BC Business
High-end houses in Vancouver are depreciating more quickly than less expensive homes
As far as investments go, real estate is a pretty solid bet. Year over year almost anyone who bought a house five years ago has made money on their investment. Still, the headlines can be frightening:
Home sales slow to near historic levels in Fraser Valley as buyers watch and wait from the sidelines–Fraser Valley Real Estate Board
January home sales remain quiet–Real Estate Board of Greater Vancouver
Bank of Canada signals rates likely on hold until 2014–Canadian Real Estate Board of Canada
House market continues to cool as sales slump 17.4 percent from a year ago–Macleans
Unless you study the market closely, these generalized statements taken at face value can feel, well, alarming. The multiple mortgage changes and low interest rates have had a downward pressure on prices, more of a slow leak than a bursting bubble. That pressure is evident mainly in the areas that appreciated the fastest in the last run up. An easy rule of thumb is that properties that rose the quickest in value will depreciate at the quickest rate as well. For example, the Fraser Valley has seen moderate decreases while Vancouver and Richmond have experienced much higher price reductions.
Another result of the market slow down is that sellers who don’t need to sell are electing to take their homes off market until pricing stabilizes or increases. Also buyers who are not worried about future interest rate increases are slow to purchase. To combat this, developers have increased buyer incentives and lowered prices. Still, while some real estate is negatively affected, other real estate price points still have a lack of inventory and those properties continue to move quickly. In the meantime, sellers are standing toe to toe with buyers waiting to see who will blink first. Eventually somebody’s going to.
A licensed realtor and seasoned expert, Leah Bach has extensive experience in the Greater Vancouver and Lower Mainland’s real estate markets. A past blogger for BCBusiness, Bach has advanced training in contract law, negotiations and risk management. www.leahbach.com | Twitter