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Category Archives: Real Estate

2011 Year End Review

All in all I’d say that 2011 was a great year for the lower mainland real estate market. In general prices were up. In some markets prices were up significantly. Richmond, West Vancouver and Vancouver saw price increases that could only be called “bubble like”. That worries me.

The Tri City (Coquitlam, Port Coquitlam and Port Moody saw a more tempered increase. The number of actual homes sold in 2011 was up in the Tri City area, in some areas sigificantly. Coquitlam detached home sales were up 29%. All in, the Tri City registered a 12% increase across all home types (detached, townhome and apartment).

Here are the numbers:

Detached home sales 2011 versus 2010

Coquitlam   1039 homes sold in 2010, 1339 homes sold in 2011,  29% increase

Port Moody   230 homes sold in 2010, 234 homes sold in 2011,  2% increase

Port Coquitlam  428 homes sold in 2010, 453 homes sold in 2011, 6% increase

Attached home3 sales 2011 versus 2010

Coquitlam   1086 homes sold in 2010, 1237 homes sold in 2011, 14% increase

Port Moody   496 homes sold in 2010,  525 homes sold in 2011,  6% increase

Port Coquitlam    571 homes sold in 2010, 531 homes sold in 2011,  7% decrease

 

The MLSLINK Housing Price Index

Here is an explanation of what it is:

The Housing Price Index (HPI) is an alternative measure of real estate prices that provides a clearer picture of market trends over traditional tools such as mean or median average prices.

As of December 2011 the following benchmark prices applied:

Coquitlam $674,792

Port Moody $933,068

Port Coquitlam $555,876

I’ll be adding more to this as soon as possible.

Thoughts about where our local real estate market goes from here.

In a recent article in BC Home Magazine, a local economist noted that population growth will likely drive the Vancouver real estate market. In the article he noted that in the final quarter of 2008, BC’s population grew by 14,440 persons. This is second only to Alberta in growth and the largest quarterly growth since 1996. Both international in-migration and inter provincial in-migration are up with the international side growing strongly and interprovincial getting weaker. The connection to house prices seems obvious, as more people move in than move out, demand for housing will increase.

What about other factors that drive the market? Surely interest rates have a major impact. In fact housing affordability has grown in the past 12 months. The article suggests that house prices are down 11% from a year ago and that the actual cost of carrying the mortgage on that average home is down 23%. With numbers like this it’s a wonder that more renters are not trying to get into the market.

Market continues to be robust

Not sure if we lower mainlanders are particularly resilient to the world economic situation or if our heads are simply “in the sand” but our local real estate market continues to be busy. We are seeing sales happening and plenty of showings on our listings. My thoughts are that perhaps as many buyers are out there looking as there were one year ago when the market was hopping. The difference is that only half of them are actually buying. The other half are waiting for the bottom of this trend to be signalled.

One thing is for sure, it’s a great time to buy a home. Why? All the usual reasons; prices are down to relatively affordable levels; there’s no hurry, buyers can take their time; selection is good and most importantly financing rates are down significantly. 5 years rates are as low as 3.6%. That’s pretty low. About 6 months ago, with rates at 5.5%, you would have paid $610 per month to borrow $100,000. Today, at 3.6% that $100,000 will cost you just $504 per month, a savings of $106. That’s a savings of 17% on  your largest expense. Couple that with the fact that home prices are down 20%-25% and the savings just pile up.

How many homes sold in February?

These are the unofficial number for the past 3 months in terms of homes sold In Coquitlam, Port Coquitlam and Port Moody.

Detached Sales in:

February 70 homes sold

January   58 homes sold

December 39 homes sold

 

You can see that the numbers are up up up.

 

Here are the attached numbers:

February: 74 homes sold

January:   115 homes sold

December: 53 homes sold

As you can see, the number of attached homes sold peaked in January. Interesting.

Evergreen Line

I noticed that Translink has almost completed their display trailer for the Evergreen line on Coquitlam’s Park and Ride site across from Coquitlam Center Mall. The elaborate trailer has been under construction for a few months which means that the recent funding announcement by Prime Minister Stephen Harper has been a foregone conclusion for a while now.

Looking at the route map available on line it looks like there will be relatively little elevated track except the parts from Lougheed Mall to the top of Clarke hill and then the part that runs up Pinetree Way. That’s good. I think that Skytrain is for the most part quite ugly.

The question is how will it effect real estate. Well one thing I can say for sure is if you own a property anywhere near the elevated portion you should look at selling now. Of course every buyer will know that Skytrain is being built and of course it all has to be disclosed. My point is this. Once the elevated guideway is built, your chances of selling for the same price as without the guideway sitting there is nil. Even a month before construction starts is better than selling while skytrains are whizzing past.

As for Coquitlam, Port Coquitlam and Port Moody’s real estate prices in general my prediction is that the Evergreen line will not hurt prices. Prices may not increase due to the line but they will firm up some.

Vancouver Sun article

Brian Morton wrote an interesting article in the Feb 17th Vancouver Sun. In it he claims that the cost of home buying and home ownership has dropped significantly in the past 12 months. He cites a 15%-20%  decrease in home prices coupled with lower interest rates. An average condo now costs $600 less per month to own than it did one year ago. That is a significant increase in affordability. Rental rates are also a factor. Apparently the cost of renting has increased 5% in the past year. This adds to the case that home buying is a better option than renting.

