experts: real estate column Friday, January 12, 2007

Riding the Crest of the Wave?

2007 will be a more 'gentle' year but the long term will reflect further gains.

By Alan  Skinner

Yes folks, 2007 has dawned; B.C., Greater Vancouver and our own North Shore have just come through another boom year, economy-wise and, of course, “real estate value-wise”. Many of us have just received our Property Tax Assessment notices and after the annual Wows!, tsk-tsk’s and good griefs, have moved on and can calmly and rationally reflect on the fact that this is the natural result of the forces revealed in Ecomomics 101. The commodity is desired (demand): it is in short supply (e.g. number of town homes, apartments and houses on the North Shore); buyers are competing for ownership and therefore (minor “voila”) the value of the commodity is (and has been) rising. Question: will it stop rising? Question: will it start falling? Question: will it continue rising? Answer: all of the above … but, these phenomena (called fluctuations) will occur in relatively short term spells. Yes, 2007 will be a more “gentle” year but the real answer (the one which should be pre-eminent) is that the long term must reflect further gains. It is in fact the rate of these gains that fluctuates. My reason for making this “bold” (or obvious?) statement is a strong belief in the sustainability of demand for this commodity.

Again, I’ll use only the North Shore home values. Yes, “regrouping” and slow down in activity will take place, but it’s not logical to see this as a precursor to “collapse”. This is sometimes the wishful thinking of those desiring to become owners. Spells of calm are essential to stability and this balance is the key to a sane perspective. It was, I believe, Matisse who said “what I dream of is an art of balance”. We are experiencing this to a small extent at present. It is however only truly present in an economic sense when supply equals demand and prices move neither up nor down.

As we take our first faltering steps into the breaking dawn of 2007, the greatest unknown is the intensity of demand in the short term (and the length of that “short term”?!!). Look at the inventory figures below (active listings) for evidence of a less than buoyant supply – will it stay that way or grow apace? With 2007 listings emerging tentatively, it’s most likely that January ‘07 will be a low volume month!

Now, our year in review (vs. 2005). Number of N/Van detached sales was 6% lower. Average prices +14% and inventory same as last year. On the attached (t/hse) front, sales numbers down 10% while apt sales were down 14%. Average prices up 16% (t/hse) and up by 15% for apartments. Yes, values are certainly “leveling off” but all prices are markedly up over ‘05. Inventory (t/hse) unchanged from ‘05, and (apt) up from ’05 by 47% (unsold newer product).

In W/Van, detached number of sales down 1%. Average price +21% and inventory now at 10% higher than ‘05. On the condo side – attached (t/hses) sold are up 2% over 2005; average price change down 3%. Active listings down 39% from last year. Apartments reflect 14% fewer sold vs. ‘05; with average prices up 40% and active listings 30% lower at 63 units. The North Shore continues to show healthy “gentler” demand and inventory certainly not at all high enough to approximate a balanced market.

I know some find numbers/stats dull but for those of you who don’t, visit my website for what I feel is a revealing analysis based on listings and price changes from both July1 and Sept 1/06 to date. Would “annualized” gains of 8% and some drops of 12% surprise you? Look for “Leveling?” at www.OnTopOfTheMarket.ca

It only remains for me to reiterate my New Years’ wish for success and happiness to you and yours. 2007 will be as great as we make it!

To join the group subscribing to the e-mail version of this “update” - send a request now to alanskinner@shaw.ca and you’ll be assured receipt; phone me at (604) 988-7368 or visit www.OnTopOfTheMarket.ca

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.




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Recent Articles by this columnist:

Keeping Realtors Honest
Tuesday, August 12, 2014


How well do we stack up?
Tuesday, July 29, 2014


Resistance to change and compliance delay
Wednesday, June 04, 2014


Of urban planning and municipal wisdom
Thursday, April 17, 2014


Yes, it's official - demand is rising
Tuesday, March 11, 2014


All articles by Alan  Skinner

Related Links:

Alan Skinner

OnTopOfTheMarket.ca

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