Hello East Van! What a month February was! I don’t know if anyone could see the intensity of the current market coming last year.. everything had started to pick up in the Fall, but we’ve gone to significant multiple offer situations really quickly. The detached house-townhouse-condo markets are all a bit unique right now, so if a well priced unit doesn’t have multiple offers, it will have a lot of interest, so you have to move quickly if you like it.
The detached house market in particular is on a tear right now. With very low inventory and increasing prices, I don’t expect this market to slow down anytime soon. We’re seeing a lot of offers on detached houses, anywhere from 5 to 10 to 20+, so the competition is significant. The condo and townhouse market are easier to navigate but there is still competition on the good, well priced listings.
Interest Rates are at all time lows right now – so even if you’re not looking to buy, consider talking to your mortgage broker about your renewal or a re-finance. The coronavirus pandemic has significantly affected the stock market, which is leading to the decreasing rates. No one knows how this pandemic will unfold and what that will mean for the future, but these rates are good enough to take advantage of right now.
From what I’ve seen out there, the busiest markets seem to be: 1 bedroom condos under $500k, 2 bedrooms condos under $900k and livable detached houses under $1.7-million.
How to Navigate Multiple Offers
In order to be successful in this market you have to move quickly, you have to do all of your research beforehand and you have to be ready to submit a good price, likely one that’s a touch uncomfortable. These situations can be really disheartening, but practice helps, so if you like a property, submit an offer, even if it’s in multiples, to start learning about the process.
We’re seeing a lot of “subject free” offers which is why it is helpful to see a unit as soon as possible once it’s listed. This will give you more time to do your due diligence if you really like it (and enough time to see it once or twice more to really take it in!). Particularly in the detached house market, Buyers are doing pre-inspections BEFORE submitting their offer in order to submit a clean offer. The few days you have for due diligence are really important so make the most of it. Make sure you review all property and building documentation, ask questions and do your research.
It goes without saying that your mortgage approval should be in place and you should be working with a mortgage broker since they can move a LOT quicker than banks – needed in this competitive market. They are also much more able to offer solutions for issues and interesting financial situations. When you’re submitting a “subject free” offer, you need to ensure that your mortgage broker understands your situation, works to get you as close to an approval before you submit your offer and has explained the potential issues.
One detail you need to consider if you’re submitting a subject free offer is the appraisal. Typically appraisal’s are part of the approval process: the mortgage lender sends an appraiser to the property to ensure the price is good value. If the appraiser doesn’t think it’s good enough value you can walk away from the deal. However, when you submit a subject free offer, there isn’t enough time to send an appraiser in before offers are submitted (offer submission is often Monday or Tuesday) so you have to understand the ramifications of the property not appraising at the price you have under contract. For example, if you’re under contract to buy a house for $1.7-million, but the appraiser doesn’t think the property is worth more than $1.65-million, then the mortgage lender will only fund a mortgage up to $1.65-million, which means you need to find an additional $50k in extra cash to cover the difference (this is in addition to your down payment). Buyers with large down payments have a little wiggle room in this regard, but Buyer purchasing property with the lowest down payment available and no extra cash need to understand the potential issues and need to be ready with a back up plan (which could be borrowing money from family, pursuing a B-lender, etc).
Finally, price. Buyers always ask what price they need to submit to win, and it can be really tough to balance my desire to help you with with my intention of helping you find something that’s good value. A few factors help determine my advice: how many other offers there are, if you’re submitting an offer subject free or with subjects and the value of the property itself.
When the Market is Busy, do you Buy First or Sell First?
There is some finesse in selling your current home and buying your next home in this kind of market – it’s hard to buy due to competition, but (generally) easy to sell, so how do you best navigate this situation? You have two options:
Sell First so you know how much money you have to work with, and be prepared to rent in case you can’t buy another property before you have to move out of your current one. A lot of Sellers ask for flexible dates to give them some flexibility in when they have to move, but that will only take you so far.
Buy First because you can be certain that your current place is going to sell quickly once you do put it on the market. You need to be prepared to own two properties in case a major issue comes up that prevents a sale (this could be a shift in the market, or an unexpected issue in your building or unit). In this case, make sure you go over your options with your mortgage broker so you understand if its possible that you own two properties at once and what that will cost you.
This is only a quick overview of some of the key points to think about when it comes to multiple offers, but it’s a good reminder that you need to work with someone who understands the market and has your best interests at heart. Call me to chat about your options.
Onto the stats.
Detached houses are still far off the “top of the market” HPI price we saw over the last couple years, which tells me that this market still has a big price increase to see. Detached House inventory is REALLY low compared to the last couple of years. We haven’t see this amount of inventory since 2016, which was right as priced really started to increase, so expect detached house prices in increase while inventory and interest rates are low. The sales to active ratio for detached houses in East Van is 21%.
Condo prices are close to the highest HPI prices we’ve seen over the last few years, so I don’t anticipate prices to increase significantly, but expect some increase over the next few months. Condo inventory is more than what we saw throughout 2016 and 2017, but almost half the amount we saw at this time last year. The sales to active ratio for East Van condos is 56% for 1 bedroom condos and 26% for 2 bedroom condos.
Similar to condos, Townhouse prices are close to the highest HPI Price we have seen over the last few years. Townhouse inventory has remained relatively steady over the last few years just due to the few number of townhouses across the city compared to condos, though I expect some of the Buyers looking for a detached house will settle for townhouses as prices of detached houses grow out of reach. The sales to active ratio for East Van townhouses is 37%.
The Median Days on Market is between 8 to 10 days, which is not surprising given that listing agents are postponing offer submission until after the Open House, and everything is selling quickly.
East Vancouver Real Estate Stats up to and including February 2020
This market isn’t easy to figure out. Multiple offers are frustrating to navigate while pricing on certain listings has increased quite a bit over last year. Dial into your personal finances so you know what you can afford. There are good properties out there and with the right preparation and advice, you can be successful! Call me to talk about what you’re looking for, the buying process and how to navigate multiple offers – it’s a lot easier to talk about in person. It’s still early in the year, and the market still has a lot of growth to see this Spring so the sooner you learn about what’s going on, the sooner you can get in.
If you’d like to slowly dip your toes in the market, I can also set you up on a Custom Real Estate Search so feel free to contact me: [email protected] or 778-387-7371 to let me know what you’re looking for in a new home.
This kind of market leads to a needed reminder for Sellers – you need to ensure your property looks good, is priced right and has an agent truly trying to sell it. Contact me to talk about the best plan of action for the sale of your home – you need good marketing, positive open houses, market knowledge and strong negotiation.
All the best!