This is something my kids repeatedly ask me, over and over and over again, whenever we go anywhere....annoying but at least I can give them a solid answer when they ask. Conversely, when clients ask, in reference to whether we have hit the peak of the market and are ready for a downturn, I cannot give as firm an answer. Up until the past few months, I have assured clients that I don't see a downturn coming yet but when it comes, it will likely be without a lot of warning. Lately the market has been feeling different.
I recognize that "feeling" isn't very scientific. However, in 2008, just before the market went down approximately 18% (more or less depending on where you lived in the lower mainland) it started to "feel" like it could not continue. There were nowhere near enough homes for the buyers looking and everything priced within any reasonable range was swooped up with multiple offers for some very happy sellers. It was what I like to call “the storm before the calm”. Crazy opens, crazy selling prices, crazy stormy market.
Then suddenly, we hit the peak in February 2008 and things began to slow. By November, when we hit the bottom, the market ground to a halt (ok not a halt but a slowdown-however for me it was a halt because I gave birth to twins in November 2008 so I stopped working...I think God or the Universe was on my side in having the market do that-so I could spend a ton of time with my kids...but I digress). After we hit the bottom in November, according to Greater Vancouver Real Estate Board stats, we did not get back to where we were until February 2010. So for a 2 year period, people where often having to sell for a lot less than they would have had they sold sooner. In areas outside of Vancouver proper, the downturn lasted longer with prices and sales volumes taking longer to bounce back. Even recently, areas such as the North Shore have just started to overheat to the extent that Vancouver has been seeing for a couple of years. Last year some houses on the North Shore could not have been sold for $800,000 and this year those same houses are selling at $1.25 million!
Fortunately, the 2008-2010 drop was a very short downturn for most people (not all-some condo purchasers sold at a loss for many years) but we have experienced much longer downturns.
So what? Some are forecasting that next year could see price increases of around 7%-and they could be right. But to me it is feeling like we are almost "there". Which, for my kids in the car, is always a good thing. For sellers of real estate, it is likely NOT a good thing at all. With prices and terms so seller favourable, if it were me and I was thinking of selling in the next 5 years, I would seriously consider bumping up that time line. If I were thinking of selling in the next 2 years, there is no doubt I would be listing my home for sale as soon as possible. You can never time perfectly the top or bottom of any market...and for those who have been asking "are we there yet" in reference to the peak, I would say "almost". Time will tell.
If you would like to discuss the current market and who it affects you, please contact me.