Trends don't happen overnight.
Real estate trends are starting to shift, and it can be hard for would-be buyers and sellers to keep up.
While most reports focus on real estate for the average homeowner and yes even the luxury market is being impacted.
In the past few months and to date, the market is experiencing a ‘layering of factors’ that affect our BC Real Estate Markets - supply chain issues, politics, policy, significant inflation and interest rate hikes to name a few.
The luxury market can be an $8-million home or a $50-million home, and there are potential differences in how they fluctuate. The properties have to be priced strategically to reflect the current market conditions and in anticipation of how we believe the market will play out. People still want to negotiate regardless of the price point; everyone wants to feel like they have won.
We currently see tighter movement in the mid-tier of the luxury real estate market, around $6 million to $8 million. The higher ends of $10 million-plus and $20 million-plus continue to see similar levels of activity relative to previous months prior to the interest rate hikes.
Question: Do you expect to see sales decreasing or increasing in the coming months?
Answer: Realtors who are actively working in the marketplace will start to see market shifts prior to the statistics coming out that bear fruit to what they are experiencing.
We are seeing a little slow-down in sales, and this softening will likely continue in the coming months.
When new policies are implemented, and also having come off a stellar previous year of (exponential) increase in sales points, it stands to reason that there may be a "wait and see" attitude among purchasers and sellers alike as they try to make sense of a changing market.
Supply and demand are always key factors, and currently, the supply is still low.
The supply/demand ratio needs to be understood from a granular neighbourhood perspective and from the property type (condominiums, attached properties and single-family homes). It's clear that areas and neighbourhoods and property types don't react the same way across the board.
Question: Luxury homes are often on the market for some time. Why is this the case?
Answer: Simply put, the more expensive a property is, the number of buyers that can afford that property diminishes.
An important note is that the number of days on the market is, to a certain degree, correlated with value and pricing – although it is interesting that you can have an amazing property that you put on the market, and if the right buyer is there, it sells quickly.
Question: What can you tell us about the buyers of luxury homes, and have you found the foreign buyers tax a deterrent?
Answer: B.C.'s luxury buyers can come from anywhere, but there are many local buyers.
Of course, as Canada has always had a large immigrant population and is recognized for its diversity, people often want to move to Canada. When they look at where in Canada they want to relocate, B.C. stands out with its scenic natural mountain and water landscape, excellent schools and cultural diversity.
Our buyers are coming globally, although most appear to have Canadian citizenship or permanent residency.
(The tax) is an important topic and one we should be paying close attention to, but questions around it are better directed to those responsible for it in provincial and federal governments and real estate associations.
What I can tell you is we don't anticipate the foreign buyers' tax will affect our luxury property listings, as many buyers we're seeing are from the Lower Mainland, Vancouver Island, Okanagan and Canada in general.