Don’t Kill, But Do Investigate, The Messenger

The old adage exhorting us to “not kill the messenger” does not imply that we should be kind and blindly accept everything that is said (or put in print). What I am suggesting here is that we question the motivation and allegiance of the speaker. Which radio station WIIFM (what’s in it for me?) is the speaker tuned in to? An example may be the economist, David Madani, much quoted in the MacLean’s’ article last month “Crash and Burn”, from Capital Economics group, the one somewhat favoured/quoted by the investment industry (stock sales, mutual funds etc.) appearing, as it did, to be an attempt to scare Canadians out of the real estate market.

Consider – “startling news headlines that an economist named David Madani of Capital Economics saying that house prices could (note – he doesn’t say that they will) drop up to 25% if his predictions of a low inflation environment hold true”.  It is of interest that this comment was in response to an article in the Financial Post, dated, wait for it, early February 2011, 2 years ago. That 25% prediction was trotted out again in the Jan 2013 article. This is not unlike Garth Turner’s perennial prediction for an extended time of impending “bubble bursting” as published in his book (“Greater Fool”) six years ago. Amazing claims can be made by very selectively choosing two dates, say 4 years apart (or 9 years apart), or(?) and proving with 20/20 hindsight, that your investment would have gone up by 38% or fallen by 22%. The longer term graph is the better descriptor of performance. Blessing the purveyors of shock tactics by buying their books, quoting their rhetoric for short term glorification purposes is not intelligent …. or healthy.

I’ve said it before and I’ll say it again – “Why can’t we simply refer to cycles”? … but “Bubbles”, “Crash and Burn”, “emerging unscathed” and other such examples of sensationalism sell newspapers, magazines and blogs! ….and you are totally welcome to question me as a messenger too!

Overall North Shore demand has picked up a little (over the last 2/3 months of 2012 with overall inventory generally higher than Jan 31st 2012.With this few actual sales to compare we are far more prone to anomalies e.g. possibly fewer “luxury units” selling in these lower demand times.  I continue using average YTD prices which will become more meaningful as we get more months’ stats to compare. Open homes visits are markedly up and I am aware of at least 3 cases (in my office alone) of ‘multiple offers’ on listings.

The ‘SnapStats’ (what price ranges are selling and which are not) is being extremely well received. I am now forwarding the past 12 month trend for not only N and W/Van but including ALL available metro neighbourhoods, as many were requesting. If any locations are not of interest, please ignore those areas.

Again, visit my website to see and “hear” the new developments.  I continue my commitment to keep you… www.OnTopOfTheMarket.ca – the “go to” site for North Shore Real Estate analysis and jumping-off point for FULL market listing information.

Join those wishing to get the e-mail version of the “update” and SnapStats  – send a request to alanskinner@shaw.ca; phone (604) 988-7368 or visit www.OnTopOfTheMarket.ca and you’ll be added.

February 2013 Numbers

Now we turn to the ‘Year To Date’ figures for 2013. Do remember that these are identical to the month of Jan figures 2013 vs. 2012.  North Van detached homes sold down 8% from last year, attached (t/homes) down 38% and apartments down by 20% from 2012. Detached average prices down 4% and inventory now up by 49%. Average prices down 14% (t/hse) and up by 3% (apts). Inventory (t/hse) 18% higher than Jan 31st 2012 and (apt) down from the same date by 4%. Remember that numbers here reflect only the activity in the month of January and these minimal figures should not be used to define a trend of any validity.

In West Van, detached number of sales for 2013 has dropped by 2% from 2012.  Average price up 8% and inventory up 5% over Jan 31st 2012. On the condo side – attached (t/hses) sold 2013 are unchanged from 2012 at 3 vs. 3 units. Active listings are up year over year from Jan 31st 2012 by 39% (46 vs. 33).  Apartments reflect 6 sold in 2013 vs. 10 by Jan 31st 2012; with average price down 5% from Jan 31st 2012 and active listings up 51% from Jan 31st 2012. Again the sample size is too small for meaningful analysis.

Overall North Shore demand has picked up a little (over the last 2/3 months of 2012 with overall inventory generally higher than Jan 31st 2012.With this few actual sales to compare we are far more prone to anomalies e.g. possibly fewer “luxury units” selling in these lower demand times.  I continue using average YTD prices which will become more meaningful as we get more months’ stats to compare. Open homes visits are markedly up and I am aware of at least 3 cases (in my office alone) of ‘multiple offers’ on listings.

