It’s no surprise to anyone who has been keeping, even half an eye, on the real estate industry that the number of sales has reduced over the past years since the pinnacle of the market in 2016.
Now of course, we don’t have a crystal ball that can guarantee how the tides will turn in the market, but we do have something almost as useful! We have statistics. That sexy ‘S-Word’ that allows us to see what past experiences have shown us, along with what the current market shows to date.
Let’s start with 2008, the ‘other’ most well known slow down in the market and see what happened there. For the basis of our little discovery here, we’re going to use a 1 Bedroom,1 Bathroom home as our subject property:
So of course we all know how this story ended. House prices soared to the record setting prices we saw in the last couple of years. The interesting thing to note is how quickly the market bounced back. After 2008, we saw a dip in average sale prices of 6.5% in 2009, however it then bounced back significantly in 2010. Setting a record high at the time of $327,419 (an 8.8% bounce back rate which resulted in prices soaring higher than in the so called ‘prime time’ before the downturn.)
The same study of figures today, and for previous years, looks like the following:
If previous downturns have taught us anything, 2019 is likely to be a reduction to prices as the market adjusts to the knock of 2018! Therefore if you’re a seller looking to, or NEEDING, to sell in the next year or two, the sooner the better for you. If the market follows the same trends as previous downturns, in waiting, you could be leaving - A LOT - of money on the table! If you’re in a position where you can wait several years, you have the flexibility of staying in a holding pattern. Just like playing the stock market.
Equally, buyers should be cautious of waiting too long with the expectation of prices reducing. Although it seems like a great idea to wait until 2019 (assuming the market follows the same pattern as the previous downturn) as everything is going to be reduced further, it does not necessarily mean you will be able to secure the property you want. When prices hit low points, it usually follows that owners are less likely to sell their homes if they are not in a position where they are forced to. That means the large inventory we have seen on the market is likely to reduce significantly leaving less and less choice. Unfortunately for buyers, the rental market is still going strong in Vancouver, so you will find a lot of sellers pulling their home off market and just pursuing the incentive of renting the premises. We’re seeing a lot of that start to happen already.
For a more regular take on the market for our clients, we offer them the ‘Mcinnes Marketing Minute’ which gives an update every month on the latest trends, statistics and patterns of the real estate industry. If you would like to be added to this exclusive list, feel free to send us an e-mail and we’ll get you added right away.
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That’s it for this week.