have broad appeal in the market. Great location, quiet street, well maintained, excellent curb appeal, fresh and updated feel, clean and tidy appearance, etc. This brings the most possible buyers to look at the house and then of those one will like it the most and reach a little deeper to buy it. When some of these appeal factors are missing, fewer buyers will look at it, of those that do many will pass on it, leaving a small demand left. That leads to a lower price.

The items I mentioned above are not the only factors, but most of those are controllable. The home owner can't control the location, nor the street, but the others are well within the sellers reach. This market will not tolerate a sloppy house, buyers have choices and they will either pick the nicer house or low-ball the ugly one. Sellers are well advised to spend some effort making their property look as warm and inviting, positive curb appeal, and as fresh as possible.

We are in the transition to a neutral market and neutrality is healthy and sustainable.

Sales are still strong, But Sellers Beware...

Sellers best take notice, the robust sales are still alive and well in our local market, but buyers have choices and they are not tolerating high prices. This recent uptick in rates has eliminated many buyers from upgrading their home or even buying a home at all. That has taken pressure off the market. There are still plenty of buyers and these rising rates are also helping them "pull the trigger" but with more choices, buyers can be a little more discerning about how much house they can get for what cash they have to play with.

Lenders are also sniffing out the soften demand, and that means appraisers are even more vigilant in finding true comps. Puffed up values are not going to fly in this market. Sellers may miss a golden opportunity to sell if they get too greedy and try a high price. As rates creep up buyers lose buying power and that overpriced listing sits on the market.

A trusted professional realtor® will pull comps and should offer a trend analysis to help sellers determine the effective price range for their property. Most agents want to help sellers get the best price possible, but they also know that sometimes sellers and the market are not on the same page. A year ago sellers could get away with a 10% bump as the market was a raging bull, but now the market is a butterfly, still flying, but not smashing everything in its path.

We are entering the rainy season here in the Pacific Northwest and that tends to soften the number of buyers out and about looking at houses. Sellers are advised to keep their property free of leaves and other autumn debris and keep that house tidy. The old adage is rings pure: you only get one chance to make a first impression.