A Sunshine Coast Real Estate Fable...
The Story Behind What's Driving Our Market.
Once upon a time (in 1985), there was a nice young couple that bought quaint little house in a land far, far away (North Vancouver). Dad worked hard during the week to pay the mortgage and the bills and put money towards their retirement while Mom stayed home and raised their family.
The years went by and the children grew and moved away. Mom joined Dad in working to pay off their modest mortgage and in 20 years they owned their home, debt free. They loved their house and they invested in it by caring for it and renovating it.
One day, a rich man from a foreign land came dressed as an widower and knocked at their door. He knew that people from his land were fleeing and that they would soon arrive here needing to buy homes to live in. He hoped to buy the couple’s house and eventually sell it for a profit in order to add to his riches.
“Please, would you sell me your house?” said the rich man. “My wife has passed away and I no longer need my large home. I love everything about your house and I will gladly pay you 10% more than your house is worth. I’ll give you $1,100,000 if you will sell it today.”
“I’m sorry.” replied the Mom. “But we’ve raised our children here and we love this house. Your offer is very generous, but we couldn’t possibly sell it.” She waved goodbye and closed the door.
The rich man knocked again and this time the Dad answered.
“I understand from your wife that you don’t want to sell your house.” said the wolf. “It may seem silly, but I love your home so much that I’d be prepared to offer you 25% more than the house is worth. I’ll pay you $1,250,000 if you will sell it to me today.”
“I’m sorry, but this house isn’t for sale.” said the Dad, who closed the door again.
The rich man left the house and moved on to the neighbours.
That night, the Mom and Dad sat at the dinner table and talked. “If that little old man would pay us 25% more for our house than it’s worth, perhaps we should consider selling it to him. Think of all we could do with the money?” said the Dad. “If we moved away from the city we could retire, travel, buy the car we have always dreamed of, and help the kids with the cost of bringing up our grandchildren.”
The couple called their friend who was a REALTOR® and asked for his help in determining what their little house was really worth.
“The only way to know for sure is to put the home on the market. If you don’t expose it to the market, you’ll never know how much the market will pay. The market determines what your house is worth, not my opinion or that of the widower who wants to buy it.” advised the REALTOR®
The couple listed their house for sale on the Multiple Listing System in order to make sure that everyone would know the couple was prepared to sell. Many people wanted it, so the REALTOR asked everyone to write down how much they were willing to pay and put their offer in sealed envelopes. When the couple sat down to review them they were delighted to see that most were for around $1,300,000; $50,000 more than they expected. But the rich man offered $1,500,000 and he was happy to pay it, knowing that soon the house would be worth far more. The other buyers thought him a bully.
The Mom and Dad felt truly blessed. Their modest house had become worth a fortune. They retired from their jobs and made a journey across the ocean to a beautiful land that reminded them of home. They started to look for a house to buy, but they were surprised to see that there were none for sale.
Other people had sold their homes to the rich man before they had and they too had moved to this land.
Desperate to buy a home before prices went up too much, the Dad went to the door of a house that they thought would be a good fit for them. He knocked and when a the young homeowner answered the Dad said: “Hello. Our children have grown and we no longer need our big home in the land across the sea. We would gladly pay you 10% more for your home than it is worth if you would sell it to us today.”
Before deciding my return to selling real estate on the Sunshine Coast I had been managing one of the largest real estate brokerage in Vancouver. I can attest that foreign investment is driving the high end market. Courageous and informed speculators are buying multi-million dollar “flip” houses and realizing massive gains. The money that is trickling down and out of Vancouver is what is fueling things here.
The Vancouver condo market and communities like Squamish, the Fraser Valley and the Sunshine Coast are all feeling intense pressure, but the new “bully” in those markets are predominantly Vancouverites who have cashed out of their detached homes and who can afford to pay more than “fair market value.” The unexpectedly high sales prices push up the expectations and value of the neighbour’s property, causing an upward spiral to which we have yet to see an end.