Vancouver Real Estate Report - Is Now the Time to Buy?
The months of inventory metric hit over 14 months in December of 2012 but steadily dropped to around 5 months over the course of 2013 where it is now hovering. I suspect that the Vancouver real estate market will remain stable as long as the US Federal Reserve Bank continues to purchase billions of dollars a month in bonds. This stimulus is effectively increasing the money supply and depressing interest rates lower from where they would otherwise be. Interestingly, the Federal Reserve has already reduced its bond buying to $75,000,000,000 in December from $85,000,000,000 the month before. It plans to continue to reduce its purchases by 10 billion a month until late this year when the program will come to an end. It will be interesting to see how high interest rates will rise as the taps are slowly closed. I am guessing we will see 5yr fixed rates go up another 1%.
Pricing on detached westside homes in January of 2013 was $1,995,300, the lowest it has been since early spring of 2011. Thanks to the spring market, prices grew slightly and the HPI index for westside houses was $2,103,300 in December 2013. Pricing has generally been stable for attached homes and apartments in 2013.
So what does it mean to me? The questions I get asked most are: "Is it the right time to sell?" and "Is it the right time to buy?". The answer is yes but the questions should be "Is it the right time for ME" and "where is it a good time to buy/sell?".
I sold all of my Vancouver real estate holdings and presently rent. The reason is simple - it costs a lot less! The Canadian Housing and Mortgage Corporation recently released its 2013 Rental Market Report and it illustrates that very point - it is significantly less costly to rent than purchase a home on the westside of Vancouver. Don't get me wrong, there are plenty of reasons why buying a home in Vancouver makes more sense then renting but for now, the cost is not one of them. The most important thing to remember is that the longer you plan to hold your property the more likely it will pay off.
If you are an investor and want to buy cash flowing properties with minimal down payments then the question about where to buy is far more significant. The answer is: go where things are growing. I have purchased several revenue properties in Fort St. John BC and have and continue to help clients do the same. Fort St. John is in the heart of one of the largest natural gas deposits in North America. You may recall Premier Christy Clark's election promise to promote BC's natural gas industry - it won her the election. Properties in Fort St. John are cash flowing beautifully with projected annualized returns of about 20% based on a 5 year hold. If you are interested in exploring the investment opportunities in Fort Saint John, give me a call and we can get started.
Remember that Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure for the ensuing six months, 5-8 months of inventory meant a flat market with respect to pricing and over 8 months of inventory has, for the most part, precipitated downward price pressure.
Do not hesitate to call me if you have any questions and please pass this and my contact information along to any friends or family who might benefit from my services.
By Sam Wyatt VancouverRealtor