All I can say is that there are some deals out there. Buyers are picking up some steals. Prices of condos especially have dropped. If you felt that you missed the market in 2005 or 2006, this is your chance to turn back the clock. The prices of detached homes is off significantly too. Every day I look at the sales reported that day and shake my head. Some great homes in Coquitlam, Port Moody and Port Coquitlam are selling at great prices. More buyers should be looking at the market.

 

Will the market fall further? That is the big question. But should it be? Over the years I've been asked questions such as "Is it a good time to buy"?' or "Is it better to buy in spring or another time of year?".  My answer is always the same: if you have found a home that you like and you can afford it, you should buy it. Period. It's that simple. So is the market going to fall further? Maybe. Does it matter? Think outside the box for a minute. What is the number that most buyers are interested in? It's your mortgage payment, right? Purchase price and downpayment determine your monthly mortgage payment. Most buyers ask, "Can I afford to pay that mortgage payment every month?" So aren't interest rates important too? You bet. Interest rates are the major determining factor in the equation.  At a current rate of 5.45% for a 5 year mortgage each $100,000 borrowed costs $607 per month. Let's say you wait for a market drop of $20,000 on your dream home. Good. Now prices are lower and you buy your dream home for $20,000 less. If interest rates move up 1/2 a percentage point you will have wiped out 20% of any monthly savings realized by waiting for the market to drop. If rates move by a full percentage point you've wiped out 40% of your savings.

 

Another thing to consider is the cyclical nature of real estate pricing. Over time, real estate pricing rises and falls, everyone knows that. In our recent history real estate prices have only risen when looked at over the past 20 to 30 years for example. The overall trend is for prices to increase. This isn't a suprise. Another factor is that when people buy real estate tend to stay in the market for years. So you buy an apartment when you're 25. Over the next 50 years you might buy and sell many homes. In addition, most people that buy and sell tend to be "move up" buyers. These buyers buy a home of greater value than the one they are selling. Did you know that the perfect time to "buy up" is in a down market? It's true. If you are in a home that you would like to sell, and you want to buy a home for $100,000 more, you are in a better position than 6 months ago. Why? The price of your move up house has fallen more in dollar terms than your home. You can buy more house for your $100,000 than you could have 6 months ago.

The Real Estate Board of Greater Vancouver just published the 3rd quarter statistics for the board as a whole. The statistics detail the number of sales and listings taken in recent months and compare those numbers with the previous year and year to date numbers. The numbers show the trend that has been discussed over the past 6 months, namely that sales are down and listings are up. Not a suprise. When supply increases (listings higher) and demand decreases (sales lower), prices must fall. The exact reason for this is clear when you look at the one major factor in the "make up" of every seller. That factor is motivation. Motivation is different for every seller. Some are selling to move up or down. Others are selling because they are transferred out of the area. Others are selling investment property. Others are banks selling foreclosures. Motivation level is going to be different for each seller. Some will have to sell. Others can sit back and sell or not, it won't change their overall lifestyle. The sellers that have to sell have little option but "go to the market". What I mean by that is that they must reduce their price until their property sells. It sounds simplistic but that is how real estate prices fall. Some sellers are more motivated than others and must reduce prices to get their properties sold. At some point prices stabilize because buyers are enticed back into the market by lower prices. A simple calculation can tell you what is happening in the market. It's helpfull to look at how many months worth of supply is on the market. Right now in Coquitlam, Port Coquitlam and Port Moody there is a total of 1,175 detached home listings on the market. In September there were 88 detached homes sold. That works out to more that 13 months supply of homes on the market in the Tri City area. Wow!!

Ok so it's June. That's according to the calendar not the thermometer. As I write this it's pouring rain and 8 degrees. Oh well, you can't control, the weather.

 

Back to real estate. CMHC predicted not too long ago that our local market would experience a price increase of about 8%. I don't know where they got their information, maybe they were just relying on past performance. It has just not happened. If anything prices have softened somewhat. The upper end of the market has definitely softened. This is due largely to increased supply. Demand has been good but supply has been through the roof in some price ranges and areas. Westwood Plateau is an area that has seen scads of new listings hit the market. The end result is a softening of prices in that market.

 

Increases in supply have the effect of slowing the market down as buyers see that they have selection and time. The net effect can also be an increase in collapsed deals. Instead of buyers feeling lucky to have secured a property and removing subjects/conditions joyfully they are bolting from deals at the least sign of trouble.

 

What is the bottom line? Your house might be worth a little less but you will have a great time buying your new home.

 

The real estate market is on a lot of folks minds these days. Will our local market go the same direction as that in the U.S.? Are prices at their peak? Is it the right time to buy? Even booming Alberta seems to suffering a price meltdown. So what is happening in our market?

 

I can honestly say that the market is holding firm. Sales activity in the 1st 3 months of 2008 are just 3.5% lower than the same period in 2007. Total sales in the Tri city area for January to March 2008 were 1, 011 compared with 1,047 in 2007. That is strong activity. Interest rates are dropping and inventory levels are high. Those 2 factors alone point to a great buying environment.

 

Our traditional bulwarks against a market meltdown are firmly in place. Geography has been good to us as supply and demand forces work to keep prices high. When you think about it we are nestled between the mountains, water and the ALR (Agicultural Land Reserve). Land is scarce. That is the simple truth of the matter. Flying into Calgary last summer I was struck at the number of subdivisions and roads being built. From the air it's plain to see that in order to add supply, all they need to do is push a bit of dirt around and lay some pipes in the ground. When supply is added too quickly, the market will suffer a downturn. Adding supply in our area takes a lot more effort. The vacant land is just not there.

 

So long as our economy continues to grow and interest rates stay low we will be in a steady market. We may not see prices rise dramatically but we won't see a downturn either.