July 2013 Housing Market Update video podcast with British Columbia Real Estate Association’s Chief Economist: Cameron Muir

Best time to Buy?

May 16, 2009

Interesting to read the British Columbia Real Estate Association (BCREA)’s report this week indicating that April was the third consecutive month of increasing home sales in BC. It seams cliché to say “this is a good time to buy” but it seems that many people are agreeing that it is. Whether we are now at the bottom and end of the current price correction will remain to be seen, but does it really matter? When buying real estate, your holding period will generally be long term. People flipping pre-sales will not comeback anytime soon; but for people who want to buy a home to live in or a property to hold as a investment; this may be a best time to enter the market. While the Bank of Canada has indicated interest rates will be set until summer of 2010, I believe the market will force change over the next year. In speaking with mortgage brokers who’s opinions I respect, they note the long term bond rates are starting to move up and bank borrowing interest rates may follow. If we look at cost of real estate in terms of monthly cost, interest rate is a huge component. Whether the prices drop another 5 or 10 % over the next year seems irrelevant, if we can assume they will gain that back over the next 5 years and a 1% increase in borrowing interest rates would have a more significant in the purchaser’s real cost of real estate.

I know in my office, I can echo the BCREA report’s sales volume numbers. Our conveyance volume jumped in February after a quiet December and January. March and April continued to be busier and based on our May calender and volume of new deals coming in; I am confident that May and June will continue to demonstrate increased activity.

David Watts

The BC Real Estate Association (BCREA) reported on March 13, 2009 that after several months of decrease, that there were more Home Sales last month, than the month prior. Greater Vancouver has experienced a 13% average decrease in prices. The residential sales units fell 45.3% for this Feburary over last Feburary.  The report (http://www.bcrea.bc.ca/news_room/2009-02.pdf shows a graph which is shows quite well what is going on.

We have heard so many reports about how this month is 50% less than same month, year over year. I think that the reporting of month to month is more relevant than year over year right now because we are not in normal times. Seasonal changes still occur, so it is useful to look at year over year, but in this climate; where we see constant decline, its is nice to see a positive statistic that indicates we may be nearing a bottom.

One item not addressed in the BCREA report, that I believe is relevant; is that a lot Feburary transactions were completions on newly build condos. Some of the contracts for these properties were recently written such as the Onni and H&H Blow-outs, but several of these contracts were written over the past few years with current completions. I believe this does somewhat skew the numbers in that it does not reflect people choosing to enter the current market, they have made this choice months and years ago.

As long as there are both Buyers and Sellers in the market, prices may go up or down, but at least there should be enough particpants to allow market forces to work. What we saw in the fall of last year was a real imbalance with a flood of sellers and hardly any buyers. Some sellers have taken their properties off the market and there are some new buyers in the market as the cost of ownership continues to decrease with interest rate cuts.

In my office, I noticed things start to get busier around the beginning of Feburary. I think we will have a strong spring with lots of continued activity in the entry level markets.

David Watts