Markets are Ever Changing
This one is mostly for those of you who are real estate investors or thinking of becoming one. I know that you’ve all been waiting for the right timing to start buying before prices start climbing again and a couple of you may have already bought as you saw the right opportunity. Here’s a a little bit of info about the latest little change in the market that may affect your plans. Keep in mind of course that a seller who needs to sell in a down market will be generally be more willing to negotiate on a lowball offer price than they would be while the prices are climbing.
For home owners, see my series last fall title “When to Buy and Sell” There’s a link to those posts to the right of the screen.
Below is the latest press release regarding the market situation from the BCREA. The main point to take away from it is that due to historically low interest rates and a drop in the price of properties, homes are much more affordable now than they have been for a few years. Nothing new to this week, but it also shows that this affordability is continuing to drive home sales higher and shows how they reached the conclusion. I don’t think though that they included inflation, which last I heard was at 4.1% per year, in the calculation as they say it has only been three years since homes have been this affordable.
It is spring now and market activity is picking up as usual, the question in everyone’s mind though is whether it will be the bottom of the price drops or not. Like I always say, no one knows and anyone who tells you they do know for sure what the market is doing next is not someone you should listen to. You can’t really know where the top or bottom is until you look back a couple of months later and say “See? That was the top/bottom.” Having said that, you can look at a variety of factors and get a general idea of what will probably happen in the next little while. My feeling right now is that there is enough virility in the spring market to at least slow down the price declines for now. After that, not sure. Might be bottom, might go a bit lower first. Lots of uncertainty out there still, but also many glimmers of hope in the economy and small signs that the real estate world isn’t as dead as the media has a way of reporting. Mind you, it doesn’t matter what the market situation is like, they’ll always dramatize it. That’s how they keep us watching.
The follwoing info represents BC as a whole. There be similarities across the province but each city/town will have its own permutation.
Vancouver, BC – April 15, 2009. British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 35 per cent to $2.3 billion in March, compared to the same month last year. Residential unit sales declined 25 per cent to 5,464 units during the same period. The average MLS® residential price in the province was $424,122 in March, down 12 per cent from March 2008.
“While fewer MLS® residential sales were recorded last month compared to March 2008, home sales actually climbed 24 per cent from February to March on a seasonally adjusted basis, the second consecutive month of gains,” said Cameron Muir, BCREA Chief Economist.
A significant increase in affordability helped fuel housing demand last month. “Reduced mortgage interest rates have effectively doubled the impact of lower home prices on affordability,” added Muir. While the average sales price in BC declined 12 per cent from a year ago, the monthly payment on the average priced home was 24 per cent lower. “Housing is now more affordable than at any time in the last three years,” noted Muir.