Are Too Many Units For Sale A Warning Sign?

When considering buying a condo, the number of units for sale in a building can be a critical factor in assessing the health and desirability of the property. Here’s a breakdown of the key factors to consider:

1. Vacancy Rate and Turnover: My rule of thumb is a 7 to 8 percent turnover rate. If more than 7 to 8 percent of the units in a building are for sale or have changed hands in a year, it’s worth investigating further. High turnover might indicate underlying issues such as financial problems, upcoming major repairs, or a general lack of appeal.

2. Investor Activity: Buildings with a high percentage of investor-owned units can see more frequent turnover. Investors might be more attuned to market shifts and may sell off their properties if they anticipate a downturn. It’s useful to find out if rentals are allowed, as this can hint at the level of investor activity.

3. Upcoming Maintenance or Assessments: Major repairs, such as rainscreening in Vancouver’s climate or significant upgrades needed to a parking garage, can be expensive and may prompt owners to sell if they don’t want to shoulder the costs. Checking strata minutes or upcoming special assessments can provide insights into whether such issues might be affecting the building’s market stability.

4. Market Conditions: In a competitive market like Vancouver, properties typically sell quickly if priced correctly. A high number of for-sale signs in a well-located building might suggest overpricing or other issues. If a condo remains on the market longer than average, it’s crucial to understand why.

5. Due Diligence: Always review strata minutes, financial statements, and any available building assessments. A thorough inspection and consultation with a knowledgeable real estate agent can help uncover potential red flags.

In summary, while a high number of for-sale units can be a red flag, it’s important to consider the broader context, including market conditions, investor presence, and building maintenance. Working with a skilled realtor like myself can help you navigate these factors and make an informed decision.