May 6, 2012
Our Real Estate Still A ‘Good Deal’
Over-the-top prices may make the news, but in reality this is still a good time to buy, and that includes first-timers.
BY TONY WHITNEY
It seems that almost daily, the media bring us yet more news of financial challenges faced by economies in various parts of the world – and especially by Europe and the U.S. Given this scenario, it’s all too easy to worry that sooner or later, these issues are going to affect us here in Canada and even have an impact on housing markets in the Lower Mainland and other parts of the country.
In fact, experts closely involved with the financial sector believe that there is no “bubble set to burst” or any possibility of dramatic changes in the housing markets in this region any time soon. Many financial people believe that although there may be some “softness” in the B.C. housing market, it’s still a good time to buy – especially if it’s a first-time situation. And homeowners selling and moving up, or downsizing, can expect to get a pretty good deal at both ends of the transaction.
Helmut Pastrick, chief economist for Central 1 Credit Union, the central financial facility and trade association for the B.C. and Ontario credit union systems, paints an encouraging picture for homeowners (and would-be homeowners) in the province. He cites the fact that anyone who has bought property in this region over the last 30 years or so has every reason to be happy with their decision. “Given past experience,” he told West Coast Homes & Design, “expectations of growth are certainly realistic, but now and again there’s a dip and the market does enter a soft spot, but most of the time we see the market either rising or holding steady.”
“It’s not a weak market, it’s not a strong market, it’s somewhere in between.”
There is a danger of people in this region overestimating the effects of any kind of “European meltdown” and sometimes, it’s this “perceived crisis” which makes people hesitate to invest in property. It’s all too easy, with today’s ease of news access, for people to look at the U.S. and wonder whether Canada is going to suffer a similar crisis to the one that’s been so damaging south of the border. But Pastrick can’t see anything like this happening “in the foreseeable future.” He believes that people may tend to take a cautionary attitude and delay a home-buy for a while and among these are buyers who are in no hurry for that new home anyway and may adopt a “wait and see” stance as far as the economy goes. He noted that the chance of an existing homeowner losing any money after owning a property for a few years was remote.
Also, there are always a number of renters who are looking around for a property and can afford to wait for a while, until they think the timing will work for them. “But for a first-time buyer,” Pastrick said, “this would be a perfect time to buy, with interest rates being so low.” He added: “I’d lock in for five years and as a buyer, I’d be a little aggressive on my bidding. It’s not a weak market, it’s not a strong market, it’s somewhere in between. We’ve seen volumes at much higher levels than we have over the past few months and occasionally we’ve seen them lower. I don’t think that this market is in trouble or anything like that.”
Prices are holding steady around the region and there are plenty of choices around Metro Vancouver. Even as close to Vancouver as Burnaby and Richmond, there are excellent buys that also happen to be handy for SkyTrain. Pastrick confirmed that it would be easy for an outsider to believe the city was “too expensive” but over the past few years, a fairly small number of super-luxury properties sold to offshore investors at mega-prices have tended to skew the average price and create the notion that there are no affordable homes in the area.
Pastrick cited the Lower Mainland’s location as a factor that will always assure buyers of a worthwhile investment. “We really are landlocked here, given our geographic constraints. The metro area has pretty good population growth and the land area is not increasing. In the long term, prices are not anywhere near overvalued – in the next 10 years the metro area could be home to another 900,000 to one million people and where are they going to live?” He believes that densities of developments will increase to take care of this growth. Added Pastrick: “Land prices will get even higher over the next 25 years or so and when that time comes, people will be saying what a great buy the area was back in 2012 and thinking that it must have been a great time to buy.”
Pastrick underlined that the short term market is always hard to forecast because it’s tough to predict what might happen in the next two or three months, given what’s unfolding in Europe and the possibility of more trouble in the Middle East. He concluded by emphasizing that the average homebuyer is not looking for quick returns. “Most purchasers are in it for the long term – it’s their home and not an equity to be traded on highs and lows. Take a long-term view and typically, any homeowner ends up being better off.”