Welcome to September!

All corners of the province have experienced unbelievably good weather through the summer, but it looks like we can't escape the wet stuff forever.

For the real estate market, last year's relatively sluggish summer has rebounded strongly this year. It looks like we've entered a period of relative stability, with many areas in balanced - rather than buyer or seller - market conditions. Remember though, real estate is local. It's hard to take regional stats and make inferences about a neighbourhood.

Moving forward, it looks to be a relatively busy Fall market, as interest rates have begun climbing and buyers with pre-approved mortgages look to take advantage of more favourable rates. We anticipate a solid next few months as this wave of buyers ripples through the market. Expect to see things taper off closer to Christmas.

Given this, for those of you thinking about selling, it is important to realize how vital the Art of Pricing is to the sale of your home.

All sellers want the highest price possible for their homes, but the strategies to get there are not always intuitive. In certain circumstances, pricing low can be more effective than pricing high, while in others, pricing above market value can be a winning strategy. In most cases, however, the optimum pricing strategy is to price within 10% of market value and let the market decide. After all, the 'list price' comes with a caveat: Or Best Offer.

Top Reasons for NOT Pricing High:

1. You lose out on potential buyers who put a price cap on their property searches.
2. Serious buyers question the motivation of a seller with an overpriced listing.
3. You provide a strong comparable for your neighbours who are properly priced. You are effectively selling other people's well-priced homes.
4. Buyers assume that properties which remain on the market for long periods of time have something inherently wrong with them.
5. Other agents will be more hesitant to show your home.

In a quickly rising market, pricing strategies tend to matter less, as underpriced listings are bid up to market value and overpriced listings simply wait until the market catches up to them. However, in flat or falling markets, pricing plays a pivotal role in how much you may ultimately sell your house for.

In a flat market, buyers have more time to analyze the market and therefore become more educated about value. Houses that are overpriced will simply sit on the market, as well-priced new listings come on to replace well-priced recently sold listings.

In a falling market, the optimal pricing strategy is actually to price BELOW market value. A simple exercise that pricing experts like to use in this situation is to visualize catching a fly ball. The ball represents the market and your glove represents your pricing strategy. If you price too high, the glove will simply swing across where the ball was. If you price at market, there's a good chance you will miss it. But if you price just below market value, there's a greater likelihood of catching the ball. After all, it's better to take a little bit less than to risk having the ball drop in for a double.

Many factors come into play when it comes to pricing your home and a professional can help you through that process. To find out more, please feel free to contact me at the information above.

Macdonald Realty Luxury Press Release

Midway through 2013, the BC luxury real estate market has rebounded from a sluggish 2012. After breaking all luxury records with 691 $3-million+ sales in 2011, the luxury market slowed to 439 $3-million+ sales in 2012. This year, that number is forecast to reach 588 sales, which represents over $2.8 billion in luxury real estate changing hands in 2013.

This compares to only 10 $3-million+ homes, with a total value of $39 million, that sold in 2000.

Much of the rebound can be attributed to the overall health of the housing market, says Macdonald Realty manager Matthew Lee. Says Lee, "Year-to-date, both in terms of gross sales and units sold, the Greater Vancouver housing market has seen an increase of 10% over 2012, so it's no surprise that the luxury market has followed suit."

Dan Scarrow, VP Strategy for Macdonald Realty, agrees. "The luxury market in Vancouver is more intricately linked with the overall market here than in other jurisdictions," says Scarrow. "We're a global lifestyle city," he says, "economists have been trying to figure out the Vancouver market based on local incomes for 40 years now and it's never made sense."

Scarrow credits foreign buyers for driving demand for high-end product. "Everyone now knows that mainland Chinese buyers are a big factor in our market now," says Scarrow, "but we're actually a repository of wealth for people from all over the world."

The most striking examples of this have been the two sales this year in the Fairmont Pacific Rim for $15 million and $25 million, respectively. These sales were not made to mainland Chinese buyers, but instead, are rumored to be Middle Eastern buyers. (http://news.nationalpost.com/2013/06/04/ten-things-you-should-know-about-the-near-record-breaking-25m-condo-sale-in-vancouver/) Should these sales hold up for the rest of the year, it would mark the first time in BC history that the most expensive home sold in the province was a condominium unit.

"When foreign investors invest in Canada, they're not looking for huge returns," says Scarrow, "they're looking for a safe, stable place to store their wealth. That's unlikely to change."

Top 3 Most Expensive Homes Sold in BC so far this year:

For a more complete analysis of these statistics, please feel free to contact me at the email address or phone number above.

July 2013 Monthly Report

Welcome to Summer!

Our thoughts are with those who have been affected by the Albertan floods. That said, we're confident that our Albertan brothers and sisters will be able to recover from this disaster.

In addition to reading about the Alberta floods in the paper, the news often covers a wide variety of real estate stories. The media, in an attempt to feed the public's insatiable appetite for real estate news, often publishes interesting pieces of real estate information that help sell papers. Due to constant heavy dose of statistical information, it's important to understand how the data is collected and how to interpret these facts.

Below are the 3 most commonly misunderstood real estate statistics in the media:

1) Pace of Canadian Housing Starts Up

http://globalnews.ca/news/627941/pace-of-canadian-housing-starts-up-in-may/

This shouldn't really matter to buyers or sellers out there. While this is related to the real estate market, it is more relevant for the construction industry than it is to the resale housing market.

Remember, these are new home construction figures: not sales or pricing numbers. Unless you're a construction worker or materials' supplier, this type of information is largely irrelevant to your real estate decision-making process.

2) Home Sales Drop!

http://business.financialpost.com/2013/04/03/toronto-vancouver-home-sales-fall-sharply-in-march/?__lsa=ca1a-ee8a

This kind of information is important for buyers and sellers to know and also helpful for realtors to use. A drop in home sales is sometimes a precursor to lower prices down the road. That said, there are a multitude of reasons that home sales could slow that wouldn't also result in a corresponding drop in prices.

It is therefore important to remember that these are unit sale figures, not price figures. These statistics also generally need to be seasonally adjusted to reflect the fact that sales tend to be slower in the winter and summer as opposed to the spring and fall. You should talk to a professional to see whether a drop in sales velocity is because of a slowing market or because of some other extraneous event.

3) Average House Prices Rise 6.5%!

http://www.cbc.ca/news/business/story/2011/10/17/crea-housing-september.html

This is the most misunderstood of the media reports that come out because averages are a terrible metric to measure house prices.

This is because the type of home that is sold in a given month strongly influences the outcome. For instance, if a lot of luxury homes are sold one month, then the average price of homes will go up, even if the typical home price doesn't change. This is exactly what has already happened in Vancouver, where the average price has risen 5.4% year over year, but the typical home price has fallen (see graph below).

For a more complete analysis of these statistics, please feel free to contact me at the email address or phone number above.