Flip or Hold Vancouver Real Estate?
Date: April 18th, 2008
Shall we Flip? or shall we Hold real estate?
Our Asian flipping property culture has recently spreads to Canada in the past few years during our red hot real estate market. So, is the market still hot? or has it started to cool off? Well, as we discussed before, we are now in a balanced market. I have recently noticed some Sellers offer bonus to the buyer's agent on their listings. What it means is trying to attract buyer agent to bring the buyer to view their property & hopefully this will motivate the buyer's agent to persuade the client to buy the property because of the extra incentive. However, Buyers need to know that their agent needs to do commission disclosure. Bonus ranges from $1000 on a condo listing to $5000 on a detached house listing. This scenario never happened during our red hot market. On another hand, a 40 yrs old detached house new listing in Lynn Valley, N. Vancouver priced at $724,900, sold in 6 days at $839,000 on April 7th. Therefore, in order to draw buyer's attention, well pricing or even under pricing the property is a way more effective way to sell a property than adding bonus on the listing. I've also noticed many expired listing with discount commission got relist again with more attractive commission.
By province, Ontario showed the most stable prices, with total inflation reaching just 0.8 per cent for the past 12 months – a reflection of that province's slowing economy. One Seller in Toronto is selling his property in a very innovative way. Global News on April 17th shown this seller listed his house at $1. Well, no need to say it attracts lots of interests, it even drawn the media attention. The Seller obviously expects multiple offers to happen.
Kelowna has a lot of condo projects recently completed. Mostly were bought by "Flipper/investor" hoping to make some easy profit. 1/3 of the new completed projects were up for sale. Listings has gone up 93% from 500 listings in 2007 to almost 1000 listings in 2008. Flippers have to slash their profit margin if they wish to sell. They will not loose money but they won't be making the type of profit they were expecting when they bought it couple of years ago. However, since Kelowna's vacancy rate is awfully low, if investors are not satisfy with their returns, they can always keep it as rental units.
In Alberta, prices came back down to earth. Lots of investors are pulling their money out from Alberta & move to Saskatchewan where it shown the highest inflation in the country @ 3.2%, pushed by a whopping 46.7% annual increase in the costs of maintaining a home there. As I mentioned before, Saskatchewan is in the midst of a raging real estate boom.
Well, I personally never recommend "Flipping property" in Canada. In order to make real profit, I always recommend to hold property. Prime example is my Shaughnessy client. Bought their property 30 years ago at $287,000, sold it last month at $2,010,000. However, it totally depends on the investor's personality and his investing habits.
To understand what type of investment is suitable for you. Call Tina Mak at 604-412-5860 or visit her website at www.TinaMak.com to make a Free consultation appointment.
