Time to Sell in Vancouver?

[Brit]

I have a townhouse in downtown Vancouver that I bought in 2003 as a primary residence and turned into a rental residence in 2007. From a cashflow perspective it barely breaks even, a situation likely to get worse as interest rates rise on my variable rate mortgage. Not surprisingly I have considerable equity in the house. I also have a bad feeling about prices in Vancouver in the next 12 months.
My question to the collective wisdom that reads this site is;
"Should I sell the property now and use the equity to invest in better cashflow properties elsewhere?"

 

[myme22]

Hi Brit
Let me start of by a little disclaimer: by no means do I claim to be an "expert", but I just had a very relevant conversation with our realtor in Squamish, who is on of the top realtors here locally, but also works with the North Van office.
He currently has our house listed, and has listed his own residence as well (that should say something). In a nutshell, he expects a major (20%-30%) price adjustment over the next year or two.
As for the sale of our place in Squamish, we have now had it listed for 3 mos, and haven`t had any recent offers (the last 2 were about a month ago and fell through because they couldn`t get the financing). We did get a couple of showings, although that`s way fewer than before we dropped the price about 2 weeks ago...(!?)
I just had a really interesting strategy talk with our realtor, and he has already lowered the price on his own house twice within a month! He went on to tell me they are at the highest # of (new) listings in 7yrs in their NVan office, and the lowest # of sales in about 3yrs. A week ago, his assistant had shared with me the fact that her collegues in their team had had a bit of a jolt when they reviewed their weekly stats, which showed 37 new listings (in Squamish), with only 2 sales! Not surprisingly, he confirmed that prices have started to come down in general in Squamish.
There definitely seems to be smoke on the horizon, and I think we will now pretty soon start smelling it too... although, I am not looking forward to it...
That is before we`re in a position to buy!

My two cents...

 

[housingrental]

Sell

 

[TheVancouverMarket]

Yep, sell. Price sharp. Don`t overprice or you`ll lose money everyday it sits.

QUOTE (housingrental @ May 30 2010, 10:16 AM) Sell

 

[TheVancouverLife]

QUOTE (Brit @ May 29 2010, 09:22 PM)
My question to the collective wisdom that reads this site is;

"Should I sell the property now and use the equity to invest in better cashflow properties elsewhere?"






Hello Brit,



I think you answered your own question. If the primary reason to have the property is to have better cash-flow, and if you are barely breaking even (and getting worst) then it is not a good investment. It would be wise to transfer your equity into better cash-flow properties elsewhere.



The Vancouver market is correcting itself and there is downward pressure on prices over the next while.



Have a look at Don Campbell's top 10 places to invest in Canada. If you'd like to have the investments close to home Surrey and Maple Ridge made the top 10 list for BC...



If you need any assistance I offer special rates for REIN investors.



Hope this helps...



Alan

 

[doblo7]

I`m really interested to read this because my family and I are planning to move to the Vancouver area within the next 12 months if all goes according to plan. It sounds as though we should get a really good deal!

 

[housingrental]

No you should rent
Wait
Learn the market
Once an adjustment, take action

 

[Thomas Beyer]

QUOTE (doblo7 @ Sep 13 2010, 06:36 AM)
.. we should get a really good deal!


If you can pay cash and close quickly .. and have researched the market very very well ..



Vancouver is HUGE .. over 2M people !!!

 

[TheVancouverMarket]

You could get a good deal. The key thing is to have a crystal clear picture of the supply-demand trends in any given neighbourhood (and price range) for the last 90 days. This will tell you if sellers in the area are under pressure. Then you`ll need someone to take a critical look at the product your buying (realtor and/or inspector) to see if it is really a deal or a lemon. Then you`ll need a tough negotiator.

The next 12 months seem like deal territory to me. I am selling my current home and planning to rent for a year or more to see what happens to prices.


QUOTE (doblo7 @ Sep 13 2010, 06:36 AM) I`m really interested to read this because my family and I are planning to move to the Vancouver area within the next 12 months if all goes according to plan. It sounds as though we should get a really good deal!

 

[Thomas Beyer]

QUOTE (TheVancouverMarket @ Sep 13 2010, 06:16 PM)
You could get a good deal. ..




What is "a good deal" ?



It is not so easy to find the right combination in the real estate love triangle of: asset type, location and price !!

 

[RorySutter]

Congratulations on a break-even Vancouver investment property. Not as easy as it sounds in one of North America`s highest valued markets and not easy to replicate if you plan to reinvest your equity here and don`t have a significant downpayment.

This discussion started in May 29, 2010 and we have not yet realized a major decline in Vancouver prices. Yes listing inventory levels we`re up for a time, but the number of new listings and total active listings have been trending downward by as much as 30% since April.

Last month average residential prices in Greater Vancouver were still up 12% over August 2009.

Cameron Muir, the Chief Economist for the BCREA, suggests that the end to the buyer`s market may be on the horizon, but the truth is that markets will always swing back and forth and change equals opportunity.

As for dire market predictions I will resist the temptation to take a position as my job as an investor is not to be right, my job is to make money in spite of the cycle. When you believe the sky is falling you will look for reasons to validate your position, which leads to fear, inaction, or hasty decisions. For example, we are not selling our primary residence here as my family needs a nice place to live and we can weather any swings.

I concur that Metro-Vancouver is over-valued according to the fundamentals, but it has a few wild cards in its favor such as 40,000 arrivals each year, which translates into 16,000 to 18,000 residences and includes 55% of Canada`s investor immigrants, a 2% vacancy rate, low mortgage rates that are holding, and barriers such as water, mountains, agricultural land reserves and the U.S. border that drastically limit the availability of developable land.

According to Tsur Somerville from the UBC Centre for Urban Economics and Real Estate the higher the population of a city the higher the house prices and our population of two million will have the same house prices as a metropolitan area of seven million because people have to commute the same distance.

In recent months some of Canada`s biggest investors and REIT`s have been gobbling up multi-family assets here because of these factors.

As for advisors, a good question to ask is will this person profit when I sell or buy a piece of real estate or any other investment for that matter.

Personally I would look at your situation much more closely before rendering an opinion, but you would be wise to stress-test all your investments for higher interest rates in the future.