Home Sellers Continue to Outnumber Buyers in
Greater Vancouver’s Summer Housing Market

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Home sale activity remained below long-term averages in the Greater Vancouver housing market in August.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties reached 1,649 in August, a 30.7 per cent decline compared to the 2,378 sales in August 2011 and a 21.4 per cent decline compared to the 2,098 sales in July 2012.

August sales were the second lowest total for the month in the region since 1998 and 39.2 per cent below the 10-year August sales average of 2,711.

“Home sales this summer have been lower than we’ve seen for most of the past ten years, yet we continue to see relative stability when it comes to prices,” Eugen Klein, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,044 in August. This represents a 13.7 per cent decline compared to August 2011 when 4,685 properties were listed for sale on the MLS® and a 15.8 per cent decline compared to the 4,802 new listings in July 2012.

“For sellers it’s critical to work with your REALTOR® to understand today’s market and to develop the best strategy for selling your home,” Klein said. “On average it’s taking about two months for a home to sell on the MLS® in Greater Vancouver today.”

At 17,567, the total number of residential property listings on the MLS® increased 13.8 per cent from this time last year and declined 2.8 per cent compared to July 2012.

“Today, our sales-to-active-listings ratio sits at 9 per cent, which puts us in a buyer’s market. This ratio has been declining in our market since March when it was 19 per cent,” Klein said.

The MLSLink® Housing Price Index (HPI) composite benchmark price for all residential properties in Greater Vancouver is $609,500. This represents a decline of 0.5% compared to this time last year and a decline of 1.1% compared to last month.

Sales of detached properties on the MLS® in August 2012 reached 624, a decrease of 38.8 per cent from the 1,020 detached sales recorded in August 2011, and a 30.1 per cent decrease from the 893 units sold in August 2010. The benchmark price for detached properties increased 0.2 per cent from August 2011 to $942,100.

Sales of apartment properties reached 725 in August 2012, a 24.1 per cent decrease compared to the 955 sales in August 2011, and a decrease of 22.5 per cent compared to the 935 sales in August 2010. The benchmark price of an apartment property decreased 0.9 per cent from August 2011 to $370,100.

Attached property sales in August 2012 totalled 300, a 25.6 per cent decrease compared to the 403 sales in August 2011, and a 19.8 per cent decrease from the 374 attached properties sold in August 2010. The benchmark price of an attached unit decreased 1.9 per cent between August 2011 and 2012 to $462,300.


Courtesy of the Real Estate Board of Greater Vancouver 

When you have found a home you are interested in buying, I can walk you through the process of drafting up an offer to purchase.  I will communicate the offer to the seller or the seller's real estate agent for you.  Some properties are in demand and you will not be the only interested party making an offer.  I will be able to assist you in generating an offer that is reasonable and protects your interests using specified terms and conditions.

1. Terms: An offer includes certain "terms", which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller's mortgage (assumability).

2. Inclusions and Exclusions: These are specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures and decorative pieces.

3. Deposit: A deposit is provided from the buyer to the seller as a token of the buyer's assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. I can assist you in proposing a certain and appropriate amount for the deposit.

4. Conditions: Items that are usually put in place to protect a party's interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes.

5. Possession or Closing Date: This is usually the date that the legal ownership of the property transfers from the seller to the buyer and, unless otherwise noted, when the funds for the purchase are concluded.

6. Purchase Price: This is the amount that the buyer is offering to pay for the property.  The price is usually dependent on market conditions and may differ from the seller's current asking price. 

Setting a realistic price for your home that reflects current market values will help sell your home quickly and for top dollar.  When you price your home properly, you increase the chances that the offer you receive will nearly match your asking price, and that there will be competing offers—which may net you even more in the long run. 

