A one-bedroom condominium steps from Vancouver’s Coal Harbour waterfront recently sold for $550,000, despite having been purchased for $600,000 in 2016. Realtor Bready Wu says the transaction reflects the challenges facing condo investors in Vancouver’s current market.
The Property
Type: Condominium
Neighbourhood: Coal Harbour
Beds: 1
Baths: 1
Year Built: 2006
Parking: Garage, Underground
Taxes: $2,054.94
Maintenance fees: $609.73
Sold price: $550,000
Located in the Qube Building, the one-bed unit offered a separate 670 square foot dining area that could function as a home office. With remote and hybrid work still common among downtown professionals, Wu saw an opportunity to target a specific buyer demographic.
“The tenants in the building are mostly younger professionals,” Wu said. “We marketed it with that demographic in mind.”
Wu’s strategy worked and the eventual buyer fit that profile, purchasing the Coal Harbour condo as part of an upgrade into Downtown.
The Sale
The seller purchased the property in 2016 for $600,000. The condo was initially listed for $650,000 before being relisted in March at $599,999. Within two days of the price reduction, the seller received the offer that ultimately secured the sale at $550,000.
One factor behind the drop in sale price, Wu says, was a special levy of approximately $37,000 assigned to the unit based on its entitlement. But according to Wu another issue was the amount of inventory available across Vancouver’s condo market.
“We priced lower and we priced sharply towards the market, but there’s just so much inventory in the entire Vancouver West,” she said. “In 22 neighbourhoods, including the downtown area, there are almost 700 one-bedroom and studio units in the resale market. But every 30 days, there are only 90 of them sold.”
The seller was also facing a growing cost of owning the condo. Though it had been rented to the same tenant for three years at $2,650 per month, increasing strata fees, property taxes and limits on annual rent increases were reducing its profitability. After expenses, Wu estimated the owner was netting around $1,800 per month before accounting for repairs or other unexpected costs. “So, the $50,000 drop from the $600,000 they bought it for, that’s almost over two and a half years of the rent,” Wu says.
The transaction itself was not straightforward, as Wu says five previous offers on the condo collapsed before the successful buyer emerged. In each case, prospective purchasers were unable to complete the sale of their own homes, preventing them from moving forward. “It’s a domino effect,” Wu explained. If buyers cannot sell their existing properties, they are unable to purchase another home, slowing activity throughout the market.
The Big Picture
For Wu, the sale of the condo reflects the state of Vancouver’s condominium market. “For the majority of the neighbourhoods downtown, for the last three to five years, there’s been no appreciation,” she said. “In some areas it is going down.” This forces many investors to evaluate whether to continue holding properties that are generating limited appreciation while carrying rising operating costs.
However, she believes first time buyers and buyers looking to upgrade may be entering a favourable environment.
“For people who need to upgrade, it’s the perfect market to get into,” she said. While owners may be accepting lower prices when they sell smaller condos, many are finding discounts available on bigger properties. Wu also predicts an issue of supply in the next three to five years, as developers continue to build rental housing and fewer condominium projects move ahead.
For buyers planning to remain in Vancouver for decades, Wu says today’s market may represent a good opportunity. For investors, however, the sale of this Coal Harbour condo reflects the difficult decisions being made across Vancouver’s condo market.
