Autumn Market
Like all British Columbians, I have been bombarded with the latest doom and gloom predictions of a crashing real estate market. Here are some REAL facts - that probably would not help sell newspapers - but please consider the following;
Recession is defined as "..a business cycle where employment, investment spending, household income, business profits and inflation ALL fall, while unemployment and bankruptcies rise. The government response to a recession is to increase spending and reduce taxes."
There are no massive layoffs, no collapse in household income, inflation is holding at less than 2%, non-residential investment spending is down from 2009 but housing starts June 2010) are up 97% from June 2009 and according to Canada Mortgage and Housing (CMHC), they will continue to climb for the next 3 years. BC's unemployment rate will remain lower than the national average, and if you haven't been following the HST saga, taxes sure aren't being reduced.
'Bubblemania" - again (like in 2008) predictions of a 30 to 40% price drop, dominate the news. The reality is; from the January 2008 price peak to the price bottom in December 2008, the Greater Vancouver housing price index fell 16% - and then rose 27% (from the bottom) to another peak in February of this year (14 months later). Currently the housing price index has 'softened' 2.5% from February 2010...and appears to be levelling out. (I can send you the Housing Price Index graph if you contact me)
Interest rates - The best 5 yr fixed rate is now 3.45%...WOW! (the 40 year average for a 5 year mortgage rate is 5.79%). Bank predictions in May 2010 were for a 2 to 3% interest rate rise by the end of 2011 BUT that was before the summer slowdown and with expectations of higher inflation. The Bank of Canada just raised the national interest rate (from .75% to 1%)and the canadian banks responded by lowering the mortgage rates. Note: the Bank of Canada raises the national rate to decrease the CAD compared to the USD and to reduce inflation. The 'banks' lowered interest rates to stimulate demand for mortgages.
Should you wait to buy? Consider that; 1) Selection has never been better (2) there are some very motivated sellers (3)The cost of money is low (e.g. a $300,000 mortgage at the 41 year average rate will cost you $32,000 more over a 5 year term than the current best rate of 3.45%) - which means prices would have to fall by more than 10% to make it a 'wash'.
I can most likely negotiate most of that 10% off the price and you can still get the low interest rate. Win- Win.