Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Kristie Marsden, Jason Low, Sandra Ens and Jenny Stephanson.

Welcome to the Macdonald Realty Market Update

Each month, we provide you with valuable information to help you in your decisions related to real estate. It is my intention that armed with this knowledge, you will be able to make a more informed choice of whether to buy, sell, or hold.

Return of the Bear

2008 saw the end of the long Bull market run in real estate across Canada. Since their peak in the spring of 2008, housing prices have seen steady declines in all asset classes and almost all areas. Average prices across Canada have fallen more than 12% from a high of $320,000 to the current level of $280,000. In areas where prices climbed more rapidly during the bull run, prices have seen a more sudden softening. For instance, in the Lower Mainland, benchmark prices (or the price of an ‘average’ house) have thus far fallen 16%, from a high of $771,321 in April ’08 to the current level of $648,421. Other areas throughout Western Canada have followed this same pattern, albeit at different rates of depreciation.

Surprisingly, the rapid fall in prices, while not welcome news for owners, is a good indicator of a healthy market. A market that artificially maintains high prices is an illiquid one that will see few sales. Conversely, a market that produces quick price adjustments will return to ‘balanced’ conditions more rapidly.

Time to Jump In?

Ultimately, the guiding principle to buying a home is to find a property you want at a price you can afford. For first-time buyers, every drop in price represents another crop of homes that is suddenly available. Buying during a downturn gives you the opportunity to comparison shop and complete your due diligence before making an offer, minimizing buyer’s remorse and ensuring you truly want to be in the home you’re bidding for.

For move-up buyers, a down market closes the price gap between higher- and lower-end properties, allowing people who want to trade up a valuable opportunity to do so. Prices tend to fall on a percentage-wise rather than absolute basis, which means that while a $500,000 property and a $250,000 property may have both fallen by 10%, the $250,000 property has only fallen by ½ of the amount of the $500,000 property ($25,000 vs. $50,000) on a purely cash basis. Move-up buyers can use this period to trade up; when before, the difference in price may have been prohibitive.

Other buyers can also benefit from the downturn; however, buyers should keep in mind that the main purchasing criteria should be lifestyle – buying what one can afford – rather than short-term gain – buying what one expects to receive in the future – during these uncertain times.

The reality is that real estate has historically been a good investment. And while it is true that the flipping opportunities of the past 5 years have now disappeared, strong demographics dictate that those who are patient long-term holders of real estate will ultimately reap the rewards.

If you would like to learn more, please feel free to contact us by

calling us or clicking on one of the links below:

Simon Clayton 604-764-0711

Kristie Marsden 778-836-4389

Jason Low 604-790-5276

Sandra Ens 604-263-1911

Jenny Stephanson  604-675-6214

MacDonald Realty 604-263-1911

This entry was posted on Wednesday, February 18th, 2009 at 1:54 pm and is filed under Real Estate in Vancouver. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.