Great deals out there
Home buyers are holding back because of the economy and deals have sprung up as a result
Jennifer Podmore Russell, Special to Westcoast Homes
Once again the real estate market is one of the hottest conversations in town. The topic can be heard at the water cooler, in restaurants, at dinner parties and on airplanes.
We talk about it because it affects us and because the correction in the market has occurred far faster than we expected.
I have heard both doomsday predictions and rosy outlooks. From this, I conclude that right now people are looking for direction. They are looking for some semblance of where the market is going, when the opportunities will emerge and how to best act on those events.
While I cannot predict the short term fluctuations of the market I can offer insight based on MPC Intelligence's experience observing and documenting Metro Vancouver's development market.
I can provide some simple facts about the current market that will better allow consumers to sort through the fact and the fiction in the months ahead.
The Chinese proverb says, "May you live in interesting times." Which is exactly where we find ourselves in today.
The rate at which our markets (real estate, financial, and stocks) have changed has been nothing short of dramatic. It has caused many of us to question our own security and defer major purchasing decisions.
With this in mind, it is no surprise that we have witnessed a significant decline in the number of homes sold through the second half of 2008.
MPC has documented the reduction of sales in nearly every market in the Lower Mainland during the fall months.
We attribute this to buyers collectively adopting a "wait-and-see" approach to home buying, which has resulted in some developers offering incentives to those who are willing to take more immediate action.
Preferred pricing, mortgage rate buy downs, increased levels of finish and feature are some of the most popular offerings. The reality is, if you are looking to buy a home, there are some great deals if you act today.
The next truth of today's market is that consumers have the time to research, explore and contemplate their next home purchase.
MPC monitors every development in the Lower Mainland on a monthly basis. We monitor sales absorptions, values, completion schedules and new development activity.
In November and early December, MPC observed that the number of people looking for homes (that is visiting presentation centres and display homes) has steadily been increasing. From this, we derive that people are more actively looking for a new home.
Another certainty of a correcting market is that it is impossible to predict the bottom.
I have often been privy to conversations that speculate where and when the very bottom of the market will occur. I challenge, with all due respect, that a decline is not nearly that predictable. And I suggest, during the coming months as we move towards the spring market, consumers looking for their next new home should start doing their due diligence.
They should start deciding what neighbourhood they would most like to live in, what type of house they want and at what price tag. They should talk to the banks to confirm eligibility.
Of course there is no guarantee that they will find exactly what they are looking for but at least they will be prepared to identify opportunities and to take advantage of this unprecedented time in the market.
We also have to realize that this is a very different decline than in the past.
As such, we must consider a few factors. Most of us will be only be affected by this correction psychologically as it is human nature to monitor the value of our homes. We watch a neighbour sell or advertise their place at a reduce value and we speak of the money lost at our own address. We had similar discussions in the heat of the market when we perceived we had made money through adjacent rising sales values.
For most of us, our home is where we dwell. It isn't just walls that provide shelter, it is where we live our lives and choose to spend our time.
While a handful of homeowners will list and sell their homes next year -- because of lifestyle changes, financial motivation or the need to relocate --most of us will only watch; albeit with some trepidation, as the market twists and turns and comes back to normal.
Normal is a word that often gets misused. To me, it defines a market that is dependent on supply and demand, one that is not predicted to climb or fall with any large or permanent swings.
Normal means we are in a changed market, with changed definitions and requirements of participation.
It alludes to a market that will see corrections and one that is nearing a better balance.
Perhaps the greatest advice one can receive is that there is never a bad time to start building equity into a home.
Now more than ever I see great opportunity for those who want to get into the market. Of course, there will be pricing reductions moving forward and motivated vendors will reduce their prices for quick sales. However, as the financially motivated exit the market the aggressive pricing will settle. We know that no one can pinpoint the bottom (or top) of a market. Instead we rely on intuition.
This real estate correction, coupled with the decline of most other markets, has created for some the prospect of finding a new, next or first home.
While not all homes on the market are good deals buyers, with some research, can be confident they are buying at a price that makes sense today and tomorrow and will have no regrets moving forward.
Five years from now, we will all be more disappointed with the things we didn't do and the opportunities we didn't take.
If what you are looking for is a home, a place to raise a family, entertain your friends, celebrate holidays and set your roots then start looking in 2009.
Chances like this only come around once each cycle.