Shout out to Nick!! Yes, we are shouting out Nick as this weeks blog comes to you as per his request. As the title so subtly hints, we’re going to be looking at what is selling, and what is not.
This question is not just a simple answer of “1 bedrooms are selling and 3 bedroom townhouses are not!” Because, well ….. Everything is selling. Yup, you heard that right, everything is selling. The rest of that sentence though, should go something like this “Everything is selling, provided it is priced to the current market value.”
So let’s take a look at what that really means. As I think once you see the below figures, you’ll start to see what we mean quite clearly.
Just to clarify IT DOES NOT MATTER IF YOUR PROPERTY IS $600,00 OR $6,000,000. This is exactly the same issue across the entire market right now.
The below table is based upon the following criteria, both the same for Active and Sold homes:
- Area: Kitsilano
- Size: 1 Bedroom, 1 Bathroom
- Square Footage: 500 - 650 Sq.Ft
- Building Age: 1970 - 2005
Note: The sold figure is based upon sales within the last 90 days.
It’s pretty easy to look at the above figures and realise the difference of $134 between the two numbers. This is a large enough difference in and of itself, however when you take an average 600 SqFt home, and you’re asking a buyer to pay an additional $134 per square foot, you’re actually asking them to pay $80,600 more than the going average. THAT friends makes it pretty clear to see why some homes are selling and some are not.
Don’t forget, these are average numbers too, so can be skewed either way slightly, but if you’re asking for a higher than average price per square foot, you want a really good reason to justify that difference. And we don’t mean “It’s newly painted” or “We installed new laminate flooring”.
Let’s take a look at another example below. Now we won’t name the building and unit for privacy purposes but don’t worry, that won’t matter.
Now to add to this, i’ll also confirm the floor plan layout is exactly the same, the view is exactly the same and the unit condition between each is exactly the same.
It doesn’t take someone eagle eyed to notice that unit 701 is 34 square feet less, has no locker, yet is asking for $40,000 MORE than the recently sold unit 501 in the building. This increase is completely unjustified and not warranted. So what happens now? Unit 701 stays on the market and continues to chase their high price, all while the market continues to decrease slowly. Then the longer on market they are, the further and further they are getting from market value as the market is currently decreasing roughly 1% each month right now. So they started around 7.5% over market value, now a month goes by and the market decreases by 1%, so now they are 8.5% above the market. This continues to take place, then after 3 months a downward price adjustment takes place and they go from 10% above the market value, down to 7% above the market value and the cycle repeats! This process is called ‘chasing the market’.
So in summary, everything is selling as long as it is priced to market value. Market value means what the market is willing to pay RIGHT NOW for your property. All of the above information is public, so your agent will be able to pull this and make sure any offers you proceed with or receive are based on the actual facts, which will determine whether they are realistic or not!
Thanks again for the question Nick. If anyone else out there would like their questions answered, feel free to shoot us an e-mail, DM, phone call or text!
Until next week,