Macrealty October 2011 Market Update
2011 has been the tale of two real estate markets, as mainland Chinese buyers influence some areas and asset classes while ignoring others altogether. The biggest beneficiaries of the influx of Chinese immigrants have been Vancouver and Richmond, and to a lesser extent, Burnaby, White Rock, and West Vancouver. Many areas of these cities have seen their single family home prices increase 20+% over the past 12 months, with some areas approaching a 50% increase!
Historically, big price increases in single family homes in these areas have resulted in upward pressure in both the surrounding communities and alternative asset classes as people cash in by selling their Westside homes and downsize to a condo or house in the suburbs, the Interior, or the Island.
Interestingly, this has yet to happen.
Prices for multifamily homes - condos and townhouses - have remained relatively stable, while prices in the surrounding suburbs of Vancouver as well as on Vancouver Island and in the Interior have more closely tracked the price gains of the markets in the rest of Canada rather than the core cities of the Vancouver area.
So what will happen in the fall and winter?
No one really knows what the market will do, but traditionally, the fall and winter seasons have resulted in a slow-down in the market as families buckle down for the school year and weather patterns make buyer tours less pleasant. Because there are fewer buyers, many sellers decide to pull their properties off the market, which results in less supply to offset the drop in demand.
However, statistics consistently show that house prices tend to be lower in the winter than in the summer, which is why home price stats are seasonally adjusted. There are many reasons for this seasonal disparity, but simply put, people who sell in the winter are more likely to need to sell. And because there are fewer buyers, true negotiations between buyers and sellers are more likely to occur in place of auction-type multiple offer situations.
So what does this mean if you're a buyer or seller? If you're a buyer that has the flexibility to purchase during the winter months, your selection will be limited, but if you find what you like, you could very well get a good price for your home. If you're a seller that needs to sell, the limited supply can work in your favour if you have a good realtor that can outline the unique features of your home.
(Click chart to see larger image)
Every situation is different, and each year presents a new set of challenges and opportunities that require professional analysis. Feel free to contact me if you have any questions.