Spring in Vancouver, British Columbia
Spring arrives in British Columbia earlier than it does in the rest of Canada. The cherry trees have been in full blossom for two weeks, the tulips all red, yellow and purple for three weeks.
A slow real estate market here has also arrived this spring. Real estate sales were down 14% for the first three months of the year, a trend that gained momentum into April. Listings, at an all time high, were up 25% year-over-year.
Prices in Vancouver, although up year-over-year, are down about 10% from their highs earlier this year, a much steeper decline than expected. The decline appears to be a trend which has accelerated since the first week of March.
This is not a good time for home sellers. It is a good time for home buyers. However, they would still be buying near the top of the market. Vancouver and British Columbia real estate prices have historically dropped rapidly after a steep run up. In the early 1980s, prices dropped 40% in just 12 months, after a two-year 100% run up. And a four year run up has just ended.
The fundamentals impacting the investment, retirement and recreational markets are not good. Credit for recreational and investment properties has been tightened, pricing already reflects the 2010 Olympic rental income potential, Americans are staying away in droves, and with real incomes continuing to fall in British Columbia, the supply of available buyers is declining. Although not as overbuilt as some markets, the traditional recreational markets in British Columbia are at risk of becoming speculative. Cash rich Albertans are helping keep the markets going in the short term.
As with all our recommendations, advice must be tailored to the individual investor. However, any investor who knows they will sell in the next two - four years would be wise to sell now, using a lower price as the key selling point. Anyone considering buying, would be wise to wait until after 2011.