Your property has the best chance of selling within its first seven weeks on the market.  And, studies indicate that the longer a property stays on the market, the less it will ultimately sell for.  A property priced 10 % more than its market value is significantly less likely to sell within this window than a property priced close to its actual market value.  About three-quarters of homes on the market today are 5-10 % overpriced.  Sellers will usually over-price their homes by this margin if, either, they firmly believe the home is worth more than what the market indicates, or if they want to leave room for negotiation.  Either way, if you choose to over-price your home by this amount, you run the risk of increasing the amount of time your home spends on the market, and decreasing the amount of money you’ll ultimately receive. 

At the other end of the selling spectrum are houses that are priced below a fair market value.  Under-pricing often occurs when the owner is interested in a quick sell.  You can bargain on these homes attracting multiple offers and ultimately selling quickly at—or above—the asking price.

The knowledge and skills of an experienced Realtor will be invaluable when determining an appropriate asking price.  It is the job of your Realtor to know the current market and market trends inside and out, to be closely connected to the real estate market at large, and to be aware of other properties currently for sale in your particular area.  Based on this range of connections and knowledge, your Realtor should counsel you on how to price your home properly in order to attract the highest price possible, in the shortest period of time.

Before approaching this process, you should first do some homework yourself.  You’ll need to know the workings of the current market before you even begin to think about setting an asking price.  The market will always influence a property’s value, regardless of the state of a home, or its desirability.  Here are the types of market conditions and how they may affect you:

1. Seller’s Market:

A Seller’s market is considered a “hot” market.  This type of market is created when demand is greater than supply—that is, when the number of Buyers exceeds the number of homes on the market.  As a result, these homes usually sell very quickly, and there are often multiple offers.  Many homes will sell above the asking price.

2. Buyer’s Market:

A Buyer’s market is a slower market.  This type of market occurs when supply is greater than demand, the number of homes exceeding the number of Buyers.  Properties are more likely to stay on the market for a longer period of time.  Fewer offers will come in, and with less frequency.  Prices may even decline during this period.  Buyers will have more selection and flexibility in terms of negotiating toward a lower price.  Even if your initial offered price is too low, Sellers will be more likely to come back with a counter-offer. 

3. Balanced Market:

In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of Buyers.  When a market is balanced there aren’t any concrete rules guiding whether a Buyer should make an offer at the higher end of his/her range, or the lower end.  Prices will be stable, and homes will sell within a reasonable period of time.  Buyers will have a decent number of homes to choose from, so Sellers may encounter some competition for offers on their home, or none at all.

Remember, a Realtor is trained to provide clients with this information about the market, helping you make the most informed decision possible.  The right Realtor will guide you through the ups and downs of the market and keep you up-to-date with the types of changes you might expect. 

Evaluate your house in the other main areas that affect market value:

1. Location:

The proximity of your home to amenities, such as schools, parks, public transportation, and stores will affect its status on the market.  Also, the quality of neighbourhood planning, and future plans for development and zoning will influence a home’s current market value, as well as the ways in which this value might change. 

2. Property:

The age, size, layout, style, and quality of construction of your house will all affect the property’s market value, as well as the size, shape, seclusion and landscaping of the yard.

3. Condition of the Home:

This includes the general condition of your home’s main systems, such as the furnace, central air, electrical system, etc., as well as the appearance and condition of the fixtures, the floor plan of the house, and its first appearances.

4. Comparable Properties:

Ask your Realtor to prepare you a general market analysis of your neighbourhood, so you can determine a range of value for your property.  A market analysis will provide you with a market overview and give you a glimpse at what other similar properties have been selling for in the area.

5. Market Conditions/ Economy:

The market value of your home is additionally affected by the number of homes currently on the market, the number of people looking to buy property, current mortgage rates, and the condition of the national and local economy.

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Courtesy of Canadian House & Home.
 

