Are Prices Going Up or Down? Why I stopped Predicting
Everyone loves predicting Vancouver real estate prices. It’s become a hot topic at any social gathering. I found myself predicting prices and market conditions it was like an emotional roller coaster. I soon realized that was a lose lose.
Here’s the problem. Being a Vancouver Realtor I have clients and friends ask me almost every single day, ‘what do you think, are prices going to go up or down? Is now a good time to buy or should I wait?’
A year ago I would have offered you my opinion and that would have been to hold tight on buying unless you really needed to and had the means to do so.
I remember I had a client wanting to buy a 2 bedroom condo in the West End. I told him he should consider waiting if he was in no rush. It was an investment after all. But he insisted to go through.
This was in September, 2015. When multiple offers started to happen in the Vancouver condo market. I remember thinking man this is crazy, multiple offers on condos in Vancouver. Realtors used to joke how crazy the market was, they couldn’t believe the frenzy. Who could’ve predicted it would only get crazier!
My client won in a multiple offer situation, we beat out two other groups and got a 2 bedroom, 2 bathroom, 800 square foot condo in the West End for $601,000. It had partial ocean and mountain views. It seemed like a crazy price but today an identical condo would sell for $850,000. That’s a $250,000 increase in less than a year. Even if the market was to crash today would that condo really drop $250,000? Maybe. But highly unlikely.
But what if I tell you to buy because prices are going up every month. Then you buy and the market tanks 3 months later. Who do you think the finger is pointed at?
What if prices rise another 25-30% into 2017? Let’s say you buy right now at todays prices and the crash doesn’t come for a full year. Would you be in a losing position and lost a ton of equity?
Well if prices dropped 20% tomorrow that would only bring us back to January 2016 prices. So anyone who purchased January 2016 and earlier would be safe so to speak.
But what if prices drop more than 20%? How much will they drop if the bubble bursts?
I don’t have a crystal ball, nobody does. There are a ton of experts predicting the crash with very valid reasons and some data behind it. But seriously, when and how much??
Take housing expert Tom Davidoff’s recent interview with BNN. Where he says there are two likely ugly scenarios for Vancouver.
- Prices keep rising and it becomes a playground for the rich
- Market conditions change, prices crash and people lose a lot of equity in their homes.
So which one is it?
I have a 50/50 chance of being wrong. And if I guess wrong who do you think those clients point the finger at?
You see it’s a lose lose from a Realtor’s perspective.
There’s nothing I want more than to help people and it kills me inside not knowing 100% what will happen with the market. I think about it all the time.
Make no mistake the Vancouver real estate market faces many issues right now, foreign capital, money laundering, speculation, limited supply.
What Decisions will the government take or not take to address these issues. Will they limit foreign capital? Impose a speculation tax? Ease zoning regulations?
All I can do is educate you, provide you the information and the resources to make the best decision possible given your unique situation. Of course it makes more sense to buy in a buyers market and sell in a sellers market. But I can’t tell you what to do with your money.
As much as I would love to predict Vancouver real estate prices, those days are over.