Welcome to the first entry on my blog. I hope you’ll bear with me as I become more proficient with the site. I look forward to any questions or comments anyone would like to share.
As with most realtors, the most commonly asked question of me is “What will the market be like over the next……”. I thought this would be a good place to start.
First of all, none of us can be sure of what the future may bring. Interest rates, the global economy, local politics and even natural disasters can come into play and completely change the state of the market.
The greatest effect on a market in my mind is consumer confidence no matter what else is going on at any given time.
Having said that, I feel compelled to give the best answer I have given the information at my disposal and the general feeling I experience in the market on a day to day basis.
The best explanation I can give comes in part from what the chief economist Cameron Muir of the British Columbia Real Estate Association said in his recent forecast. Here are some highlights of that paper. (I’ve included the first paragraph to illustrate a point of perspective.)
“The Multiple Listing Service (MLS) residential unit sales in the province are forecast to break the 100,000 mark for only the second time in history. A total of 101,000 home sales are expected this year, up 4 percent from 2006. A record number of home sales were recorded in 2005, when 106,310 units changed hands.
A resurgence in consumer demand this year is the result of strong economic fundamentals and an aging population. BC householders are the beneficiaries of robust employment growth, low unemployment, and rising wages. While mortgage rates edged up in the second quarter, they remain low from a historical perspective. In addition, the housing stock is increasingly orientated towards more affordable multi-family units.
Recreation and investment buyers are playing a larger role in the BC housing market. Vancouver Island, Okanagan, Kootneys, Kamloops, and Northern markets are experiencing a marked increase in these buyers. The baby boomers have created significant wealth from their real estate and many are rolling over some of their equity into second homes.
Affordability remains the most significant constraint to home ownership in the province. Some buyers, particularly those with small down payments, are simply unable to find a home at a price they can afford. As a result, consumer demand is expected to edge down next year, with MLS home sales forecast to dip 4 per cent to 96,300 units. MLS home inventories are expected to increase moderately next year contributing to a more modest rate of growth in home prices.
The average MLS residential price is forecast to climb 12 per cent to $437,000 this year and a further 8 per cent to $470,000 in 2008. Barring any unforeseen shock, such as rapidly rising mortgage rates or a meltdown of the provincial economy, the BC housing market is expected to shift to a moderating trend over the next 24 months.”
How is your crystal ball?
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1 comment:
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