I have had several clients trying to decide whether it makes sense for them to buy now that the market is slowing. Some think that they should wait to see how slow it gets to see if they can do better. While this may make sense for the investor who already has a home to live in and is just looking for somewhere to put some extra money, I don't know if it is the best approach for those who are renting. This is the same sort of thinking that some sellers had who were waiting to see how high their homes would go before selling-and of course many of those are now trying to sell and their homes are not moving. Or they listed very high last year and nothing happened and now even with a drop to what they could have easily sold at last year, nothing is happening-what would have been a hot property if properly priced last year, is going nowhere now.
So to those buyers, I have a warning similar to what I had for sellers last year: to sellers I said, if you are thinking of selling, given that we have an incredible sellers market AND given it has been a very hot market for quite some time and is likely to slow at some point you may want to sell sooner rather than later. While the market could still go up, better to sell before the peak while the market is still strong than just after the peak as it is slowing.....but of course each person has to weigh these factors and decide for themselves what the market will do....
Similarly, I am now warning buyers not to pass up a great home (which the price and or bidding wars may have kept them out of last year) because they are waiting for the bottom of the market....Of course, everyone needs to make up their own minds in this regard but I was just reading yet another article pointing out that this may be the best market we have for buyers for quite some time because there is a combination of 3 positives that could change at any time:
-very low interest rates (when I bought my first house it cost $1140 per month to service $100k and now its about $564 I think-which really affects buying power)
-incredible selection for buyers
-lower prices and price drops which we haven't seen since the late 1990s.
I know when I bought what has been my best real estate purchase ever it was in the late 1990s-the overall market prices decreased after I bought but I never saw a house that was as good a "deal" as the one I bought while the market was on the way down but had not reached its lowest point....A buyer may have decided that they are pretty confident that prices will go down more and they may-but I would advise that buyer to keep an eye out just in case they see a great place that they might not otherwise be able to buy....I think this is particularly true if the prospective buyer is renting. Even if the market goes down further (and I haven't heard any analysts predict a huge drop in prices in Vancouver) it is likely to go back up and while one is living in their principal residence, do minor price fluctuations really matter? I don't think so-its better than throwing away money each month on rent!
Also, a lot of analysts think that there will be a significant increase in consumer confidence-here in Canada and of course in the USA-after the US election and that that could curtail the softening of the market-especially in areas like Vancouver where there aren't many good reasons for prices to be going down much...
The recent article I referred to above also noted Jason Zweig, a personal finance columnist at The Wall Street Journal and the author of Your Money & Your Brain (Simon & Schuster, 2007), suggests asking the hesitant buyer: when do you think it will be a good time to buy your principal residence? Zweig predicted most buyers will not be able to answer this question.
a hard question to answer-just as it was for sellers who waited to sell and now may have missed the boat!
Food for thought!
Patricia