Vancouver's high-flying market for detached houses has been sputtering, but $1-million is still considered an entry point.
For a glimpse into how the market has cooled off since the crazed bidding wars in the first half of 2016, look no further than what passes for a starter home these days – a $950,000 listing along a busy street and across from an industrial area.
The property originally went up for grabs in 2004 for $365,000 – touted as a "cute, well-kept, old character home" – though there were no takers.
After several more attempts to sell over the years, the asking price soared to $1,180,000 during the market's peak in mid-2016. Again, no purchaser emerged. The listing got snarled up in the slowdown sparked by the B.C. government's decision to introduce a 15-per-cent tax on foreign buyers in the Vancouver region in August, 2016.
In the months leading up to the foreign-buyers tax, many sellers were asking for the moon as they listed at prices far above assessed values. In the case of 1053 SE Marine Dr. on Vancouver's east side, the list price in mid-2016 was a 28-per-cent increase over the assessed value of $921,600.
The modest house is located across the six-lane street from the local U-Haul storage warehouse. Despite the drawbacks of its location, the residential property is a rarity within the City of Vancouver for detached houses – an asking price today that is less than $1-million.
Welcome to Vancouver's version of a balanced market for detached houses, in which prices are still expensive but the chances of buying an entry-level home for less than $1-million are expected to improve slightly in 2018 when compared with the previous two years.
Tom Ikonomou is the sixth real estate agent in the past 14 years who has been retained to attempt to sell the Marine Drive home.
Mr. Ikonomou listed the house for $999,900 in November, and lowered the price four times until it reached $929,800 in mid-January, but last week, he boosted the asking price on behalf of his client to $950,000.
The latest list price is 6 per cent lower than the revised assessed value of $1,012,000 in mid-2017. And instead of portraying it as a "cute" home like a previous agent did in 2004, the sales pitch now promotes a fixer-upper for renovators or a deal for developers to knock down: "Investor Alert! Listed well below assessment," the feature sheet blares. "Needs updating – value is in the land only. Could this be your opportunity to live in Vancouver?"
The lot measures 30 feet in width by 100.33 feet in depth, or slightly smaller than a standard lot. Technically speaking, BC Assessment pegged the land value at $991,000 on July 1, 2017, while the 112-year-old house rang in at only $21,000.
Mr. Ikonomou declined to comment on his client's strategy, but he said he stopped years ago trying to predict which way Vancouver prices are headed. "The real estate market is really dependent on two entities – the buyer and the seller. They determine market value. What's going to happen six months from now, I don't know," the agent at Re/Max City Realty said. "We can look in the past and see what the market has done, but we can never know what's going to happen tomorrow."
While condo prices have surged since early 2017 to set record highs last month, the market for detached houses has been choppy.
Real estate agent Steve Saretsky points out that the average price for detached houses sold with Vancouver's city limits has skyrocketed over the past two decades, though the market slipped in 2017. The average price rose from $441,587 in 1998 to $626,054 in 2004 to $1,140,999 in 2010, a year in which Vancouver played host to the Winter Olympics.
Vancouver saw the annual average price surpass $2-million for the first time in 2015, hitting $2,271,943, followed by a record high of $2,825,858 in 2016, before softening to $2,642,992 last year.
Brandan Price, an agent with Rennie & Associates Realty Ltd., said there has been a noticeable dampening of demand for detached houses since the hectic times in the first half of 2016. "There are negative vibes in the market now, including less consumer confidence because of higher interest rates. And some buyers will wait to see what happens with the provincial budget," Mr. Price said, referring to the NDP minority government's Feb. 20 budget that is widely expected to include measures designed help to tackle Vancouver's affordability crisis.
The proportion of detached houses with an assessed value of at least $1-million has dipped slightly in the City of Vancouver, going from 99.7 per cent in mid-2016 to to 99.4 per cent in mid-2017, according to Andy Yan, director of Simon Fraser University's city program. Mr. Yan cautions that it's buyer beware because listings for less than $1-million will have issues – a teardown, located on a busy street, situated on a smaller lot and/or have some problem related to location.
Sales volume for detached houses in Greater Vancouver remain sluggish, going from 1,047 transactions in January, 2016, to 444 in January, 2017, to 487 last month. The ratio of sales to active listings has tumbled, falling last month to 11.6 per cent – considered to be a buyer's market if that percentage stays at less than 12 per cent for several more months.
B.C. real estate agents consider it a balanced market when the ratio ranges from 12 per cent to 20 per cent. In the Vancouver region, it is deemed a buyer's market below 12 per cent for several months and a seller's market above 20 per cent, according to the Real Estate Board of Greater Vancouver.