experts: real estate column Monday, September 19, 2005

Fact Supporting Theory - And The Power(?) Of The Commentator

What do you do if there are one half as many condo apartments for sale in N/Van this year than last year and you need/want to buy one?

By Alan  Skinner

What do you do if there are one half as many condo apartments for sale in N/Van this year than last year and you need/want to buy one? Compound this with the fact that there are more people wanting one this year than last year. You have two options - i) hang tough and pray that the market changes in your favour (some combination of other buyers backing off & an increase in inventory) or ii) buy and pay the 17% increase over the same period in 2004. This is market theory in action - supported by Jan-Aug 2005 market facts.

After my August Update in which I addressed "bubble theory" and our N/Shore, I had a range of interesting (and some adversarial) responses. Ozzie Jurock carried my commentary on his widely read website and shared a particular response from a person who had apparently (recently?) bailed out of real estate. The argument went, that, since crashes had happened before, they would inevitably happen here, and "Skinner's" position was to be expected from an unthinking broker who relied on climbing prices for his livelihood. Two comments - i) higher prices have led to fewer sales for brokers e.g. 4 x $300k provides a broker with about 25% more income than a 10% inflated market with 3 x $330k sales. The market would actually have to go up over 50% for the income to be equal! - ii) The fact that I was opining specifically on the N/Shore seemed to be lost. Indeed, I was at a loss to detect one solid reason for demand receding. Another responder seemed to be blaming me for the inflation of the market. I was rather flattered by the power that he implied that I was "single handedly" wielding. We can all dream! Please bear in mind that I am not preaching the disappearance of price corrections in this or any other market - just a cautionary note on the emotional and dramatic "inevitable bubble".

Remember this, if we had a build up in listings and fewer sales year over year, a good case could be made for slackening demand. THIS IS NOT THE CASE inventory-wise - with the unique exception of W/Van condos up to 133 from 86 (Aug '04) - inventory here, still well below traditional levels - all other categories are between 27% and 49% below Aug '04.

Number of N/Van detached sales are reaching break-even with the same period last year. Average prices +10% and inventory down 30% over last year (supply still dropping). On the attached (t/home) front, sales numbers up 25% while apartment sales show increased growth of 8%. Average prices up 11% (t/hse) and 17% (apt). Inventories at -32% (t/hse) and -49% (apt). Demand here (buyers) remains strong and inventory still limited.

W/Van detached still has a YTD drop in number of sales (-5%); average price maintains a steady rise at +10% and inventory now down 27% from 2004! The condo picture remains mixed - attached (t/hses) down (-24%) in number of sales; average prices still strong (up 26%). Active listings higher than last year at 45 units. Apartments show 171 sold vs 123 last year (+39%); still solid, average prices up 13% and active listings now at 88 vs 53 (2004) still reflects the new building activity.

Remember that OnTopOfTheMarket.ca is the place to visit for North Shore R/E information. This work in progress strives to be the "go to" site for North Shore Real Estate analysis. A jumping off point for FULL market listing information, it also offers a "no obligation" estimate of value for your personal Real Estate. Please use it and continue your valuable feedback.

Questions regarding the market, decisions, contemplations, opinions of my musings, are welcomed via e-mail (or phone) - hey, pop-in and say "Hi" to me at an open house - I'd love to see you.




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