I was just interviewed by CBC Newsworld about what the market is doing and how it impacts on buyers and sellers of Vancouver Real Estate. The woman who interviewed me had already spoken to some other realtors about the real estate market in other parts of the country and was surprised at what I was telling her. She said that she was hearing that the market is terrible and that many realtors were worried about the impact on their incomes due to lack of work. Well I will go back to what I told her about the market in a second but as far as the impact on my income, she specifically asked me what I thought would happen to my business and income and my level of concern about this. I said that if the market continues to slow, I expect that I will see some reduction in business and income but that I am prepared to work harder to keep any damage to a minimum. With respect to her question on the impact on realtors generally, I said that I think many realtors will quit working in this field but that I thought that that may be a good thing. I think the good realtors will stay and the ones who got into real estate not realizing it requires hard work and based on an erroneous belief that it is an easy way to make a high income, will be gone..... I think this will greatly benefit clients.
With respect to what is happening in the market, I told her what I think based on what I have been reading from reliable sources not trying to sell newspapers (and I am practicing what I preach with my own real estate investments).
Firstly-I think if you are going to put money somewhere as an investment, real estate is probably the safest place as long as you are getting good advice on what you are buying-whether that be your principal residence or a rental property (that would mean advice from a knowledgeable realtor-not advice from neighbours, family and coworkers). Buying a "home" saves you rent and buying a good investment property should earn you income....in either case, market fluctuations should not be a huge concern.
Secondly-While the Vancouver real estate market is much better for buyers now, sellers are still able to sell at very high prices so should not be deterred from selling if they were considering selling at some point in the next couple of years. I am selling a couple of my properties now even though I could have sold them for more if I had sold at the peak. I have, in theory, lost a bit but have made a lot more during the time I have owned the properties. I think the sellers who are in trouble are those who list their properties and then watch them sit at prices which are too high for the property to actually sell (buyers don't seem to be offering on anything that is overpriced)-as they sit hoping someone insane will make them an offer, their properties could be worth less and less each month...if they are going to list, why not list at a price that will sell and sell quickly before they risk the prices moving downward? I don't get it!
Thirdly-Buyers should be rejoicing and acting now while we have so many factors working in their favour: great interest rates; lots of properties to choose from and the luxury of time to consider their purchase. Some say "what if the market goes down further" well then I have to ask-how will you know when it has gone down and bottomed out? How will you decide when to buy? It is next to impossible to predict the top or bottom of the market and in my experience greed kills-trying to squeeze every dollar out of a transaction doesn't seem to be the best way to do things. And again, unless they need to sell soon, who cares if the market goes down-it will go back up.
Fourthly-Upgrading is a lot easier now than it was-it seems to be a lot easier to sell the lower priced properties and many of the higher priced ones are sitting longer and prices lowering more (dollar wise of course but in some cases also percentage wise)-so in my opinion (and again, I am in the process of upgrading myself so this is not just me trying to con some poor potential upgrader) it is a lot easier to move up in the market now. Some houses which may have been completely out of reach for a buyer last year may now be possible to purchase (for more details on how this works, pls see my Aug 25/08 blog or call to discuss).
And finally-For investors, there are some great deals to be had-it seems a lot easier now to find properties in Vancouver where one can purchase and fully finance the property through rental-this is a great thing and usually difficult to achieve in the Vancouver real estate market!
So yes the market is slowing and yes it will affect a lot of us...but it is not all gloom and doom-the market is still active (we have been involved in 6 multiple offer transactions in the past month so something is going on out there!)....perception is 9/10ths of reality in my opinion and the worst thing in this market is that a lot of buyers and sellers have a distorted perception of what is really going on...and that creates a reality which really isn't real. Personally I plan to keep my perception positive for as long as I can because from what I see in the market, the reality is there is a lot to be positive about!