As we are entering the New Year, 2013 has proven to be relatively uneventful one in regards to real estate value fluctuations and volume, which comes as a much needed relief to the overall economy and real estate market.
Certainly, the BC Liberal Parties success in being reelected has greatly assisted in providing consumer confidence in the local economy and real estate market. Coming as a welcome surprise to many in the real estate sector, as remember how the worst years for the local real estate market were during the Provincial NDP’s tenure from 1992-2001 and how real estate values began to finally recover almost perfectly commensurate with their departure from government. Thankfully, we did not have to bear this scenario again!
Following the election surprise, we had an active spring market that was buoyed by interest rate increase panic in May. Since August, sales volume has declined which fits with traditional summer slowdowns. Fall activity has shown generally continued confidence in local real estate but with buyers exhibiting more diligence and care. Low price range segments have seen the most activity with continued activity in the high end market, allowing price there to remain stable.
Looking into the new year and beyond, coming interest rates increase seem more foreboding than ever and with that, the usual consequences. Mortgage payments will increase, causing mortgage approvals to become increasingly difficult, until we see a substantial increase in wages to coincide. This will not be likely for 2-3 years yet as may require some inflation to spur it. The end result is likely to be a relatively flat real estate market in the Vancouver Lower Mainland with the potential, in some segments, for decreases. We have already seen some market value decreases in Chilliwack/Abbotsford this year due to overall decreased demand, which may in part be a result of a considerable amount of new, affordable housing stock being released in Vancouver and immediate suburbs.
As I usually remind, for those who wish to invest in Real Estate in Vancouver, you cannot go wrong in the long term, despite any short term fluctuations as long as you practice prudent fiscal discipline. Ensure that your investment can generate appropriate revenue to match costs, ensure there is no localized risk to its capital value (such as leaky condo, unstable soil conditions, upcoming lease negotiations, etc.) and do not overpay on the acquisition of the asset.
Of course, Aedis Appraisals can help you with all the above!