Of course, buyers in a real estate market want the best possible property in the best possible location…….and want a property which fits in their budget. And of course on the other hand, sellers want to make the best profit available.
So, what exactly are the criteria that determines the prices of properties?
Location:
The location is very vital for the pricing of property. For instance, properties located in commercial areas and market areas such as downtown Vancouver or along the Broadway corridor, can sometimes be priced more than ones located in residential areas. Also, a well-developed area with modern amenities and community centres has a higher price than less developed areas still constructing or choosing what to have. Lastly, buildings on freehold land are costlier than ones on leasehold land, with False Creek being a good example of this in Vancouver.
Amenities:
Builders have the right to charge more for the various amenities that they provide as part of their build. For instance, the property with good amenities such as electricity, water supply, sewage, cable and telephone lines, parks & pools, community centres, clubhouses, general stores, etc., can charge a higher price. And it makes sense. When a property allows you, the homeowner, to live more comfortably and easily, it demands a higher price in the market.
Infrastructural Development:
The level of infrastructural development also plays a crucial role in property pricing. Property values often escalate when there are good roads, malls, bridges, airports, close public transportation, etc., in close vicinity to the property being sold. For instance, this is best seen along the Skytrain line in Vancouver where property values hold well no matter the market. Propertythat is well-connectedto education centres, health care centres, hospitals and clinics, as well as entertainment hubs and districts, etc., is more valued than the one which isn’t connected in these ways.
Commercial Real Estate:
Development of commercial properties and real estate, side by side and in the vicinity of residential real estate, boosts the overall pricing of the area. If commercial properties such as malls, IT hubs, Special Economic Zones, etc., are available near, or alongside, the residential properties, and are easily connected or accessed together, they boost the overall values of that area.
Land Availability:
Scarce resources attract a higher price. As we know, the limited building land of Greater Vancouver is a testament to that. And in real estate pricing, it is a very commonly known phenomenon. So, if a lot of land is available in an area where properties can be constructed, the prices of the property would tend to be lower minus other factors. If in a certain area, the land is scarce for real estate, the prices will almost always be higher.
Supply and Demand:
The popularity of an area is seen when more people want to reside or purchase property in that area. In this case of increasing demand, property prices will show an upward trend. And, in Vancouver, there are not a lot of properties available so the prices are, and will continue to be high. If in the future, more choices become available, then the prices will be lower. As we know, more and more people are moving each year to reside in Vancouver. As a result, the likelihood of long-term, lower pricing, is not very likely.
Structure & Construction:
The price of a real estate property also depends on the structure of the property and the type of construction undertaken. The cost of materials, layout, design, quality of raw materials used, and durability and life cycle are important aspects that are all considered when determining pricing.
Sometimes, we see builders give certain offers to buyers so as to induce purchases. These can be discounts, extra parking spots,Modo parking, Car2Go easy access, pre-construction discounts, etc. These small offers attract a lot of customers and makes the selling and buying process go a lot faster.
As always, there are many other factors that affect pricing. If you know some other vital ones, do let us know in the comments section. As well, reach out and ask questions. So often our clients tell us they wished they would have asked us, the real estate investment professional, questions sooner rather than gotten mixed messages over the Internet or from friends.
Lastly, please do share this blog with someone who is likely to invest in real estate and may get insight and help on their investment and purchase.