If you had $1 million, would you buy in Vancouver, or would you scuttle off to the suburbs? REW's biannual survey results suggest a love of picket fences.
How do you feel about buying a house?
Is it a good time to buy a home in Vancouver? Is it a good time to sell? Real Estate Weekly (REW) has released the results of its biannual Greater Vancouver real estate consumer confidence survey, which gauges the perception side of Lower Mainland real estate market, and the results are surprising.
As it turns out, would-be home buyers are more confident than would-be home sellers, by a widening margin.
Do you think it’s a good time to buy a house or a condo in the next three months?
When Mustel Research Group asked, "Do you think it’s a good time to buy a house or a condo in the next three months?", 54% of respondents answered "yes". This is a slight majority (for the first time in a year), though the margin of error in the survey is 4.1%. Depending on your own level of optimism, there could actually be more confident market-watchers, or few enough to keep them below the 50% mark for another season.
So, why buy?
- 23% of those optimistic about buying cited falling prices (or some variation of the housing-bubble). This was also the #1 reason respondents gave for not wanting to buy, by the way.
- 20% cited low interest rates.
- 18% pointed to an overstocked market: plenty of choice.
You don't have to be a sociologist or statistician to predict the top reasons for responding "no": high prices.
Do you think it’s a good time to sell a house or a condo in the next three months?
Okay, this is where things get interesting. When asked, "Do you think it’s a good time to sell a house or a condo in the next three months?", 63% of respondents answered "no". That's 30% more people saying "no" than we saw in March 2012.
Not that surprising, really, presuming that the would-be sellers are somehow aware of this increase in buyer optimism: buyers are more inclined to buy when they perceive advantage (lower prices or future increases in property value, for example), which equates to disadvantage in some form to the seller.)
Why the doom and gloom, sellers?
- Nearly half of those who think selling is a bad idea pointed to dropping property values.
- 20% blamed slowing sales.
- 12% said there were too many properties on the market already; that it's getting too crowded out there.
Even some who thought it a good idea to sell, thought so for less-than-optimistic reasons: 26% of them said that they'd sell only to avoid seeing their property values shrink more than they already have.
So, all Mustel Research Group did was attach some numbers to the cocktail-party conversation you've been having for the last five years.
Respondents from the Fraser Valley characterized these survey results the most clearly: Langley-east residents were the most optimistic about buying, and the most pessimistic about selling.
In terms of bucking the trend, Richmond residents proved more pessimistic towards buying, while Surrey/Delta/Langley residents were more optimistic towards selling.
But wait! There's more! It involves a deep, dark secret. The real estate version of that Fergie song hidden on your iPod.
If I had a million dollars (If I haaaad a million dollars)
Now we come to the third (and best) question on the REW real estate market survey. Mustel Research Group asked folks the following: "Suppose you had exactly $1 million dollars to buy the only residential property you would have in the Lower Mainland area. Knowing that you can live anywhere in the Lower Mainland area, and that the farther you get from the City of Vancouver the less you pay, which one of the following types of property would you be most interested in buying?"
Here's how it broke down, based on the five options offered:
- 34% would buy a large house and property in the suburbs.
- 23% said they'd keep the million dollars and rent.
- 20% would spent the hypothetical million bucks on a small detached house.
- 12% opted for a luxury condo in a city centre.
- 10% would choose a townhouse or duplex in a city.
- Meanwhile, 1% were like, "I dunno."
Wow. So, for all the talk about eco-friendly urban oases and all the glass-and-steel towers popping up around False Creek like toadstools, you're telling us you'd rather scuttle off to the suburbs?
To be fair, you would have trouble finding a detached house close to Vancouver's city centre for only a million dollars. The million dollars may be hypothetical, but Lower Mainland property pricing is all too real: if you want space, you have to leave the area.
To what extent this survey result is a referendum on urban living versus an acknowledgement of how far a million dollars would go is not really clear. Furthermore, were respondents optimistic or pessimistic regarding what the hypothetical money would buy? That small detached house near the city centre may be hard to find, but it does exist. It's just not in Kitsilano.
Also, who "didn't know" what to do with the imaginary million dollars? It's an imaginary million dollars, dude/dudette: just pick something.
Age mattered in the REW survey as well. Turns out that those 55 and older were most keen to keep the cash and carry on renting. Generation Y (18-34) coveted the large suburban house with property, followed by the downtown condo. So Gen Y either really loves mowing the lawn, or really hates it.
Generation X (35-54), however, was most likely to seek a suburban life with that million-dollar windfall: the top two choices were the large house with property and the small detached house. (By now you all know where I stand.)
Generation X has really grown up... or sold out. Come to think of it, formerGeneration X frontman Billy Idol himself lives in the 'burbs: well, the hills overlooking Los Angeles, anyway.
It's not just about plucking weeds: the decision to buy property with land also speaks to home-life values. Urban living conjures thoughts of cultural and economic diversity, walkability, nightlife. Suburban living suggests quiet Sunday mornings in the garden, knowing your neighbours, commuting by car.
REW points out that there's no battle of the sexes here: men and women agreed on everything in the million-dollar survey section.
Familial status mattered in the survey results as well. Overall, singletons, couples without kids, and families with broods all favored buying a home with the fictitious $1 million rather than keeping the money.
However, single respondents were more likely than the others to keep the dough. Families with children were the quickest to buy, be it to provide a yard for the children or to secure an investment. (Remember, though: a house is only an investment if it's actively earning you money. Otherwise, it's an expense.)
We know that emotion and perception are powerful drivers of the real estate market, and that everyone professionally involved in that market (including REW) wins when emotions are positive.
What is yet to be determined is whether or not this spring-has-sprung optimism will bear out in terms of increased property sales.
As of February, the sales-to-active-listings ratio is at 12.2%. That's still below average, but a pip up from January. Also, new listings are down by nearly 6% compared to last month, but still come in higher than the 10-year average for February.
While new listings are down, overall listings are up. So, some of that buyer optimism may be well-placed: there is indeed more to choose from, and the longer a listing sits on the market, the bolder you can get in negotiating its price.
Beware, though, the pushback of seller optimism: if REW's survey reflects reality, you may find yourself up against sellers who are selling because the see themselves up against a ticking clock-- determined to command the asking price. This is emotion we're talking about.
Besides, a glut of listings does not indicate that your dream home can be found by the dozen. How many available properties are of the type you're looking for, in the neighbourhood you want to call home?
Is this whole thing a self-fulfilling prophecy? Are we being told how to behave in the real estate market? Will we actually behave as the survey suggests?
A note on sample size
This is where I wish that the sample size were larger: 561 randomized telephone interviews seems like too small a net to cast when we've glimpsed the Ogopogo of suburban aspiration. We're gonna need a bigger boat.
If you want dig further into the REW/Mustel findings, you can check out the slideshow below. Those figures should provide you with enough cocktail-party bons mots to last until September, when we'll see the results of REW's next Lower Mainland real estate survey.