After putting in a huge amount of time and effort to get your home looking good and ready to sell, your hard work is finally going to pay off:  your home is on the market—you’re ready to begin showing.  Your house should always be at-the-ready for a tour, as agents may bring clients by with very little notice.  If they catch you unprepared and you aren’t able to show the house on the spot, you could be losing out on a sale.  Concentrate on the following areas to ensure your home is ready to show:

1. People

Homebuyers may feel like intruders if you are present while they view your house, and this will affect their overall impression.  Consider taking the opportunity to visit the local coffee shop, go shopping, or take the kids to the park.  If you can’t leave while the house is being shown, try to be as unassuming as possible.  Do not move from room to room.  Don’t offer information, but make yourself available to answer any questions the agent or buyers might have.

2. Lighting

When you know an agent is bringing someone by, make sure all of the drapes and window shades are open to let in as much daylight as possible, or—if the showing is taking place at night—to create a look of comfort and warmth when viewed from the outside.  Open all the doors between rooms to create an open, inviting feel.  Turn on all lamps and overhead lights, even during the day.  Keeping lights on during the day softens the harsh shadows sunlight can create in a room, and illuminates dim corners.  During nighttime showings, make sure all outdoor lights are on, as well as pool lights.

3. Cleanliness

Scan the floor for debris—newspapers and magazines tend to accumulate without our noticing.  Make sure all the counters are clutter-free.  Empty the kitchen garbage before every showing, particularly if the garbage can doesn’t have a lid.  Keep everything freshly dusted and vacuumed.  Beds should be made and bathrooms cleaned (toilet lid down).  Every room should sparkle.

4. Scents and Sounds

Avoid using scented sprays before showing your home.  Some people simply won’t enjoy the smell, and others may be allergic.  If you want to make a room smell pleasant, consider a potpourri pot or a naturally-sourced aroma. 

If you or your family is home while the agent is giving a tour, try to stay as quiet as possible.  Turn off the television and the blaring radio.  Put on some soothing background music at a low volume.

5. Pets

If you have pets, make sure your listing agent includes this in your listing on the Multiple Listing Service.  This way, no one will be surprised by a furry welcome if the agent shows the house while you’re not there.  If you know someone is coming to tour the house, ideally you should take the pets with you, or arrange to have a friend or family member take them.  If this isn’t possible, keep dogs in the backyard, preferably in a penned area.  Try to keep indoor cats in one room while people are touring the house, and put a sign on the door.

• Make a list of all the features you want in your new home such as number of bedrooms, bathrooms, proximity to schools, shopping and workplace. 

• Be sure you can afford your home. Your monthly housing costs should not be more than 32% of your gross monthly income and your entire monthly debt load (which includes other debts such as car loans and credit card payments) should not be more than 40% of your gross monthly income. 
   
• Calculate your other monthly living expenses such as food, clothing, transportation, personals and childcare to ensure you can afford your mortgage payments. 
   
• Call a REALTOR® in your preferred area. They are trained professionals with knowledge about local conditions and the housing market in general. Through the Multiple Listings Service they have access to virtually every property listed for sale in the province. Your REALTOR® can narrow down your search and provide you with information on properties for sale and those that have recently sold. This will allow you to make informed decisions about pricing. Licensed by the province and members of local real estate boards, REALTOR® must adhere to high standards of ethical behavior. 
   
• Obtain a pre-approved mortgage form the lender of your choice. This will help you determine the price range you should be looking in. With a pre-approved mortgage, your lender will guarantee the interest rate for up to 90 days. 
   
• You may wish to have an independent appraisal done of a property before you offer a price. It can keep you from paying more than the market value. 
   
• Ask your REALTOR® for a copy of the Property Condition Disclosure Statement. This document is completed by the sellers and ensures the buyer gets complete information about the property they are about to purchase, and alerts buyers when they need to do more research on a property. 
   
• If buying a new or existing condo, look beyond style and amenities and investigate whether the construction is of good quality. You can ask for a copy of the minutes to Strata Council Meetings to determine what kind of problems the condominium has had in the past, and the expenses. 
   
