How outlier sale in Vancouver condo highrise may be a sign of cooling real-estate market
One might say it’s not an exact apples-to-apples comparison.
However, a number of sales of similar apartments at a downtown Vancouver condo highrise may tell a story.
And that’s one of a real-estate market that has started to cool after the Bank of Canada started to increase interest rates.
In detail, these are condo units at The Pinnacle, a 36-storey highrise at 939 Homer Street in Yaletown.
Their numbers all end in “02”, meaning they are stacked on top of each other, face northwest, have roughly the same layout and measurement, and feature two bedrooms and one bath.
Let’s take four units that sold before the Bank of Canada made the first interest rate hike in 2022.
In the fall of 2021, unit 1202 sold for $745,000; unit 2802, $765,000; and unit 1802, $755,000.
And then on January 13, 2022, unit 2902 sold for $815,000.
Less than three months later, the Bank of Canada increased its interest-setting rate from the pandemic-era low of 0.25 percent to 0.5 percent on March 2.
The central bank followed this up with 0.5 percent increase on April 13.
[The bank increased rates two more times, in June and July, and its key rate now stands at 2.5 percent.]
Two weeks later, unit 3302 at The Pinnacle listed on April 27 for $799,000.
The two-bedroom Vancouver real estate sold six days later on May 3 for $630,000.
Compared to the four other previous sales, one might say the deal for unit 3302 is an outlier.
Vancouver realtor David Hutchinson is familiar with units at The Pinnacle with numbers ending in "02".
That’s because he was the listing agent for an upper "02" unit, which sold on January 23, 2022 for $815,000.
The sold price for Hutchinson’s listing was over the property’s 2022 assessment of $766,000.
“My client wanted to do a full renovation, and he was living there, so I advised a smaller job so we could list the property quicker,” Hutchinson recalled to the Straight.
The Sutton Group-West Coast Realty explained why.
“I didn't want to wait that current hot market out too long, and I didn't want an overly-renovated unit at a higher price because that narrows the buyer pool and the property spends a longer time on the market,” he said.
The seller followed the realtor’s advice.
Hutchinson said: “I thought, he did a good quality, well-timed renovation. If he did not sell at this time, it definitely would've taken longer to sell, and that could have lead to him having to settle for lower price.”
As for the seemingly outlier of a sale for unit 3302 at $630,000, Hutchinson suggested that it may be a “kind of a narrow indication of the recent fluctuation in prices due to the sudden changes in the market”.
These changes are primarily elevated interest rates, and what the Vancouver realtor referred to as some “reverse FOMO”.
[FOMO means “fear of missing out”.]
However, Hutchinson qualified that although unit 3302 sold at a lower price compared to previous deals, there may be other and non-market reasons involved.
“It could be a special situation with the seller, like a family situation,” Hutchinson said.
“In any case a sale like this affects the market numbers, and, coincidentally, I now have clients that were looking for one-bedroom-plus-den condos now looking for two-bed condos, and they seem to be happy with the new inventory that is coming on the market,” he added.
Hutchinson may be right in qualifying his statement.
On May 16, another unit with a number ending in “02” listed for $799,900, which was slightly above the previous listing price for unit 3302.
Unit 2702 sold six days later on May 22 above its asking price, when a buyer snapped it up for $825,000.