Podcasts

North Shore Real Estate Radio

On an ongoing basis I pledge both my continued personalized service and a commitment to my reduced  business ecological “footprint”. A significant part is the radio (podcast) library which I’m continually creating.

All North Vancouver Real Estate “Updates”, reports and information articles, checklists etc. will be archived on my website and available for download or desktop listening 24/7. You can access the information you seek when the spirit moves and not when someone pushes yet another flyer into your mailbox. I am most excited about these developments. Input as to the topics for “programming” you feel would be of interest is strongly sought. Please e-mail This email address is being protected from spam bots, you need JavaScript enabled to view it or call me 604 988-7368 and 1-800-665-1455.

Click on the “Podcast” Icon in the top right of this article to listen now.

North Vancouver Real Estate

Podcasts

I Rent or I Own my own Home?

I Rent or I Own my own Home?

Renting vs. Buying: Which Option is Better for You?

Buying a home can be the most rewarding purchase you ever make. However depending on your current circumstance this may not be your best option. To help make an educated decision, try to answer the following questions first:

1. Do you really want to own your home?
Some would argue that this is the first question you should ask yourself. Home ownership, like everything else, is a matter of choice. Only you can decide whether or not home ownership is important to you. If it is then you may want to re-assess how you spend your money every month.
2. How often do you expect to move in the future?
If you expect to be moving a lot (every couple of years or more) then you probably shouldn’t buy your own home. Every time you buy or sell a home you incur significant costs (selling commissions alone average 6%). Unless you get lucky and the value of the home you purchased goes up by at least 10%, you’ll be losing money.
3. How stable is your employment situation?
You should only consider buying a home if your employment is stable. Home ownership requires a number of regular payments like the mortgage, property taxes, maintenance, insurance, etc. Missing any of these payments can trigger terrible consequences for a homeowner. Unless your employment is stable, your best option is “renting”.
4. Can you afford to make the monthly payments?
When qualifying for a loan, most mortgage companies will not allow your housing costs to be more that 33% of your gross income. Housing costs include your mortgage payment, property taxes, utilities, and 50% of condo fees if applicable. If your total debt servicing costs (housing costs plus all of your other monthly debt payments) exceed 40% of your gross income you will not qualify for a mortgage. How much rent are you paying now? What is the maximum amount you are willing to pay? If you buy a home, it is important to have some money set aside for “emergencies”. You may not be able to save as much money as a homeowner as you did when you were renting, but it is important that you leave some room in your budget. If you have to stretch your budget too far, you should definitely reconsider your home purchase.
5. Do the math.
Housing costs can be divided into shelter costs and investment costs. When you rent, you pay your shelter costs, and the landlord pays the investment costs. When you buy, you pay both, which is usually more. Ten years later when you sell the house, you will find that your investment did well and you saved a lot of money by buying. From a purely financial standpoint, whether you should rent or buy comes down to your monthly budget and the cost of borrowing. If you have the down payment and interest rates are 5% or lower, it makes very little difference whether you rent or buy. At interest rates above 8%, buying will cost you 20% or more than renting. Although it might seem that you will be spending more money on buying a house than renting, you need to consider your options and priorities. There are many more advantages of purchasing a home over renting.

Conclusion.
Buying a home is an investment, and for many people it is a good one. You can purchase insurance to help you manage any potential risks like fire, earthquakes, and thefts. Remember to take your buying/selling costs into account when considering selling your home. The strength of the real estate market in your area will determine the return on your investment. Assuming that you can afford the increased costs of owning your home, the question of what’s better, renting or buying a house, becomes one of personal preference. There is a certain satisfaction in owning your own home, but only if it is important to you. If you are only staying somewhere for short period of time (less than four years), renting is almost always better; the transaction costs of buying and selling homes will definitely make it less expensive just to rent. For longer periods, buying a home is usually better. Although if you have the discipline to invest the difference between your rent and your potential mortgage and other buying costs in a reasonably high yielding investment, renting might be better. But that’s if you carefully figure out the difference and diligently invest that difference. If you can’t do that – buying is probably the better choice. Buying a home is usually a sound long term investment as it helps you build equity vs. throwing your hard-earned money away as rent, real estate generally appreciates; a house bought today is worth more a few years down the road.