A market shift = a shift in expectations
Real Estate market conditions in the Lower Mainland and other parts of BC have shifted. After five years of blockbuster Real Estate activity in BC and double-digit price growth, market conditions have slowed, and now favour buyers in many areas of the province.Residential sales have declined 22 per cent in the first six months of this year, while available resale inventory has grown by 54 per cent to 57,000 active listings in June. In the Greater Vancouver board area, where longer-term data is available, inventory is at the highest level since 1998.
Home price appreciation observed from 2004 to 2007 is less attainable in today’s market, and sellers’ expectations for such gains should be tempered. More generally, in a market favouring buyers, prices generally increase at or below the level of inflation. While the average residential home price in BC increased at a healthy 6 per cent per year since 1981, large gains are often followed by periods of price stagnation. Over-optimistic pricing by sellers will only inhibit the timely sale of properties, adding to inventory levels.
Buyers have more homes to choose from now than in previous years, resulting in greater freedom to compare the attributes and prices of similar properties in the market before making purchase decisions.
Despite current buyers' market conditions fuelled by housing affordability constraints and economic uncertainty, the economic and demographic backdrop in support of housing demand remains strong in BC. BC's unemployment rate remains near record lows, while the labour force participation rate hovers near historical highs. Meanwhile, the province remains a favoured destination for new migrants, reflected in the third-highest population growth among provinces during the first quarter of 2008. However, challenges continue in the forestry sector, and eroded consumer confidence may also be playing a role in a pull back of consumer spending.
As a mortgage broker I can still offer 100% until October 2008 at fully discounted rates.
3 comments:
What is happening now with the RE market is just a natural supply/demand cyce. Though a bit rough. The cancelation of the 40 year mortgage is somewhat contradictory to what is happening, but in the long run, it will do only good. As a Vancouver real estate agent in one of the strongest RE markets in Canada, I feel it already influencing the market. Brokers like yourself that aren`t scared and continue working with the mortgage somewhat fuel the drive, because people want to buy till they can afford.
In the end, it`s going to be good.
Jay
Hi Jay,
Thank you for your comments.
I agree that the real estate market is going the a natural supply/demand cycle. If you're a buyer in the market right now you have a lot more selection and you don't have to be as impulsive when you find a place. The change from 40 to 35 year ammortizations won't make too much of a difference but as of October 8th people won't be able to obtain 100% financing which may have an impact on the bottom end of the market.
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