In these volatile times, there seem to be two major news items (with an interjection of a fantastic US election story): stock market news and real estate market news. Seems we just can’t get enough of the news, mostly bad and I guess that sells papers – what did one journalist say – it’s like a bad accident, we’ll slow down every time to get a good look.
Under normal circumstances markets cycle and naturally correct themselves over the long run. But these are not normal circumstances, and after seven years of an upward market trend we are now on the backside of this cycle. Was it precipitated initially by the psychological fear of Canadians – Vancouverites – that what was happening down south could happen here? I believe so. We are witnessing a global crisis because of what happened in the states. And that has definitely created more fear, anxiety and uncertainty. But know this: Canadians have one of the lowest debt-to-GDP ratios in the world. And our banking system is still among the strongest with a far tighter system of checks and balances than the U.S. We will not experience the degree of crisis the US is experiencing.
Given that our commodities feed the U.S. economy, B.C. was bound to feel some after shocks from the U.S. situation. It had to happen. Downward markets can last for varying lengths, just as this recent upward cycle lasted longer.
Have sale prices in Vancouver fallen? When measured against May 2008, yes they have. In some neighbourhoods for a number of categories in some price ranges, prices have already contracted more than the Real Estate Board’s projection of the 6.9% average. So as to not misinterpret recent headlines – and yes, the number of transactions was down 51% – this means prices are down a varying amount by neighbourhood and there are less transactions being done. So yes, the market is falling but the sky is not, as Peter Simpson of the Vancouver Sun (November 12, 2008) so aptly said in one of the few well rounded, saner reports on the overall market conditions in Vancouver and Canada.
We all need to take a breath and recognize what we already know: markets go up and they go down. This is the natural order. This reality presents some very powerful opportunities to take advantage of lower prices and great interest rates if you are so inclined.
And don’t wait for the proverbial “bottom of the market”. It’s hard to time and you may miss it altogether, as some folks did in this most recent upswing. I’m sure we’ve all heard someone in the peripheral of our sphere of influence say, “See? I said this would happen!” And meanwhile they have missed out completely on seven years of a fantastic market. Let’s see if these same naysayers will jump in this time. Some folks like to stay on the sidelines in perpetuity. We shouldn’t be afraid to make a move if we research and then gauge our investment moves carefully.
And don’t forget that Vancouver is still rated one of the best places in the world to live. Witness Vancouver’s #1 ranking in The Economist’s ranking of “the world’s most livable cities”, April 28th, 2008. Further, on a world scale Vancouver also is ranked #1 as far as “the best destination for business travel” according to the Economist Intelligence Unit, April 29th, 2008.
Beyond this, Vancouver will be receiving a lot of worldwide attention as we approach the Olympics. This will make an already desirable place more desired by more people! Plus, the Olympics and the Olympic facilities will deliver a well-timed positive economic activity injection over the next 16 months. From now through the Games, Vancouver will be relatively busy in a country with a safer banking system while the rest of the world wrestles to offset the current situation. In fact all things considered, Vancouver has the potential to weather this storm and be one of the few positive oasis in North America if not the world over the next 16 months.
Furthermore, Vancouver is also inherently desirable because of the physical restraints on land availability in the Metro Vancouver area. These constraints in combination with increased worldwide profile will lead to greater population density and will drive up the property values over the long term.
The winter holiday season in Vancouver creates a natural slow down in the market. This coupled with the election of a new US president and some stabilization in the stock markets, may well lead to a more stable real estate market here in the lower mainland.
And remember, interest rates won’t stay this low forever, so if you are buying, or selling and buying in the same market, keep that in mind. There are amazing opportunities out there. And for many of us, the equity we have built up over the past few years has stood up well under the current pressure.
And as I said in my last entry regarding trading up – yes, you might have to sell your house for less, but you can also get the house of your dreams for less. All in all, upgrading is potentially more attractive today with low interest rates and wider property availability. If you feel the inclination, there are excellent opportunities at this time for those who do their homework and then act decisively.
But, for the majority of us, our property is more than just an investment it is also our home: a place where we raise our kids, take care of our pets, enjoy the companionship of our friends and families and take pride in what we have created. If you are not ready to move, then don’t. Stay put and keep on the lookout for blue skies…
Our Real Estate Listings
Our Real Estate Blog
Head Office: 1838 West 1st Avenue Vancouver, B.C V6J 1G5 Fax: 604-224-5279 Email: firstname.lastname@example.org