Buying in Greater Vancouver? To Buy or Not to Buy?
October 9th, 2008Many people are struggling with wether or not to buy in the current market conditions we are experiencing in Greater Vancouver and the Lower Mainland. To Buy or Not to Buy? This is a great question in an uncertain time.
The answer may be simpler than you think.
There is one fundamental concept about real estate most people understand, real estate has always been a fairly stable investment as it is a product that will always be needed and in demand, so long run outlook is almost always good. This is in fact one of the most stable investments you can own.
The second fundamental concept is that it is always better to buy when things are discounted, not when they are on the rise if you are looking at it as an investment.
With these in mind, I think you will agree that there are people that would benefit by buying in this market.
1. If you are downsizing from a house to a condo for instance, you will not lose on the differential, you will probably gain a bit. In fact, anyone who is buying and selling in this market is in a fairly good position.
for example, if you sell your home and then buy a new one, you Will have much more choice on the buying side and more opportunity to make a great deal. As well, if prices were to decline a bit more, you may even buy your new home at a lower market rate that the one you sold. In any event you really do not loose in this case.
2. If you are a long term investor, you now have the opportunity to take advantage of deals that may be out there due to sellers needing to sell at a difficult time. Even if you do not find this, if you are holding for longer term why would you not want to buy in when the market is at a slow point and prices are down. It is true that we may not have hit the bottom yet, but we never know where that is and timing it can be difficult. One thing is for sure, prices have come down and motivation to sell for some sellers has increased. We all know that prices will increase again. If you had asked an investor a year ago about being the righ time to buy they probably would have said yes, so why would now be worse time?
3. First time buyers, with interest rates having declined again, and prices having come down, it is more affordable than it has been for some time. Again we all know prices will increase again, it is just a question of when as well as if prices will decline more. At any rate, there is much more choice for buyers today and they have much more power. The other thing to consider is even if prices decline slightly more, at some point interest rates will have to increase and the the affordability factor will not improve at that time.
Of course in all these cases, there is still uncertainty about when the market will hit a bottom, and when interest rates will hit a bottom, as well as when the world economy will head in a positive direction, but real estate is a solid investment and is on sale. You do not need to rush into a purchase at this time as has been the case over the last five years or so, you can take the time to find the right property for you and the right price, this is really a pretty good position to be in when you are buying.
Of course buying now is not for everyone, there is one group that probably should not buy right now, and that is the short term investor, with the uncertainty we do not know when the market will be in a steadily increasing position so it would be risky to bet on a quick turn around. Having said that, these type of investors should be keeping a close eye in the market as there will at some point be an opportune time to get in, but as always, this can be very difficult to predict.
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