Could there be a theory emerging, following our record breaking heat wave, that the real estate market in B.C. (and particularly Vancouver) is emulating this weather pattern? If you harbour any scepticism …read the current statistics below!
A short diversion if I may – as close as I get to a “rant”; do I rant? You be the judge. The Vancouver Sun reported a few days ago, rather flamboyantly and, I feel, a little misleadingly, with this headline – “…markets race to record July home sales” reporting an “89% increase over same time last year”. Reporting the number of sales in the “month that started the slowdown in 2008” vs. the “month this year with the lowest inventory of homes for sale for over a year” does distort the picture somewhat – but, what an attention grabber! Exaggerated by the unleashing of significant ‘pent-up demand’ and, just because the months happen to both be ‘Julys’ – an anomaly occurs.
It’s a little like saying ‘the 12th of July 2008 reported 4 sales and the 12th of July 2009 reported 8 sales, therefore the market is twice as buoyant’. A better and more reasoned comparison is Jan – July 2009 vs. Jan – July 2008, thereby smoothing out the spikes and troughs – be they daily stats or single (unusual) months. It seems news is created with one “bite sized chunk” being compared to another “bite sized chunk” as is repeatedly the case with TSX business reports. You know; the type that report “market dips dramatically” [a 219 pt drop in the Index on Wednesday] and the Thursday headline blaring “stock market rebounds well” [a 196 pt rise in the index]. Wouldn’t, at a minimum, weekly reports on direction and magnitude be a little less theatrical and maybe a calmer way of considering the facts? Do we, the buying public, require this sort of reporting as a necessary ingredient to persuade us to buy the newspaper? Ah, the ‘journalism’ vs. ‘headline impact’ debate continues.
Now, having made an argument for the ‘calm’ approach to information dissemination, I will say that, yes, the real estate market, including ours on the North Shore, is showing an undeniable improvement from late 08/early 09. My belief is that, if we lost say 20/25% (in average property value) in the worst parts of the late ’08 downturn, we have likely regained 50% of that and are gradually approaching 10% off the late 2007 position. I said last month I’d comment on the “whither demand” question and, while this is the more enigmatic partner in the supply/demand waltz, I believe there is very little reason for demand to deteriorate at a greater rate than the current slippage in supply.
Thus, it is likely that the interplay between the two ‘partners’ will cause current price levels to be maintained and it is as likely that a very gradual price increase will emerge in the more desirable segments of the market. The higher end (luxury) market will in all probability take a little longer – maybe a couple of years or more – to regain its pre-downturn levels. Increases are evident but not to quite the same extent as the lower and middle price points.