After the release of June home inventory stats by Vancouver Real Estate Board, the media has picked up many opinions out there regarding which way the market is going. These have been mostly negative, including one of our own realtors who was quoted as saying “it’s time to cash out”.
Most of these comments are based on one calculation method only – inventory absorption rate. In reality, it is only one of many factors influencing real estate market trends. First of all, most of people are buying homes based on their individual needs and life plans. The concept of market “right time to sell or buy” really only applies to short term investors and speculators – they only count for a small percentage of the buying/selling public. Therefore their power to drastically influence property price change is limited and also, geographically specific (some areas have higher # of properties bought by speculators and will feel more effect with a market slow down).
Vancouver is a city with diverse industries (unlike a single-industry town), and the employment base is strong. It is known internationally as one of the most attractive cities to live in and there will continue to have strong demand for immigration which converts to demand in housing. All these elements remain the same and they serve to support a sustainable real estate market. Also, the mistake of using solely the listing inventory account to predict prices is that it ignores the fact that many sellers have the ability to take the properties off the market if they can’t achieve the prices they want, which would change the stats again.
Real estate is a cyclical market. We have had a long run of very active market and price increases in the last few years. By its cyclical nature the market is due for some correction in some overheated markets. And depending on each individual’s specific needs and wants, now could both be the right time and wrong time to buy or sell. For a point of reference, looking back at Vancouver’s past 40 years real estate price charts, Vancouver home prices have doubled every 10 years with drops and rises in between.
President and CEO
Macdonald Realty Group