What The Gambler Could Teach Us About Vancouver Real Estate
Kenny Rogers would have a lot to say about what’s been going on with Vancouver real estate these days.
In his iconic song, The Gambler, Kenny warns of the woes of an uncertain life and offers a few tips as to how to stay on the good side of Lady Luck. These lessons can be applied to any roll of the dice, from Hold’em, to penny stocks, to trying your hand at Vancouver real estate.
Logic does not seem to apply to the ebbs and flows of this market. For over a decade, Vancouver has continued to climb, doubling in value. When there was a global economic recession, the city took a small hit, but quickly rebounded, and then some - continuing its upward trajectory.
Since spring of last year, sales have been down. But prices are only 5% lower in East Van than they were at the peak.
What does this mean? What would Kenny do?
It’s an intuitive game. Predicting what will happen next is more of an art than a science.
Making Sense of Sales-To-Listings, The Kenny Rogers Way
To calculate sales-to-listings ratio, take the number of homes sold in a month and divide it by the number of active listings for that same month. For example, in March 2013 there were 2,347 sales divided by 15,460 active listings, equaling a ratio of 15.2 per cent.
This means that the market is in a healthy place. According to the number crunchers, this means that there is going to be a price rebound in 2014.
Historically, Vancouver REALTOR®s consider the market neutral when the ratio is between 15 and 20 percent.
A buyer’s market below 15 percent.
A seller’s market is above 20 percent.
That’s the science of it. We’re just out of a buyer’s market and moving towards a seller’s. If you’re buying in, you’re gambling that prices could still drop, but you might have hit that perfect 2008 lull all over again. If you’re selling, you might be perfectly positioned to cash out while the numbers are still up, but then again, that lull could work against you.
It’s become a crap shoot, an intuitive, educated guess that you need a seasoned player behind you that knows when to hold ‘em and knows when to run.
If you’re hedging your bets between holding onto the condo vs. going for the home, you can rest assured that the old motto rings true: the house always wins….but in Vancouver with our high prices, a better motto is-just buy what you can and get in as soon as you can so the market doesn’t get further and further out of reach! For more information on how to make the real estate market best work for you, please contact me!