You've decided to list your condo for sale. But how do you effectively price it?
Until next time.
Much like a house, there are several obvious factors that influence the pricing of a condo. The most obvious factors are location, age, size, materials used, and maintenance.
Is pricing a condo different than pricing a home? Here is an insider's perspective.
In general, I find that location (including school cachements) and size are the two largest factors influencing houses, with location being by far the greatest influencer of price. With condos, that is not necessarily the case, as many people moving into condos either have no children, are young families, or are empty-nesters. Suddenly, those school cachements are no longer the top priority for these buyers.
Don't get me wrong: location is still very important for condo buyers. But the overwhelming majority of them simply want to be close to a downtown core for ease of transport (especially if their condo doesn't come with parking) and all the benefits that downtown life has to offer. There are exceptions of course, but there's a reason most large condo buildings are built right downtown.
I find that, all else being equal, the most striking factor in pricing a condo is the quality of strata corporation and their finances and maintenance.
Of course, it is hard to parse out the difference between maintenance and building age, as they are usually closely tied together. But there are striking examples of older buildings with good finances that sell for higher prices than newer buildings with bad finances.
In the (relatively) lower price ranges of $300,000-$500,000, it can be difficult to find a strata corporation with appropriate finances for their age. Sadly, the group of condo buyers in this price range are the least flexible to handle special assessments that can come up from time to time. If you are shopping in this price range, do you have a spare $30,000 lying around in case the strata needs a new roof or balconies? If you do, then great. If not, then you are in the majority. This is a common concern with buyers we work with.
Every morning when I look at the new condo listings on the market, the overwhelming majority of lower priced condos will need major maintenance over the next ten years. That is not necessarily a stumbling block, as we can help buyers plan to put a little bit of money away every month to help offset those projects. Special assessments are painful when they are unknown. If known, and planned for, then they simply add value to your condo building.
Think about it this way: if the condo you wanted to purchase for $400,000 needs a $30,000 special assessment down the road to redo the exterior, you may walk away from that building. But if we had shown you a condo with a brand new exterior for $430,000, you may have jumped at the chance to purchase it. It's the unknown that is scary.
With that being said, many condo buyers still want to avoid strata corporations with little to no savings. Since they are unable to increase their purchase price, there are only two other main factors you can adjust: size and location.
Generally, the farther away from downtown, the cheaper condos get. That is less of a phenomenon on the Saanich Peninsula, where Sidney and Brentwood Bay condos are still pricey. Heading out the opposite way to the West Shore, however, will get you cheaper and newer options. That is because the land is much cheaper to buy for the developer.
The major shift we have seen in the condo industry since I started has been the size of units. Want a two-bedroom condo downtown for $400,000 with a great contingency fund and no major projects ahead? That could have happened in 2009 when I started. Now there is zero chance.
So what is a buyer to do? They go smaller. Now you can get a fairly new one bedroom unit close to downtown for $400,000. You can get a fairly new studio downtown for $300,000. You can get a micro suite for $250,000. Everyone wants more size, but there is peace of mind knowing you are getting a new unit with plenty of decades to save for the future.
As with all purchases in places like Victoria, Vancouver, and Toronto, your eventual purchase will be an adjustment of many parameters until you find the perfect mix in a single condo. Regardless of your price point or your timeline, we can help you navigate each price level and the options you will find. Condo purchases are bit more nuanced, but we love them and want to give you all of the info to make you a confident condo buyer!
Ready to get started? Just give us a call. We have bought and sold over 350 condos over the years and love talking shop. We are here to help make this easy and fun!
Until next time.
Mike + Kaley