Our Own Experience
A bit over four years ago, we entered the housing market in the Kootenays of BC, looking for a good value home that required no work to move in. We bought a beautiful house on 3/4 of an acre, which we soon converted into a food-producing garden, adding berries to the existing fruit trees and expanding the veggie patch to more than 1500 square feet of carefully planted crop rows.
Fast forward to 2011, we sold the house, walking away with a bit more than we paid for the property and not having spent more than a couple of thousand on maintenance in four years. In addition to this, we got good use of the property as an amenity for our family over that time. But we were lucky.
The viewings got off to a hot start, for a few weeks it felt like we spent more time at the local Tim Hortons waiting for a viewing to end than we did at home. And then it happened, an offer, lower than the asking price, but we were cautious about the future market conditions, so we played the counter-counter game and settled on a price, sneaking the sale in just before the revised mortgage rules came into effect. After the offer came in, viewings dried up, and no more offers. As I said, we were lucky. The new owners drove a hard deal, but we walked away a little richer and a lot wiser.
Friends in the area were surprised at the price we listed our house at, saying, “it’s worth way more than that!”, but I think what they really meant was, “if your house is only worth that, then what’s mine worth???”
The stats across the country are not looking good. This from Montreal:
Sales in April crashed 18%, making the 12th month in a row of declines. And this was accompanied by an 18% surge in listings, which suggests Montrealers have a little more on the ball than many other Canadians.
This from Richmond, about half an hour from where we now live, (renting of course).
The place, a local realtor tells me, “is now a disaster.” Only one in four houses is selling (it used to be eight in ten), and inventory is exploding – close to 1,000 listings in this one community. “The Richmond market,” says my source, “is definitely showing the most extreme effects of what happens when demand goes away.”
Interestingly, in this part of the world, you have the real estate board president making soothing comments like this:
Sukh Sidhu, president of the Board, explains, “April’s sales are pretty typical for that month over the last two decades with the 20-year average being 1,580, but softer than what we saw earlier this year.
Statistics can always be manipulated (note that in carrying out the following analysis, I fully acknowledge that I am manipulating the numbers myself), and considering that over the past 20 years the population in the Fraser Valley and Lower Mainland has increased at about 2.5% per annum on average, that is over 60% growth. So if we are looking at a 20 year average of sales, which all things being equal, should reasonable follow population projections, I would have thought that number of sales would be around 28% higher in 2011 than the 20 year average. This hypothetical number of sales would have been 1940, which is a lot closer to last year’s number of 1731 than this year’s of 1516, which incidentally is down from March 2011’s sales of 1818 homes. So a more truthful statement may have read, “April’s sales are markedly down (over 30%) from the 20 year average when adjusted for population changes”.
The president then goes on to blame the federal election:
“The Fraser Valley market was busier than normal in February and March due in part to the tighter credit conditions that kicked in on March 18, plus you add into the mix a focus on the federal election and you get an April that trends back to normal conditions.”
I think I’ll wait and see what May brings before we declare normal conditions.
For those who are interested in looking at the potential savings from renting or owning check out this link. Throw some different numbers in and see what comes up. Real estate isn’t my game, but statistics, community development and analyzing scenarios is, so I make no apologies for this coarse review of the numbers presented, except to say that I’d like to see an objective review from a group who has no interest in the number of sales or the price of houses sold.
Of course, if you are still wanting to buy a home in the Fraser Valley, your first stop should be to this bargain, a five bedroom house on 20 acres with over 8,000 square feet spread over 3 storeys, it even comes with a tennis court and more for only $4.2M. The website helpfully notes the following:
Monthly Payment is approximately $18,484.78 for a $3,360,000.00 5 year mortgage at 4.44%
That’s still putting 20% down.
Somehow, it makes hanging out with family seem more important than buying the biggest or best house you can afford.