experts: real estate column Monday, May 07, 2007

Supply and Demand - Is It That Simple?

Quality of marketing, experience can make the difference in a slowing market.

By Alan  Skinner

Having been involved in yet another "multiple offer" sale this past week (3 offers and finalizing over asking price) I had cause to consider (and discuss with a colleague) the nature of the dance between the "willing buyers" and the "willing seller". It finally came down to the question "Is it that simple?". I think there are two answers here, and, Im not intending to be facetious, but they are i) yes, definitely! and ii) no, not really. Before you think that this commentator has finally succumbed to overtraining for May 6th Vancouver Half Marathon, Ill clarify my thoughts. On the one hand, it is obviously this excess of demand over the available supply that has driven the speed of the sale and the seemingly unabated rise in prices. Where the "not really" comes in is the fact that, because a property is available for sale and there are many potential buyers, it isnt automatic that the maximum market value will be achieved. Consider this rather blatant illustration; assume Joan wants to sell her 2 bedroom West Van condo and her agent runs a 3 line classified ad in the Vancouver Sun advising a listing price of $450,000 and an open house this weekend, say Sun 2 4 pm. If one offer is presented to Joan and her agent at 6pm on Sunday, is it likely she will get that maximum (or fair) market price? Clearly the exposure is suspect in this illustration (if not the advice she is getting). It is precisely this "quality of marketing" (from asking price determination, to extensive and appropriate exposure, to assistance with the negotiation and the contract) that will determine an optimal sale result. This is why your Realtor must provide a detailed and well rationalized marketing plan before the property is listed for sale. Experience and quality do matter. [Click here for an example of marketing a 1 bedroom + den condo RUTHERFORD PARK PERFECTION Panoramas, Photos and details Large photos are my favorite ;)]

But will the excessive level of Demand continue to outstrip the level of Supply? It will clearly ebb and flow as we go forward but over time it will evidence increasing values. So says a recent study by that conservative institution CIBC. This new report, entitled Much Ado About Nothing: Canadian House Prices Not Based on Demographics Alone, predicts that Canadian house prices are likely to double in the next 20 years, and not drop as some analysts have feared. Benjamin Tal, senior economist with CIBC World Markets, says that while cyclical forces will continue to influence the housing markets during the next two decades, "our finding is that the widely held fear of a softening in housing market activity and structural downward pressure on prices due to the changing Canadian demographic landscape are largely unsubstantiated."

For a full text of this most interesting study see attached Adobe Acrobat article.

Now, the North Shore figures (N/Van 1st). With 4 mths under our belt, it appears clearer 2007 is continuing the upward price trend. The YTD (year-to-date) figure comparison shows mixed but reasonably comparable levels of sales as last year. Detached average prices +7% (on 5% fewer sales) and inventory of "resale" homes equal to a year ago. On the attached (t/hse and apt) front, sales numbers up 3% over 06 (t/hse) and up 8% (apt). Average prices up 11% (t/hse) and up by 14% for apartments. Inventory (t/hse) 6% higher than 06, and (apt) up from 06 by 45% (largely new construction). The lagging inventory in the 1st category combined with the evident demand will likely foreshadow a gently continuing rise in those prices.

In West Vancouver, detached number of sales down 17%. Average price up 11% and inventory now 26% higher than 06. On the condo side attached (t/hses) sold are down 31% over 2006; average price change up 10% based on 20 sales YTD. Active listings now up 19% over last year. Apartments reflect 8% fewer sales vs. 06; with average price up 1% (55 units sold) and active listings 14% lower. The North Shore demand is healthy with inventory still not nearly enough for a balanced market.

Again, visit my website to see and "hear" the new developments. I continue my commitment to keep you ... www.OnTopOfTheMarket.ca. This work in progress strives to be the "go to" site for North Shore Real Estate analysis and jumping off point for FULL market listing information.

To join the group subscribing to the e-mail version of this "update" - send a request now to alanskinner@shaw.ca (or from the website) and youll be assured receipt; phone me at (604) 988-7368 or visit www.OnTopOfTheMarket.ca




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Recent Articles by this columnist:

Keeping Realtors Honest
Tuesday, August 12, 2014


How well do we stack up?
Tuesday, July 29, 2014


Resistance to change and compliance delay
Wednesday, June 04, 2014


Of urban planning and municipal wisdom
Thursday, April 17, 2014


Yes, it's official - demand is rising
Tuesday, March 11, 2014


All articles by Alan  Skinner

Related Links:

Alan Skinner

Much Ado About Nothing: Canadian House Prices Not Based on Demographics Alone

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