• To assess potential water leakage problems, visit a condominium project immediately after a rainfall and check to see if flat areas such as roof deck and walkways have large pools of standing water on them. All building surfaces except specially designed ponds should drain freely and be immediately clear of water after a rainfall. 
   
• It is always a good idea to have the home inspected from a professional home inspector. An inspector's written report should include how well-built the home is and whether any repairs are necessary and the estimated costs. 
   
• Don't forget about other costs when you buy your own home such as legal fees (they will most likely be at least $500), property taxes and the GST (if purchasing a new home).

I came across this article and I thought it was very interesting and helpful for first time homebuyers.  Hope you find this useful!

-Alisa

The Upgrade Cycle

It definitely varies by geographic area — if not by specific neighborhood — but a lot of folks in my area will buy a townhouse or condo as their starter home. After about three years, they’ll start looking for a bigger place to upgrade to, either a bigger townhouse or a single family home. Depending on the family, that upgrade cycle can go through a couple of times as people work their way up to a house that they are happy with and is big enough for their family.

The thought seems to be that if you’re making a little more money every year, by three years out you’ll be in a position to afford a bigger house. And everyone knows assumes that buying is more cost-effective than renting — as long as you’re paying down the principal on your mortgage, you’re going to come out ahead.

But with an upgrade cycle of about three years, there’s a good chance that you will lose money.

The Five Year Rule

When you purchase a house, the general rule is that you want to be sure to be in the same location for at least five years. Otherwise, financially, you’re probably going to take a hit.

The first hit is your closing costs. Every time you go through closing — buying and selling — money hits the table. Depending on where your house happens to be, the buyers and sellers pay different amounts, but everyone pays something. We can easily be talking about thousands of dollars and limiting how often you have to pay out that kind of money is always a good idea.

But you take a second hit when you look at your mortgage statement to see exactly where those monthly checks you send in are going. The way mortgages are structured, you pay much more interest in the first few years that you own a house. Usually, it isn’t until you’re about five years into paying down that mortgage that you’ve made enough progress on the principal that the math actually works out that you’ve gotten a better deal than paying that monthly check to a landlord.

David’s Note: When you take out a mortgage, you are paying an interest rate on what you owe. So, in the first year, when the principal is highest, the interests you need to pay is the highest as well. However, since the monthly payment is the same through the loan (at least with a fixed rate mortgage anyway), more of the payment will be used to cover the interests payments, and therefore less goes towards the principal. As your principle goes down, your interests payments will go down, leaving more of your check to go towards the principal.

If you can wait at least five years to move, you’re in a better position to be ahead of the game.

Defeating the Five Year Rule

Five years is a generality. If you add in a couple of other factors, you can make buying a house that you don’t plan to stay in long-term a better choice.

The biggest factor is how much you’re going to pay on your mortgage. A lot of people buy as much house as they can afford, according to what lenders offer them. That’s usually the upper end of what you can financially manage. If, however, you buy at the lower end of what you can afford and make extra payments, you can pay off a bigger chunk of the principal. You need to run the numbers for the specific house you’ve got your eye on, but you can often come out ahead.

You may also consider buying a house that you won’t stay in for five years — but that you also won’t turn around and sell. It’s not out of question to purchase a home, start paying it down and fixing it up so that you can turn around and rent it out. You do need to be careful that you’re choosing a house that you can afford even if you don’t have a renter, on top of a mortgage for your next home. There are plenty of other arrangements that can work out similarly, but you need to study up on real estate before making such a choice.

[Click here for a discussion on whether you should buy an investment property]

But if you’re buying just on the basis of what the bank says that you can afford and you don’t want to think about it, stay in the rentals until you’re ready to spend at least five years in the same home.

