As most of you may know, our local real estate market has reached and passed it’s “peak”. For now anyways. Inventory levels continue to increase along with a slight drop in prices, giving buyers more and more opportunities to get into the market, or buy an investment property. With more properties to choose from, and more time to make informed decisions, buyers are starting to control the market more and more.
I am constantly asked what my opinion is on the state of the market, and what I foresee for the near future. There is so much speculation about what might happen and a lot of talk of a “bubble”, so I thought I would take this opportunity to give my “two cents”. Too many times, we believe what we read in the media and assume it to be true. Someone simply states their opinion, and we are lead to believe that it is factual, when in fact, it is not. Many “experts” have been predicting our current adjustments for the last 5 years. They were constantly eating their words as our prices continued to climb higher and higher. An adjustment, like the one we are experiencing now, is completely normal. It has happened in the past, and rest assured, it will happen again. I personally, welcome this adjustment with open arms, as prices were simply rising much too fast. Many homeowners had their properties rise so much in value, that the property taxes doubled and sometimes tripled in amount. For many seniors and people on a fixed income, there was no other choice but to sell their property, in order to afford these rapidly increasing costs.
Financial institutions have tightened their lending criteria, and are doing away with the zero down and 40 year mortgage options. This new criteria should help us to avoid a disaster like the one that is happening to our neighbors to the South.
For the past few years, properties were selling at the drop of a hat with numerous competing offers fighting for the chance to own in our beautiful city. Now, it is absolutely necessary that properties are priced right, and in line with the competition if they expect to sell. We are seeing more and more price reductions all over the lower mainland.
Over the next year and a half or so, I think we can expect to see more inventory and some more price reductions. By then, the olympic craze is likely to set in. I’m not sure what it will do to our prices, but I feel that inventory will really start to move again, no matter what price they are at. Many people will rent out their homes and investment properties during the 2010 games, and they are already renting for absurd amounts of money. If you are interested in renting your place, there is a website that has been set up that will help you advertise your property for rent. Check it out here.
When you are thinking about making an investment in real estate, whether for your primary residence or as an investment property, you have to think long term. The days of buying condos before they are built and then selling them for a huge profit are behind us. (Until the next cycle of course). If history has shown us anything, it is that real estate is always a wise investment over the long term. Be sure to gather as much information as you can before making any big decisions. Stick to the basics. Choose a great location that has opportunity for advancement, and choose a property that you can afford in any scenario.
My team and I are happy to answer any questions you may have. Feel free to contact us with any questions or comments you may have. Cheers.
posted by: Wesley Behan. September 9th, 2008