The right “real estate” product is like the Girl Scouts’ cookies
What do footballs, Lady Gaga, and Girl Scout cookies have in common? The Super Bowl. The Girl Scouts of America have used Super Bowl week as the perfect event to bring awareness to their organization, and of course, sell thousands of dollars of cookies. During Super Bowl 49 (2015), the Girl Scouts organization sold $350,000, or 89,000, boxes of cookies. The following year at the Super Bowl 50 (2016), the girls were once again working the Super Bowl crowd; however, this time, it was just a small troop of 4-6 girls who set up shop in the epicenter of the Super Bowl media center on Saturday. Their goal was to sell a couple of thousand dollars of cookies. By noon, they had sold over $6000 worth and ended the day at over $10,000 in sales.
What real estate lessons can we learn from the Girl Scouts of America? We can learn that the location, the event, and having the right product is a winning formula.
Location, location, location… a term that never gets old when describing real estate. Rapid transit, shopping, schools, and exclusive factors like view, waterfront, and specific postal codes, go a long way in determining re-sale values. The Girl Scouts, through a special lottery, won the rights to the busy corner of Mission and 4th in downtown San Francisco, the best area. Once again, location, location, location—sounds like a great real estate play. The best location always appreciates and sells for the most money.
The Event. What factor did the event play in the girls’ cookie sales? Without the huge, enthusiastic, and hungry fans that were ready to spend the hundreds of dollars burning a hole in their pockets, the sales would have been less than $500 based on an average day of sales for the girls on a non-event day; therefore, the event played a major factor in the sales. Real estate events significantly change the market. Events like the announcement of the 2010 Olympic Games changed the Vancouver market place, and the announcement of the start of a LNG plant in a northern BC community did as well. Today, a current Vancouver and Fraser Valley event or phenomena is wealthy, foreign buyers scooping up the most exclusive, single family properties in Vancouver with reckless abandon. This, as well as record lows in listing inventory and record sales volume, is fuelling a market that is out of control. Sale prices are leaping up on an almost daily or weekly basis. This real estate event has caused the property buyers to be like the fans the Girl Scouts encountered on Super Bowl weekend: huge, enthusiastic, hungry, and in a spending frenzy. Like the emotionally charged fans, buyers are getting caught up in the euphoria and excitement of the market. Multiple offer situations, non-subject offers, properties that are selling in excess of 10% of the list price, and shadow flipping. The event changes everything.
The Right Product. The Girl Scouts had the right product for the fans. The fans were not about to waste time standing in long lines for food or sitting down for a meal. They were satisfied to fight off their hunger pains with a box of cookies and make the most of their Super Bowl media day. And with the price of $5 per box, fans could not resist. So what is the right real estate product when looking at the Vancouver and Fraser Valley market? Most would say single family homes, or is it? Twelve months ago, I would have agreed, but today, I would say townhomes and condos. The single family HPI (Home Price Index) in the Fraser Valley has increased 23% in the last twelve months, making it unaffordable for many of the average buyers. The townhomes HPI (Home Price Index) has seen only a 14% increase and the condos HPI (Home Price Index) is only 12%. The average price of a single family home in February 2016 was $900,000, townhomes were $400,000, and a condo was $250,000. These are the averages for the entire Fraser Valley; however, an investor can still buy a positive cash-flowing townhome under $250,000 or a condo in the $100,000 range.
The right “real estate” product is like the Girl Scouts’ cookies; but remember, you need the right location, transit, shopping, schools and/or exclusive factors. You also need the event: a hyper-active and emotional real estate market that everybody is talking about. And finally, you need the right product. The right product is like the Girl Scouts’ $5 box of cookies—so cheap that nobody batted an eye. Currently, the townhomes and condos are so inexpensive in comparison to the single family homes that I believe they will experience a significant appreciation over the next 3-6 months. In fact, townhomes are already reaping the benefits of being the right product with the average days on the market being 10.5 days for February and seeing some strong “Sell Through Rates”, while condos are still floundering at 22 DOM (days on the market). Interesting that we consider this ‘floundering’ while most markets around the world would be ecstatic to have a market needing only 22 days to sell a property.
Are the Girl Scouts’ cookies gourmet cookies? No. They are mass-produced and loaded with preservatives. Conclusion? Location, event, and the right product can overcome many of the obstacles of selling. Are you an investor that owns a poor property or a property that is challenging to rent? Or perhaps it is in need of major repairs? This may be the ideal real estate event to liquidate the dog. An investor that is tuned into the real estate market will always have a head start on knowing what the right product is.
Don’t hesitate to call me for all your real estate questions and needs and remember when investing in real estate the right “real estate” product is like the Girl Scouts’ cookies.
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By Randy Dyck
Personal Real Estate Corporation
604-807-4366 or randy@eximus.com
STR (Sell Through Rate) Formula = Sales ÷ Active Listings + Failed Listings + Sales
