Vancouver housing has seen a Spring Thaw. You can see it in Paul/Gavin's numbers and in Kopyrightklepto's numbers here:
http://www.realestatetalks.com/viewtopic.php?f=8&t=37267
However the reasons for the up-tick is clear:
1) Nothing goes up/down in a straight line. There are folks who missed the run-up and have been kicking themselves. This is the first significant down-turn and a chance for some to get into housing.
2) Low mortgage rates buy you more home. 4.05% for a five year fixed is a pretty good rate (ING Direct). There is a concern that with all this debt being piled on by the governments, long rates and hence mortgage rates will eventually head up. I think we are still a long ways from that, but it is driving some buyers to lock in and buy.
3) We had very low sales in December and January. Months of Inventory had reached a catastrophic (and unsustainable level of 20). The sales were down due to many reasons including the heavy snow-fall, which realtors told me cut open house traffic, and of course the shock over the financial crisis, which people have become accustomed to. This demand ended up in Feb and March and added to the normal Seasonal increase in sales.
4) The financial crisis is still a TV event. We have been spared any major disasters so far. The US and Europe are getting hammered, but due to on-going projects, a better banking system and quick action by the Government (forced into acting to stay in power!) we have so far escaped the worst.
However we are not an Island and I can see increasing anxiety about job losses and reduced spending. None of this fills me with glee. Those of you who used to read the old blog know that I was saying a couple of years ago that this would be the final result of reckless unproductive speculation.
In any case we are still well above the previous few years in inventory:
http://www.nvcondos.realpagemaker.com/aPage.jsp?aPageId=32
We will have to see how far this Spring thaw goes. I suspect we get a slow struggle until summer when the 'must sell' folks drop their prices, and buyers bargain tough. Then we have a lull as sellers hold out for the hoped for post Olympic euphoria. By then I suspect we will have all come to realisation that this is no ordinary recession and there wont be a quick rebound.
Add in the post-Olympic price tag and you can decide where house prices are headed.
Good to see some old friends in the comments area. Thanks for the welcome back.
http://www.realestatetalks.com/viewtopic.php?f=8&t=37267
However the reasons for the up-tick is clear:
1) Nothing goes up/down in a straight line. There are folks who missed the run-up and have been kicking themselves. This is the first significant down-turn and a chance for some to get into housing.
2) Low mortgage rates buy you more home. 4.05% for a five year fixed is a pretty good rate (ING Direct). There is a concern that with all this debt being piled on by the governments, long rates and hence mortgage rates will eventually head up. I think we are still a long ways from that, but it is driving some buyers to lock in and buy.
3) We had very low sales in December and January. Months of Inventory had reached a catastrophic (and unsustainable level of 20). The sales were down due to many reasons including the heavy snow-fall, which realtors told me cut open house traffic, and of course the shock over the financial crisis, which people have become accustomed to. This demand ended up in Feb and March and added to the normal Seasonal increase in sales.
4) The financial crisis is still a TV event. We have been spared any major disasters so far. The US and Europe are getting hammered, but due to on-going projects, a better banking system and quick action by the Government (forced into acting to stay in power!) we have so far escaped the worst.
However we are not an Island and I can see increasing anxiety about job losses and reduced spending. None of this fills me with glee. Those of you who used to read the old blog know that I was saying a couple of years ago that this would be the final result of reckless unproductive speculation.
In any case we are still well above the previous few years in inventory:
http://www.nvcondos.realpagemaker.com/aPage.jsp?aPageId=32
We will have to see how far this Spring thaw goes. I suspect we get a slow struggle until summer when the 'must sell' folks drop their prices, and buyers bargain tough. Then we have a lull as sellers hold out for the hoped for post Olympic euphoria. By then I suspect we will have all come to realisation that this is no ordinary recession and there wont be a quick rebound.
Add in the post-Olympic price tag and you can decide where house prices are headed.
Good to see some old friends in the comments area. Thanks for the welcome back.
I really enjoy your posts, Fish. They always hit the nail on the head. There is certainly a lot of evidence out there that many people are considering this rally to be a sign of proof that everything is getting better. It is unfortunately wishful thinking. People could make best use of this time to prepare for what is to come. When the media talks about the trillions of dollars in debt, people just hear a word and don't take the time to try to understand how massively significant the number is to their lives.
ReplyDeleteThanks GM.
ReplyDeleteThe next six months should be interesting.
We have the lowest mortgage rates I have ever seen. Some friends who locked in to a one year variable a year ago for prime- 0.75% or better, are now paying sub-2%!
However the economy trumps everything. If we continue to falter housing will resume it's fall.
Interest rates are very low. I found this online --3.8%--http://finderfin.com/. Anything lower advertised online?
ReplyDeleteI like your summary Fish. Also, a lot of sellers see this as a temporary downturn and are trying to rent to "wait it out". This has caused rents in the downtown area to drop a lot, especially in the mid to high end listings. Drops in rents also put downward pressure on prices, although there is some lagging effect I would guess.
Agree Panda. Rents are dropping. We just renewed with no increase for another year.
ReplyDeleteRenters have not been in such a strong position for years.
As rents drop, the rent/owning comparison gets worse. So any benefit from lower mortgage rates is being cancelled out by lower rents.