Condo Buyers: Can I Afford the Condo I Love?
Condo buyers know that the housing market is officially as hot as it has ever been in Victoria. So do house buyers (yes, we can speak to this issue as we do have condo clients moving into the house market), and they are are faced with a big problem when they start their housing searches given that so many properties are selling over the list (asking) price. It’s a moving target for a house buyer because the list price doesn’t accurately reflect the final selling price.
Condo buyers are starting to see multiple offers in this hot Victoria real estate market.
Here’s an example to help: A house on Jasmine Avenue, a street in a nice yet modest neighbourhood in Saanich West, recently hit the market at $600,000. As is common practice in this housing market, no offers were considered until four days later. In the end, several offers all over list price were submitted. The home ended up selling unconditionally for $722,000! $122,000 is a heck of a lot more money than the list price.
So, how does a buyer decide on what price point they should be looking at when shopping for a property? If a buyer was pre-0approved to purchase a house up to $600,000, then is it even worth looking at a house listed at that price? Based on the statistics, it’s not. Year to date, houses in or near the core of Victoria (for the examples in this post, we’ve only included Victoria, Oak Bay, Saanich East, Saanich West, Vic West & Esquimalt) have sold for 102% more than the list price. 2% over list doesn’t seem that bad, but it’s important to keep in mind that offers 20% over the list price, like the one on Jasmine, are becoming more and more common.
As tempting as it is to write about how to set up a winning strategy to win in house bidding wars, we’ll save that for another day perhaps. Our focus here is the condo buyers in the condo market.
You’re probably asking yourself, what should I expect from the condo market? It certainly can’t be as crazy as the housing market, can it?
The answer is no, it isn’t… but it’s getting close. To give you an example, let’s look at the stats so you have a clear picture of what to expect when condo shopping. Year to date, there have been 694 condo sales, and those condos have sold at a sale price of 98.7% of the list price. That snapshot in time is interesting in itself, but what’s more important to consider is the upward trend we are in for condo sales. Consider that in January there were 119 sales and the list-to-sale ratio was 97.4%. In February, there were 173 sales and the list-to sale ratio was 98.4%. In March, there were 215 sales, and the list-to-sale ratio was 99.1%. As of today, April has seen 165 sales and the list sale ratio has crept up to 99.3%. The difference between January’s list-to-sale ratio of 97.4%, and April’s of 99.3% may not seem significant percentage-wise, but it is when one considers how much money a 1.9% increase represents. A 1.9% difference is equivalent to $6,511 (based on an average sale price of $342,721 YTD.)
So what does this mean for you as condo buyers? Before I make my conclusion, I’ll preface it with the fact that condo buyers should not assume that the list price of a condo (or any property for that matter) represents a value that can be substantiated. It’s critically important to do your research into recent sales in the building you are considering and nearby comparable buildings before deciding what you’re comfortable offering.
But I digress. Back to my point: how do you apply this knowledge? The good news is that you can actually base your condo search on listings that are priced at an asking price within your budget (unlike the house market). The bad news for condo buyers is that condo prices are definitely trending upward, and you should expect to see bidding wars occur on condos much more often than we did a few months ago.
If you have any questions or need an extra hand tailoring your condo search, give us a call and we’ll have one of our #CondoExperts get in touch.
– Tony Zarsadias*
*Personal Real Estate Corporation
Come meet your Condo Experts, and visit our modern new office, designed to enrich your buying and selling experience, located at 102-3645 Tillicum Road, Victoria, BC.
If you are going to be buying or selling a condo, now or in the future, get in touch with The Condo Group Real Estate Real Estate at 250-382-6636. In the meantime, search through thousands of listings in the Greater Victoria Area here.