Cost to upgrade is the lowest it’s been in 5+ years
Deciding when to buy and sell real estate is among the largest financial decisions any person or family will make. This is especially true in Greater Vancouver, where the benchmark price for a property sits at $993,300, or over $1.2M on the west side of Vancouver.
People often look at how the market is doing when making a decision; if sales are high then it’s considered a good time to move and if they’re low it’s considered a bad time. The down side to this is that if the market is similar to what we saw in 2016-2017, then it’s great when you’re selling your condo, but a lot less fun when you’re offering on that townhouse you wanted to upsize to.
At that time it was normal to write 5-6 offers for a client before finally getting an accepted offer, after losing to the previous ones in bidding wars.
It wasn’t a fun market for buyers, especially first-time home buyers, who had to see a property, decide on it, do their due diligence, and write an offer, all within 1-2 days.
Demand for different product types (condos, townhomes, and detached houses) can vary in every market as well, and values for those each type will increase and decrease different amounts depending on the demand. In February 2014, 60% of all sales on the west side of Vancouver were condos, and 33% were houses, and in August 2019, 77% of sales on the west side were condos compared to just 15% for houses.
The demand gap between property types means prices will shift faster or slower for each type, and can help determine if it’s a good time to upsize or not.
The chart above shows the price differences between condos, townhouses, and detached houses on the west side of Vancouver. Based on the chart, if the average condo price was $500,000 in 2014, the average townhouse would be $732,500 (146.5% of the condo price), and if the average townhouse price was $732,500, the average detached house would be $2,276,976.
If the percentage is lower that means it’s a better time to upgrade, because the price of your current property will make up for a larger percentage of the larger home price. The change looks small for those upgrading from a condo to a townhouse on Vancouver’s west side, but the difference between the peak in 2017 and the current market (2019) would still amount to $22,050 in savings for a condo valued at $500,000. For a family upgrading from a townhouse to a detached house, the difference from the peak to today would be savings of $522,525 if the townhouse was valued at $750,000.
The price differences in the east side of Vancouver aren’t nearly as drastic as on the west side, as the average detached house price is quite a bit lower. The chart also shows that, compared on the last five years, it’s a great time to look for a larger home.
If you have a condo worth $500,000 in East Vancouver, the townhouse you want to upsize to will cost $761,150. The condo price amounts to 65.7% of the townhouse price, while in 2016 it would have only made up 59.3% of the price and you would have to make up the additional difference out of savings.
When deciding whether or not is a good time to move, your family and personal situation is usually the deciding factor, but it always helps to have evidence to help make your decisions. The overall sales numbers may not be as strong as they were in 2016 or 2017, but 2019 is a great time to upsize.
Have questions about this, or considering a move? Contact us any time at 778-235-1590