Things are heating up again in Vancouver for what may turn out to be another banner year for our spring real estate market! How do we know this? Because all of sudden, we are seeing multiple offers on many of our listings. There has been a definite shift in the buying mentality from last fall to now. Two properties we had for sale since before Christmas were getting a decent number of showings (how we measure interest level) but no acceptable offers. But come January, all of a sudden both properties ended up in multiple offer situations – getting 3 offers each!
What happened, you may ask?
Well, we think it really does seem to all come down to Buyer Mentality. What we have noticed happening in Vancouver over the last few years is that come May, we start to see an accumulation of listings on the market while at the same time, the number of Buyers starts to dwindle —this is a normal spring market cycle. This cycle, caused by the laws of supply and demand, then leads to a slight reduction in values. The media then picks this up and splashes this “negative” information all over the news. Buyers decide to hold off and everything seems to slow down and soften. With the hundreds of articles published about Vancouver being overvalued etc., the public gets worried that a big correction is happening and decides to sit on the sidelines while they wait for prices to drop.
In Vancouver many owners have the patience (and funds) to weather the dips and possess a firm faith in the long term value of real estate. They don’t want to sell at a perceived discount and thus decide to hold on to their properties rather than selling in a quiet market. I believe this is how Vancouver’s prices have managed to hold steady ever since 2009 (once we recovered from the 2008 crash); when values soften, many sellers simply decide to keep their properties off the market so we haven’t seen huge oversupplies of inventory.
After about 6 months, once the market watchers realize that prices are not free-falling and that they do in fact need to purchase a home, they re-enter the market —usually right after the winter holidays. There is not much for sale early in the year, but many Buyers start shopping right after the New Year, and thus find themselves in an under-supplied market. A few choice properties get listed, they sell with multiple offers, and Vancouver’s favorite game is back on! The media picks up on it, Buyers get excited and don’t want to miss out, and so the market heats up. Sellers hear what their neighbours are selling for and put their homes on the market too. More and more Sellers follow suit, the Buyers eventually get absorbed, and we are back to having too many homes on the market. The cycle continues…you know the rest.
I am not an economist, this is not based on statistical data and I am also greatly generalizing, but this is the Vancouver real estate market as I interpret it. Ultimately we are herd animals and this is most evident in the buying and selling patterns of the Vancouverite.