I published this article in my other blog a month ago.
Coquitlam, Port Moody, Port Coquitlam and Maple Ridge Real Estate Market Report
Over the past 3 months a number of people have commented to me that the market has really taken a beating. With recent news reports painting a dire picture it may seem that the market is in the tank. What is the truth? The truth is that we are in a steady market that is slightly balanced in favour of buyers. Home prices have declined over the past 3 to 4 months and this this trend will probably continue until January 2011.
There are 2 big questions. Firstly, is this the start of a “correction”? I don’t think so. Many people point to the downturn in US home values as a precursor to what may happen here. They see the inevitable correction around every corner. The truth is that the U.S. market is in a painful downturn after a dramatic and unsustainable run-up in values. Home value increases in BC and the US occurred for different reasons. Home price increases in BC since 2001 were due to lower interest rates, increased confidence in the economy and a build up of buying pressure as buyers stayed out of the market in the late 1990′s. Reasons for price increases in the US were probably brought on by similar conditions except that looser credit rules dramatically amplified the increases. Our conservative banking rules saved us from a similar fate. That brings us to the 2nd big question. Are current prices sustainable? I believe that they are. Demand is good, The economy is good. Interest rates will continue to be low over the next 24 months. The US economy will continue to slowly improve. We will benefit from all these factors and prices will remain high.
Homes Sales in 2009 and 2010
Coquitlam, Port Moody, Port Coquitlam and Maple Ridge
| |
Number of detached
homes sold
|
| Jan-Aug 2007 |
2,695 |
| Jan-Aug 2008 |
1,916 |
| Jan-Aug 2009 |
2,251 |
| Jan-Aug 2010 |
2,003 |
You can see from the above table that year to date homes sales in our area have remained fairly constant. The way I see it, 2010 is no better or worse than 2008 or 2009. The market correction that occurred in 2008 happened after September 1st for the most part and is not reflected in the numbers above. Prices increased dramatically in 2007 and by looking at the chart one can see why. Home sales were about 25-30% higher that in the past 3 years.
I would like to point out one major factor that does not change in Metro Vancouver. That is the fact that our land supply is limited by 3 things, namely the ocean, the mountains and the Agricultural Land Reserve. The supply of land here is limited. Fly into a city like Calgary or Phoenix AZ and all you see are subdivisions being built and roads being pushed through. Land for homes is limited only by how far buyers are willing to drive. It’s conceivable that homes could be built in either of those cities in larger and larger concentric circles. It’s different here. We can only go east and great quantities of the available land is tied up in the ALR. This limited supply has the effect of pushing prices higher.
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