“We sold the damned condo!,” Jen told me yesterday. “Listed April 6th, accepted an offer July 6th, money showed up July 26th! Yeesh. Hair raising to have it out there for 3 months — some friends managed to squeak out with big profits earlier than us, and other friends are still on the market!”
Just to be clear, this is not a CityPlace shoebox made of rebar and cement hulking in a downtown Toronto condo forest with an intimate view of the building next door. No, this is luxury West Coast, metrosexual urbanity, as close to California as we get, in a building gazing over English Bay, where mermaids and narwhals frolic.
And still, tough sledding. Almost makes Jen wonder what happened to that massive real estate bubble everybody’s been yakking about. The buying in 2006 was easy ($640,500), but the sell in 2012 ($699,000) wasn’t. What with real estate fees, repairs and sale-related expenses, Jen figures they walked away pocketing about $20,000 – after owning a choice property during five years of the frothiest market on record.
Probably because they sold too late. The Van market is sucking air, and growing weaker daily. There are enough houses for sale in once-blistering Richmond to last the next two years. The tony Westside is devoid of both HAM and hope. Condos have croaked. Jen had horseshoes just closing the deal.
She blogged about it. “Renting vs. Buying, in our particular situation, had no clear winner,” she says. “I did love our condo and really enjoyed both the space and the location. It was a great place for us to live, so I’m happy the numbers didn’t show it was a financially terrible idea to have done so. But, considering renting isn’t bankrupting us either, I’m really enjoying the freedom and flexibility of non-ownership, and am in no hurry to buy property again anytime soon.”
The conclusion might have been different, if she’d bailed out a year ago. And it would certainly be changed if the condo wasn’t going to market until this autumn. What was a seller’s market in 2011 has turned into one where buyers have the power to force prices lower. But it pales in comparison with what’s coming.
It’s a lesson the smug ‘hey, it’s different here’ crowd in Calgary and Toronto better learn. The fundamentals are not changing for either city, nor for the ingénues in Skatch or The Peg. The tumbling Vancouver market provides a useful template of what others should expect in the months to come. Nature always wins.
First sales weaken. Then listings start to swell. Bidding wars are extinguished. Soon price increases are erased. Sales declines gain momentum, and the media starts to notice. Realtors sweat a little, say the market’s balanced. Listings mushroom even as prices stay sticky. New condo projects are cancelled. Sales fall further. Realtors declare a buyer’s market – hurry! Now prices tumble lower, often crashing first in those hoods where they exploded higher just months earlier.
Here’s an example. 2785 Chelsea CS, in West Van. Listed in March for $2.448 million. Relisted in April for $2.28 million. Reduced in June to $1.998 million. Sold two days ago for $1.61 million. That’s a 34% drop after 116 days on the market
By the way, this sale price is a half million less than the appraised value.
Like I said, the mighty fall first.
Now, ready for the Letter of the Day? Just to be clear, I do not make these letters up. I do not pay people to write me. I do not drug them. As much as they beg, I do not dispense sexual favours. Not even to sweet, young Angela, who has a problem…
Hi Garth, I would love to get your input on my situation if you could spare the time.
I am 29 and single. I bought my downtown Toronto Condo in 2009 for $240,000 with a 35 year mortgage (accelerated biweekly) with a 3.69% 5 year fixed rate. I had an interest free loan from family for the down payment. As I recall this was the literal bottom out period before prices started to rise again. It is right on the outskirts of downtown bordering Liberty Village very close to where I work and play. I cycle everywhere to reduce costs. Right now my monthly housing costs are around $1,300 which includes hydro, mortgage and maintenance fees (which have gone up $100 in thee years with one hike and the new HST). I have recently placed my Condo on the market and originally priced it at $324,900 but have since reduced it to $299,999 due to lack of attention. It’s now getting a lot of views but no real offers yet and I am almost a month on the market now. My building seems to have a lot of competing units.
I work for a bank and I have a small amount of savings (less than $1500) and I make $1,317.83 bi-weekly. I do ok but large unexpected purchases can throw me off and require me to budget myself. I live pay check to pay check right with decent job security. But IT is never 100%.
After the price reduction and no real offers yet, my feet have been getting a bit cold… and I have been wondering if possibly renting my unit and finding a cheap $800 rental for myself would be a comparable plan to selling. My place could probably get $1500 a month at this time if I rented it out. Combining this with reduced living costs if I were to find a rental for myself I could start to save again. Also there is the potential loss in rental income to consider when rates finally start to go up.
I think I should still sell and move my money to another vessel but I am wavering a bit. Your advice on this would be much appreciated.
Angela, figure it out. After commission you’ll be lucky to walk away with enough to repay your family. Reality is, you’ll get closer to $260,000 and end up with less than ten grand. Renting it out is no option – you’ll net a paltry $200 a month while the condo sinks. A year from now you’ll owe more than it’s worth.
Three years of home ownership, and look where it’s put you. Savings of $1,500. No real equity. The potential of a big loss. Looking for an $800 pad. Still single. Writing to a pathetic blog.