Saturday, September 15, 2012

Vancouver luxury market -- it's only worth what someone will pay

Luxury homes are not the best indicator for the market in general because the price is always detached from fundamentals. But sentiment is easier to gauge because the market is smaller, is more closely watched, and the swings in price are more volatile. Vancouver real estate’s million-dollar question: What sells?
Mr. Christiansen, who routinely sells houses worth millions of dollars, hasn’t seen an August this bad for sales in his entire career. He says there were only 24 sales in West Vancouver in August, compared to 80 last August, and the usual August average of around 50.
So, at normal sales rates there would be inventory of 10.6 months. But at half that sales rate, the current reality, there is 20+ months of inventory. Luxury homes are generally less substitutable for one another, but that's a very crowded market. Too much choice leads to buyer complacency.
Still, he’s wary of pricing low to start a bidding war, because these days, the bidding war might not happen. There are currently 530 houses listed in West Vancouver and buyers – about 50 per cent of them from Mainland China, according to anecdotal realtor input – are choosy.
There’s the trick. Most sellers are living with yesterday’s sales figures in mind, and they want the old top dollar. The reality is, a house is only worth what this current market will pay for it – and sometimes, that’s anybody’s guess.
It's only worth what someone will pay for it.

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