Burnaby real estate update
Metro Vancouver House and Condo apartment prices both dropped in August but is that predominantly the influence of the City of Vancouver? While Burnaby condo prices are still rising steadily with a little dip this summer, Burnaby house prices have been flat since mid-2016 and have dropped significantly in recent months. Will people lose interest in buying real estate if it only appreciates by 1-3% annually? What about if it loses value over 5 years?
In Burnaby, condos are king
The benchmark price for a Burnaby condo ranges from $650,000 to $750,000. To a first-time homebuyer East Vancouver looks much more affordable. Perhaps that explains why the number of condos exchanging hands in Burnaby has dropped so dramatically.
Condo sales are down 43% in Burnaby compared to 2016, that’s cause for concern since prices have also leveled off in the past few months. A further weakening across the Metro Vancouver condo market could impact Burnaby condo prices. After all, why would an investor buy a condo rental for $700,000 in Burnaby if a comparable one is available in East Vancouver for $550,000? As well, just recently the condo market has become more balanced, so sellers no longer have the upper hand. There are only enough condos available for sale to last almost 5 months at the current rate of sales.
Burnaby houses look poised for a drop
House prices in most of Burnaby have been flat since 2016 while City of Vancouver prices have been dropping. Is it reasonable for a house in Burnaby to command $1.6 million when an East Vancouver home can be had for $1.5 million? Should crossing Boundary Rd. command a price premium of $100,000? East Vancouver home prices peaked in November 2017 and if they continue to drop then Burnaby home prices will follow. Price trends aside, Burnaby has seen a 51% drop in house sales since 2016!
With about 10 months of inventory for sale in Metro Vancouver, the Burnaby house market provides buyer’s an advantage. That means buyers are in a position to negotiate prices down and ask for concessions. This also means we will likely see fewer bidding wars.
Buyer vs. Seller’s Advantage
In the real estate industry, there are metrics used to indicate when buyers and sellers have more negotiating power. As a rule-of-thumb, less than 5 months of inventory (i.e., homes for sale) means it is a “Sellers Market” and the seller has the upper hand in a price negotiation. When there’s more than 9 months of inventory for sale, it’s a “Buyers Market” and buyers have more negotiating power. The theory is that buyers know that it could take over 9 months to sell the home, so the seller should probably drop the price to make sure the buyer in front of them purchases the home, or they could potentially be having open houses for 9 more months.
There is still a lot of uncertainty in real estate these days. The markets for both houses and condos in Metro Vancouver are trending toward a position where buyers have negotiating power, and this is true for Burnaby as well. If you are going to try to time the market, then this is a time for sellers to pull the trigger before conditions soften further. For buyers, it seems prudent to wait and see.
If your family is growing and you need a larger space or simply a place to call your own, or you believe timing the market is pointless, then take advantage of these tips to reduce your risk.