David’s Note: Here is a quick and dirty formula that you can use to help you figure out whether it’s better to buy or sell that works with any duration of ownership. Try to determine the answer to: Seller and Buyer Agent Fees When You Sell + Purchase Price + Maintenance Cost for the Time of Occupancy + Interest Paid on Mortgage + Investment Gains from Your Down Payment + Taxes Paid Such as Property Tax + Closing Costs – Selling Price. This number could come out negative or positive, but if it’s lower than the rents you would have paid during the same time frame, then you would be better off buying. If the number is higher, meaning that the selling price wasn’t high enough to cover all those costs, then renting would be the more cost effective choice.

Of course, the big question mark is your selling price, which you sort of have to estimate. Also, note the obvious that the higher the selling price, the more buying makes sense. The five year rule is actually pretty arbitrary, but if you assume that the long term trend of real estate is up, do you see why buying makes sense the longer you stay in the home?

Courtsey of moneyning.com
Article found here. 

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 Thought this was a useful article for first time home buyers!  

Why Do You Need a Home Inspection?

Home Inspections are an opportunity for you to learn a lot about your home before you finalize the purchase. In a Home Inspection, Home Inspectors are performing two key functions:

• Documenting The Home - Home Inspectors identify the types of building materials and the condition of those materials used in constructing your home. By providing you this information in a written report, you will learn what maintenance needs to be done and when some home systems may need replacing. Insurance companies and occasionally financing companies may want to know types of electrical wiring, plumbing materials, and that the home is in good order all of which you will know from your inspection report.

• Deficiencies - Deficiencies are concerns your Home Inspector raises in an inspection where parts of your home are beyond regular maintenance. Examples of deficiencies range from badly neglected exterior paint to failures in building structure. Deficiencies identified in a home inspection tend to need immediate attention.

When you hire a Home Inspector, you are buying an education and custom report on the home you are buying. You will know what major expenses may be coming up near future, what minor maintenance items need to be completed, and you have an opportunity to ask questions to an expert about various systems in your new home you may not be familiar with.

Does a Home Inspector Pass or Fail a Home?

Home Inspectors do not pass or fail homes. Your Home Inspector will educate you on any concerns they may find and help you understand your options. No home is perfect under the lens of a home inspection and all deficiencies, except location, in homes can be corrected. It is up to you as the buyer of the home to decide for yourself if the home passes or fails ahome inspection.

Who Gets a Copy of the Home Inspection Report?

Only you, our client, get a copy of the home inspection report. We even need your permission and direction to issue it to another party, typically your Realtor. We don’t disclose anything we find in the home (written or verbally) to the seller, the sellers agent, or anyone else unless there is some type of life safety concern such as a gas leak. When we complete our home inspection report, you are the ‘owner’ of the report and can distribute it as you see fit.

How Do I Hire a Good Home Inspector?

There are 4 things you should look for in a good home inspector:

• Communication Skills - You need a Home Inspector that can clearly communicate with you about your home inspection results and can also clearly answer your questions so that you understand the answers. A Home Inspector with 20 years of experience is not worth anything to you if they cannot articulate to you their concerns and options you have. Look for home inspectors who publish material in newspapers or blogs as this is likely a good sample of their communication in person.

• Valid License - In British Columbia, all Home Inspectors are required to be licensed by Consumer Protection BC. You can confirm an Inspectors license at the Consumer Protection BC website.

• CAHPI (BC) Member - The Canadian Association of Home and Property Inspectors is the oldest Canadian professional home inspection association and the only association that can legally give out the RHI (Registered Home Inspector) designation to its members. CAHPI (BC) members can be verified at the CAHPI (BC) website.

• Expertise - You want a Home Inspector who has the core knowledge to protect your investment and provide you a detailed report. CAHPI (BC) membership is a great way to know your home inspector has the expertise they claim to have as it tests all its members before allowing them to practice Home Inspections.

Final Thoughts

Buying a home can be both rewarding and risky. Hiring the right Home Inspector will give you confidence in your purchase and allow you to buy your home with your eyes wide open.

Courtsey of James Bell - Owner/Operator of Solid State Inspections Inc.
Article found here.