Multiple Offers Still Ravaging Entry Level Condo Market
Despite the detached market in turmoil mode, prices down 15% or more and sales plummeting, the condo market remains red hot, particularly at the entry level.
Just as I have noted in previous blogs and videos, Christy Clark’s first time buyer loan program would likely pin buyer against buyer in a royal rumble cage match to compete for the record low inventory available. Disguised in the form of free money, the provincial government and sellers alike have begun dangling the bait. It appears UBC Economist Tom Davidoff’s prophecy is coming true, buyers are devouring the loan, creating a feeding frenzy at the entry level.
Just last week I was caught up in several multiple offer situations with my buyers all competing at the entry level. Four or five offers later, amidst a flurry of first time buyers, the highest bidder came away the victor. Sometimes tens of thousands over ask. Bidding up prices for the next eventual buyer. This prompted me to dive into the numbers further. Just how many condos are going to multiple offer?
In January 2017, 25% of all Vancouver West condos sold over asking price. Down slightly from January 2016 when 38% of deals were sold over ask. A rather small drop considering sales plopped 30%…
As you can see, multiple offers peaked in May 2016 with 56% of units selling over asking price. Since then it’s been a steady decline. Perhaps seasonal, there was a tick upwards once again this January. Perhaps signalling more carnage to come in the spring.
However, interestingly enough, the absorption rate of Vancouver West condos was a paltry 43% in January (anything below 50% suggests a correcting market, above 75% implies prices should go up). Plus with the state of the detached market one has to wonder if or when the trickle down effect will play out.
One things for sure, we’re entering murky waters…