At the risk of repeating ourselves - repeatedly. Instagram, YouTube, Twitter, and Facebook are a few of the many platforms that curate the best of what is trending online. Recently, the death of music legend, Prince, and his huge hit, “Purple Rain,” were trending around the world. Tomorrow, the trending could change to some celebrity saying something woefully stupid, Donald Trump’s latest US election campaign comments, Hillary's criminal endictment or the recent horrific terrorist attack in Florida.
Here in the safe little bubble of BC, real estate is what is trending.
Every single day, there are multiple stories written and broadcast across numerous metro Vancouver, BC and Canadian media outlets regarding our bipolar real estate market and it's "issues". It is a rarity when you do not stumble across two or more people talking about the real estate market on any given day. Common trending stories are: sales volume, lack of inventory, foreign buyers, rocketing real estate values, ecstatic sellers, shadow flipping, unethical realtors, buyer frustration, multiple offers, sale prices well over the list price, is there a bubble about to burst, etc.
Over our lifetimes in real estate, development, building, construction and local business we have seen most of these movements trending in various forms. Yes real estate "values" are at record highs. Conversely, mortgage rates are at near record lows. Millennials, do you remember 19-21% interest rates in the 1980's? We do.
The trend that has shocked many is the most is the multiple offer environments, and the requirements of the buyer to be successful in securing the property. As we reflect back to the previous boom cycle of the mid to late 2000's, multiple offers were not as prolific as they are today; however, if the property was well priced and in a desirable location, it was still common to have multiple offers. The difference between then and now is substantial and it has set a new trend in how a seller executes a multiple offer situation, as well as how a buyer alters their offer to come out the winner.
What is trending today is the multiple offer formula for success. The formula needs to be an offer with no subjects, large bank draft deposit in hand, open ended dates so the seller can pick the dates that suit him or her best, and a price that is well above the list price—often 10% or more over the list price. Looking back to the previous boom cycle, it was rare that we would prepare and advise a buyer to write a completely non-subject offer. What was even rarer was writing an offer over list price. A strong offer back then was an offer at full price without the subject to financing clause. How the trend has changed…
So what is causing this new multiple offer trend of non-subject offers and sale prices of more than 10% over the list price? Logic would say that the common contributors are lack of inventory and huge demand—supply vs. demand. But it is more than just supply vs. demand. We believe it is the execution of the marketing and the financial ability of a few buyers that have created the new multiple offer trends.
Our urban and suburban real estate team at The BC Home Hunter Group are marketing experts. We can tell you with authority that the execution of marketing is to compress all showings, give limited access, hold a few public open houses, and drive hundreds of potential buyers through the home, essentially creating an auction event. Auctions by definition are time pressured events where people are usually bidding on something they find valuable. Auctions push a number of our psychological buttons. With numerous people around, there seems to be an increase in your physiological arousal; an effect called social facilitation. According to Wikipedia, as your adrenaline pumps throughout your body, your heart begins to beat faster, and your reactions quicken. This sensation is beneficial and positive when doing sports, but makes for difficult rational decisions, especially when buying property.
Nobody likes to lose, especially the ultra-rich in an auction environment. Craziness happens when the ultra-rich fly in from around the world into Vancouver, one of the most beautiful cities in the world. Sip champagne, eat at world class restaurants, shop at high end stores that offer a 30% currency discount, and most importantly, visit one of the safest and most welcoming places in the world. After experiencing Vancouver, they auction off a valuable commodity (Vancouver Real Estate) and add pride of ownership to the equation.
Unfortunately for the rest of the buyers in the Vancouver and Fraser
Valley, this is where the new trend of non-subject and 10% or more over list price multiple offers were created. The competitive auction environment, the excessive money of the wealthy, and a valuable commodity has changed the trend when pursuing a property in a multiple offer event. How long will this trend continue? Is this a trend that will become common in future boom cycles in the Vancouver and Fraser Valley or is this a one off? What is trending in real time? Here are a few samples of what is trending in the lower mainland: #multipleoffers#nonsubject#bigdeposit#wayoverlistprice#wewon#welost#vancouverhomehunter#fraservalleyhomehunter#bchomehunter#dontneedamillion
The white hot Fraser Valley single family market is having a significant effect on the strata titled properties. The average price of single family home in the Fraser Valley over the last 12 months has increased by 38%! Townhomes and condos for the same period have only increased by only 17%. However, the majority of the gain has come over the last 3 months just as our group forecast and advised our clients in 2015.
The sell through rate (STR) for both townhomes and condos has moved into a strong “sellers’ market” and we see this trend continuing over the next 6 months. There are still some excellent buying opportunities in the strata titled properties, particularly in condos while townhouses are the Fraser Valley's version of the urban condo. The volume of sales is up significantly, however, the selection or inventory is still very good for buyers.
There you have it folks. Our team hope we have in some way brought a little clarity to the subject of metro Vancouver and Fraser Valley real estate or at least been mildly entertaining. If you or anyone you know are considering the purchase or sale of your home or any of precious BC real estate don't hesitate to call, text or email our group anytime, 604-767-6736