I am often asked the question - should I wait to buy?
To answer this question, we need to look deeper at the various factors which affect values in and Real Estate Market - most importantly job growth, in-migration, increasing average incomes, infrastructure development and sustainability.
Canada as a Country was credited with having the #1 banking system in the world in terms of strength, liquidity and stability by the IMF (International Monetary Fund), and we are expected to lead the entire G7 in terms of population growth and economic strength over the next few years. As a result, Canada - primarily in the West - has the most of what the world needs...Food, Fuel, Fertilizer and Water.
Locally here in NE BC, the recent finds of huge shale gas fields have doubled Canada's proven reserves of natural gas. This has spurred on massive land right sales over the past couple years - almost $3 Billion in 2008 alone - and continues to be a large catalyst in oil companies purchasing rights to these leases. With current high oil prices and expectations for even higher prices, the oil sands in Ft. McMurray will continue to expand to help meet the World's demand for safe, politically stable oil. As a result, a study has shown that expected production rates in the oil sands by 2015 will consume as much as 80% of Canada's total current natural gas production alone in the oil sands extraction process - and today we export much more than we use.
Here in Fort St. John, we have the 2nd youngest average population in BC next to Whistler..primarily due to the young couples moving here to take advantage of the affordable housing, great incomes and excellent lifestyle. This trend is not expected to slow, and should continue to drive the entry level home market. The cost of home ownership is typically referred to as the 'Affordability Index', and it measures how much of a region's median household income is taken up by home ownership costs. Here in NE BC, we are blessed with an affordability index of approximately 30% - compared to Greater Vancouver with an index of over 80%! This type of research shows how affordable home ownership really is in the area.
Infrastructure also plays a huge role in the sustainability of any area - look at the development occuring locally in our area within the past few years; a new hospital, Enerplex, hotels, apartment blocks, road paving and more show the confidence that private companies as well as the Government have in the future of the economic growth in our area.
Another thing to consider is interest rates..with a current Bank of Canada rate at 0.25%, there is only one way rates can move. Inflation and the devaluation of the US dollar will help to keep pressure on historically low interest rates, but everyone who is choosing to go with a variable type mortgage today should be able to deal with the coming rise in interest rates - possibly 2-3% within the next couple years.
The past 2 years through the deepest recession in decades has proven the strength of our market - housing prices remained very stable, showing that our values were based on solid economic fundamentals, not on the speculation that drove so many other markets. Along with infrastructure development, expected job growth, in-migration, strong affordability and the average incomes increasing in the area, it's no wonder that the Real Estate Investment Network named Fort St. John as BC's top investment town for the past several years, and we continue to be on the list of Top Ten towns.
All of these factors also ignore the effects of the potential Site 'C' Dam project and what 2,000-4,000 over 6-8 years will have on the housing market of a town of approximately 17,000 people..
So my answer is usually the same - it's a great time to buy for many reasons if you're not overleveraging yourself. And I don't just say that - I act on it and continue to invest in real estate in the area.
Contact Mitch today to learn more about our dynamic market!