The article also points to a recent survey by Ipsos Reid. The poll shows that 71% of respondents said it a very good or somewhat good time to buy now compared with just 60% last November. The poll also found that the number of people expecting prices to drop in the next 12 months fell to 42% from 57% in November. These shifting attitudes are going ot be the drivers in any recovery in this current market.

When will this all end?

Ok you read it here first. This “economic melt down” or recession  will end when the the US housing market bottoms out. Actually when you think about it it’s pretty simple. The economic boom of the past 7 or 8 years was driven in large part by US households who accounted for most of the spending growth. As real estate prices were driven up, households had more room to borrow on equity which further drove spending. The house of cards began to fall when dodgy borrowers began to default in ever increasing numbers. This brought on the subprime mess. So now a large number of US household are “upside down” in terms of home equity. They owe more than there homes are worth. The result is: no more spending power and a drastic decline in economic activity. It stands to reason that the way out of this mess will only begin take shape when this massive amount of bad debt is “unwound” . The banks will have to feel the pain of it. The government can’t keep postponing that pain. Once that is done there will be some sort of signal such as a decline in foreclosures for 3  straight months. When you read about this or some similar article you’ll know that there is light at the end of the tunnel. And you read it here first.

9 Common Problems Home Inspectors Find

Home buyers often hire a home inspector to tell them if  their potential dream home has some defect that they themselves cannot detect or diagnose. Hiring a home inspector is one of the most important tasks of the home buyer. It’s important to hire an inspector that knows what he’s doing and preferable to hire one that comes with a friend’s recommendation. As realtors, we are not supposed to recommend any specific home inspector. To do so would compromise our position if problems arose from a poor inspection. It’s much better for a buyer to hire their own.

That said here is a list of common problems that inpectors find:

1. Improper surface grading/drainage: This can result in water ingress in basement or crawl areas.

2. Improper electrical wiring: problems include insufficient electrical service to home, inadequate overload protection, dangerous (amateur) wiring.

3. Roof damage: Leakage caused by poor flashing and old or damaged roof material

4. Heating systems: problems such as blocked chimneys, unsafe exhaust disposal and malfunctioning controls.

5. Poor overall maintenance: where to start? chipped, cracked and peeling painted surfaces, crumbling masonry and concrete, makeshift wiring and plumbing, broken fixtures and appliances.

6. Structural problems: damage to foundation walls, floor joists, roof trusses and window and door headers.

7. Plumbing: outdated or incompatible piping materials, faulty fixtures and wastelines.

8. Building exterior: flaws such as inadequate caulking or weather stripping on windows and doors can lead to water ingress and poor insulation

9. Poor ventilation: modern homes are well sealed which can result in excessive interior moisture which in turn causes rot and premature failure of both structural  and non structural systems.

It’s a good idea for buyers to take note of these items when they are in the early stages of home buying. They can potentially avoid even looking seriously at homes that display these problems.

What’s going to happen in the market this year?

My prediction for the market this year is that it will remain flat or decrease slightly. If we can rely on history as our guide, downturns in the real estate market are long lived. Look at the last 30 years. The market in 1980 was overheated. It crashed in 1981-1982. It remained in the tank until 1988. Prices doubled between 1989 and 1990.  In other words, the market was in a coma for roughly 6-7 years from 1981-1982 to 1988. The market was then very buoyant until 1994-1995. Again, in that period of time we saw prices more than double, we saw scads of condos being built, we saw multiple offers and bidding wars. In 1995 it was like someone turned out the lights. Prices declined steeply (10%) in both 1995 and 1998. Things didn’t turn around again for another, you guessed it, 6-7 years. In May 2001 the BC Liberals took office in BC and I have to tell you, It was like someone turned the lights on again. I’m not saying that it was all their doing.  I do believe, however, that people began to have confidence that things were going to be OK. In reality it was the beginning of a long upswing in the economy in general. Price increases really took hold in the spring of 2002 when interest rates dipped substantially. So 2001-2002 to 2008 is 6-7 years. I’ve been waiting for the market to stall. At the beginning of 2008 there was a sense of waiting for the other shoe to fall. It really doesn’t matter what the specific reasons for a market correction are. In 1981 it was skyrocketing interest rates. In 1995 it was rising (not skyrocketing) interest rates. In 2008 it’s been a global meltdown. Whatever the reason it seems that the market stays flat for 6-7 years and then increases for 6-7 years. I’ve been selling real estate since 1987 so I’ve personally seen a lot of it.

Check my site at www.mcgarrysellshomes.com .

The market has turned

Dear Reader,

The Coquitlam real estate market has turned and it began early in February. Most realtors agree that buyers are out in droves and showings are up significantly. There is however a certain reluctance on the part of those buyers to pull the trigger and make offers. Sales are happening for sure, but buyers are very cautious. Part of the problem is unrealistic sellers. Some sellers are definitely overpriced and that holds buyers back. Another problem is media reports that describe how real estate prices will fall by another 10% in 2009. This definitely causes buyers to hold back.

Despite all this there are plenty of sales happening. My contacts in the mortgage financing business tell me that they are very busy with pre-approvals. I believe that people are tired of waiting. They see that the market has dropped and they want in. They don’t want to wait until the market has bottomed. They want in now, or as soon as they find the perfect home at a great price. The sense of urgency that we all got used to has disappeared and will likely not be back for about 5-6 years.

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