Are houses worth less than assessed value?
Gibsons houses selling for an average of 2.78% under BC Assessment
Last month, I was optimistic that the Sunshine Coast would see a real estate rally in June due to a busy spring in nearby Vancouver. That prediction missed the mark and to understand why, my team compiled data on every house that sold in Gibsons so far this year. The results were enlightening.
Sale price vs assessed value
We compared the sold price of every detached home in Gibsons to its BC Assessment value. In percentages terms so far in 2023, houses in Gibsons have sold for an average of 2.78% under their assessed value. In dollar terms, that works out to an average of $44,000 below assessed value.
The condition of each specific property factors heavily into the actual sale number. In general, we found the following:
Houses in need of renovation or maintenance should expect to sell between their assessed value and 10% below their assessed value.
A standard house in average condition would be expected to sell near its assessed value.
An above average house can realistically anticipate a sale between assessed value and 10% above assessed value.
Stunning houses can sell for 20% above assessed value.
I’m seeing listings with price tags 50%+ above their assessed values. That may be realistic for a spectacular, one-of-a-kind home but for an average house on an average street, it’s aggressive.
Interest rates are suffocating the market
There’s a general understanding that higher interest rates make it more expensive to buy a house. But crunching the numbers illustrates how dramatically buying power has been reduced over the last year and a half.
About 18 months ago, you could have found a mortgage for about 2.5%. Today, you’d be in the 6% range.
If you bought a house in January 2022 for $1.5M and put 20% down, that 2.5% interest rate would have translated to a monthly mortgage payment of about $5,400 a month.
Today, that same $5,400 mortgage payment would support a purchase price of “only” $1,070,000. Buyers’ purchasing power has dropped by about 30%.
The mortgage market has changed a lot over the past 18 months and sellers need to price their homes realistically if they’re serious about selling.
Bad press for the Sunshine Coast
BC Ferries’ service continues to get worse. There’s an ongoing water shortage for parts of the Sunshine Coast. And the sink holes at the Seawatch subdivision continue to make national news once or twice a year.
When you explore each topic, you discover that the situation isn’t as dire as the news would lead us to believe. But these headlines are a regular occurrence and people contemplating a move to the Sunshine Coast can be forgiven for getting cold feet.
When housing prices aren't low enough to compensate for these perceived problems, migration to the Sunshine Coast slows and demand for housing falls, as do real estate prices.
Advice for sellers
It’s tough to dispute the numbers. If you’re serious about selling, you need to be realistic about your home’s value in the current market. If sellers are absolutely insistent on getting the highest possible price, they may want to consider sitting on the sidelines during this phase of the real estate cycle.
If you decide to move forward, you need to work with a Sunshine Coast Realtor that understands the local market and has a comprehensive marketing plan designed to get your property maximum exposure. Cell phone pictures and a single sentence description won’t cut it. At a minimum, sellers should be requesting professional photos and a professional video that highlights not only the property but also the neighbourhood and nearby amenities.
Advice for buyers
It’s even more important for buyers to work with a local agent. Local Sunshine Coast Realtors understand the market on a street-by-street basis and can highlight the pros and cons of each neighbourhood. If you’re coming from Vancouver or Vancouver Island or even Alberta and you have an existing relationship with a Realtor, ask them to refer you to a local agent. They’ll get a referral fee for their trouble and you’ll get an agent that’s an expert on the Sunshine Coast. That’s a win for all parties.
Buyers can also afford to be more aggressive and more patient.
Buyers can make more aggressive offers than they could have even six months ago. This doesn’t mean making insulting, low-ball offers but it does mean opening with a market appropriate price if you can back it up with numbers and statistics.
And buyers can be more patient in waiting for the right property. If buyers make a fair offer on a home that’s rejected, they can afford to wait weeks (or even months) before going back to that seller and trying again.
Call Tony today!
If you’re not already working with a Realtor, call me when you’re ready to buy or sell and I’ll guide you through the competitive real estate market on BC’s BEAUTIFUL Sunshine Coast.
Tony Browton - TeamTrueBlue.ca
Personal Real Estate Corporation
RE/MAX City Realty (Gibsons)
Mobile: 604-418-2695
Email: Click here to email Tony
⚠️ DISCLAIMER: This newsletter and its contents are not intended to cause or induce breach of any existing agency agreement.