As you may be hearing, the market has changed significantly over a very short period of time. The combination of new taxes, new mortgage rules, increasing interest rates, and changing global capital flows together have hit the housing market very hard.
If we take Squamish condos as an example, October listings were up almost 180%, compared to huge inventory shortages that we’ve experienced the last few years. Volume sales were down 65%, with only 6 condos selling during the month. The average days on market, at almost 3 months, is also up 175%. Although we haven’t seen a hit to prices as yet, that’s likely to come as buyers with a greater need to sell respond to changed market conditions.
Townhomes are in a balanced market for now; homes and condos are in a buyer’s market, something that we haven’t seen for some time.
For those who may have been sitting on the sidelines, waiting to buy, you’ll definitely be seeing some great opportunities. It’s human nature to be confused and nervous in times of uncertainty. There are a couple important things to keep in mind:
1. Housing markets generally go up over the long run
2. Trying to time the bottom of the market is probably a futile exercise – market changes tend to happen in a hurry, so although downturns may take us by surprise in their scale and timing, the same is true of rising markets
If you’re thinking about buying, but concerned about timing, my best advice is:
1. Buy what you can afford – don’t stretch yourself farther than you can reasonably manage
2. Buy what fits your needs, especially if you plan to own the property for a while – wait if that’s what’s right for you, but don’t let the market alone scare you away from making the right decisions for your family
3. On that note, do think in longer time-frames – financial wisdom suggests that to minimize risk, you should plan to hold a property for 10 years or more
4. Look for value – no matter what market conditions we find ourselves in, there are always good properties to be found, often at surprisingly good prices – I’ve spent years analyzing the housing market, and I can help you find them
5. Generally speaking, it can be better to upsize than downsize in a market like this – higher-end properties will tend to disproportionately fall in price compared to less expensive properties, while the upside growth will typically outstrip less expensive properties once the market rebounds. This isn’t a hard and fast rule, but something to consider if you were already thinking about a change.
6. If you do decide to buy while already owning a property that you’ll need to sell, make sure that you have a ‘subject to sale’ in your purchase contract to avoid stressful scenarios or deal collapses – and always remember that firm contracts are fully enforceable! Contact me for more details if you have questions about that – I’ll cover more in a future post.
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My next report will address assignment contracts – in a slow or declining market, what happens to this speculative form of buying and selling?