Milo and Michelle’s Weblog

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.

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.

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 .

Hello Dear Reader,

The current edconomic conditions appear to be self inflicted in part. Sure the US banking and credit system is in disarray and Canada’s exports have been hurt and there are real job losses but at least some of the downturn here in BC appears to be fear related.  For more info on me check our website at www.mcgarrysellshomes.com .