In Marketing 101 you learn about the most basic yet most important factor when selling any product in any industry - target market. Knowing who will buy your product and catering to their needs and desires should direct every decision you make. Due to market conditions or external factors however, your target market can change over the course of time – even if classified with the same label.

In the height of real estate sales, say 2005-2006, our Investor Target Market looked and sounded very different than the Investor Target Market we will see in 2009. Let me start by qualifying my definition of the Investor Target Market. Real estate is an investment and therefore many people would like to fancy themselves an investor, but my definition of investor refers to those who are looking to add to their investment portfolio. These are people not intending to live in the home themselves; they are looking to likely rent it out, “flip-it” prior to completion, have their kids live in the home for some time, possibly renovate and increase its value and will sell it at some point when they feel they can make a profit.

In 2005-2006 our Investor Target Market demographic ballooned. Many people entered into this demographic as they heard cocktail party story after cocktail party story about people purchasing real estate, flipping it quickly (often before completion) and making a handsome profit. This was especially true in the pre-sale condominium market where all one needed was a small deposit and there was little perceived risk of having to close on a property with so much demand in the market. Many of these people were inexperienced, made the decision to purchase quickly and never intended to own the home for more than 2 years. What was important to these buyers was getting in early, having good selection and in some cases, just getting their hands on a unit.

In 2009 our Investor Target Market will be a small group of generally experienced and sophisticated individuals – likely with other properties in their portfolio. These people will have done their homework, know what else is selling in the market and be able to identify good value easily. They will likely take their time deciding but be confident when they make a decision ensuring closing won’t be an issue. They will plan to hold onto the property as a mid to long-term investment - certainly longer than 2 years. These buyers will take the time to fully understand the details of the home and make sure the numbers work (rental values or vacancy rates in the area for instance).

In Vancouver 2009, the major driving force for the condominium investor will be perceived long-term capital appreciation (or capital preservation) rather than yield. The great majority expect to have a negative monthly cash flow situation – feeding the investment slightly per month.

Target markets change; this is clear in the case of the Investor Target Market which shows very different traits today than just a couple of years ago. This should also act as a reminder to ALWAYS ask ourselves that Marketing 101 fundamental question ‘who are we selling to?’.

Happy selling,

Cameron McNeill