Comox Valley homes sellers and home buyers often ask if it a good time to buy or sell Comox Valley property. Less common is a consistent answer to this question. Why is that? Probably because it is a very difficult question for people who are not either the home buyer or seller to answer with any degree of certainty. Let’s explore why this is.
The question of certainty itself is interesting. I have come to realize that only three things are really certain. First, as humans, we all have a definite lifespan. Second, uncertainty is often a certainty of life. Third, change is almost certain in life. When placed in a real estate context, real estate markets do change, but predictions about future property market conditions are rarely certain.
It is common to think of the Comox Valley property market as either a buyer’s market, a seller’s market, or a neutral market. While some may argue that the difference lies in quantitative aspects such as the number of months of total inventory, one would be hard pressed to find a precise definition or general agreement on a specific definition on any of these descriptions. I prefer to think of these markets this way:
Comox Valley buyers market – listings (supply) exceed sales (demand) on a sustained basis and inventory is larger than normal and increasing.
Comox Valley sellers market – sales (demand) exceed listings (supply) on a sustained basis and inventory is smaller than normal and shrinking.
Neutral market – listings (supply) and sales (demand) are comparable and inventory is about normal
Each of these types of market presents challenges to either home buyers or home sellers. Generally, buyers are looking for location, features in a home and value. Generally, sellers are looking for top dollar for their home when they sell.
In a buyer’s market, sales will be more challenging. For example, the Comox Valley real estate market is currently a buyer’s market. The total number of Crown Isle listings are up. The Comox Valley real estate market started off the month of January with a higher number of new listings than last year (up 38%) and sales were up 13%. This initial activity has slowed and overall market activity to the end of March is comparable to last year but sales are lagging listings. The number of new listings this year is almost identical to last year (329:328) but total inventory is up about 4.4% (1356:1298). Overall sales are down about 10% and the median price of sales is down very slightly ($282,000:282,500). Single family home statistics follow: New listings down about 8% (155:168), median price down about 7% ($348,000:323,000), Single family home sales down about 22% (54:69) and total inventory up just over 1% (491:485). Placing these short term statistics into perspective, overall sales at the end of 2011 were down nearly 30% from the peak in 2007.
While many people may conclude that this means it is a good time to buy but not to sell, this is not necessarily the case. Yes, this type of market generally represents a good time to buy. However, this type of market may also represent an opportunity for sellers. Having said this, sellers need to pay close attention to preparation, presentation and price in this kind of market. These three elements are important to potential buyers for them to conclude that the home represents value in this type of market. The goal of sellers should be to realize a sale at close to market price and these elements may determine whether or not the home sells at all.
Market price is mostly determined by the type of market and what home buyers are willing to pay. If a seller lists too high they may not get showings. Listing even a bit above market price may get showings but may not get offers. First and foremost, sellers should look objectively at their home through the eyes of the buyer. When sellers are emotionally attached to a home or if they have invested a lot of money in a home, their perspective on what a home is worth may not be consistent with the perspectives of potential buyers who have a lot to choose from. It is very important for a home seller to list at or even slightly below market price in a buyer’s market. For a full explanation of why this is important, I would be pleased to discuss this with potential clients along with the strategies and plans that are appropriate to this type of market.
People can often look at the world in one of two ways – the glass is half empty or the glass is half full. Those who see the glass as half empty may have a more pessimistic view of a buyer’s market as a seller. Those who see the glass as half full may see opportunities that others do not. Having said this, the optimism necessary to see these opportunities must be tempered and not “rose colored”. I prefer to be cautiously optimistic about the opportunities for a seller in a buyer’s market. To take full advantage of a buyer’s market as a seller, one should think and plan strategically, and execute tactically. Making a sale is a strategic consideration, while price is more of a tactical one. As the saying goes, it may be better to make a sale and make a bit less money than not make a sale at all (especially if the cost of maintaining the home for another year or more is significant). This is similar to the old adage that a bird in the hand is better than two in the bush. This often applies to waterfront homes nearest the ocean with a mountain view in a down market.
Having discussed current Comox Valley property market conditions, how can future market conditions be forecast? Generally, except for people who claim to be Clairvoyant, people forecast future events and conditions based on an assessment of past conditions and trends. As stated earlier, real estate market conditions are typically cyclical. The challenge is; however, to accurately predict the length of a specific cycle. Predictions and forecasts related to real estate markets are generally no more accurate than weather forecasts or predictions about the stock market. With many different predictions and forecasts, history always has a tendency to show that someone was right, but afterwards and not before. So where does this take us with respect to the Comox Valley real estate market?
The Way Ahead
What is known is that the current market is a buyer’s market. What is certain about the future is that the market will change, but how quickly and to what type of market is only an educated guess based on past cycles and trends. My sense continues to be that 2012 will be a “settling” year with some recovery but little substantial change absent some significant unforeseen event or influence. This market offers some very good opportunities for buyers given the large inventory. It also offers some opportunities for sellers who have their homes appropriately prepared, presented, and priced within the context of a strategy and plan appropriate to their home and this market.
Thinking of buying or selling Comox Valley real estate, contact Brett Cairns of RE/MAX Ocean Pacific Realty to get started on meeting your real estate needs.