Vancouver Housing Market Update
Written by admin on April 13, 2009 – 5:14 pm -By all accounts 2008 and the 1st quarter of 2009 has been brutal to home values in the Vancouver real estate market. The losses extend over the bridge to Portland as well.
The good thing is with low interest rates it and lower home prices are making it more attractive to purchase and own a home than to rent a home or apartment. To verify simply contact your local lender and ask them what the payments would be if your purchased a home similar to what you are currently renting. Take into account all the variables such as if the landlord pays utilities, etc.. compare your base rent (utility costs removed) to the new mortgage payment (Principal, Interest, Tax, Insurance - PITI) and factor in interst deduction for tax purposes and you will be shocked to find out how affordable it is to purchase a home now with lower home prices and interest rates.
This is partly why homes that are priced “right” quickly go pending. This is not good news for sellers who paid a higher price than the current market conditions. For instance if the home seller bought their home at $150 per square foot and if the home they own is now valued at $100 per square foot. However, for the buyer that is a tremendous bargain.
Is there any more downside to this housing market? There are bulls and bears on that issue. There is a huge glut in foreclosures that the lenders are holding back from the market which are known as “shadow inventory” which could severly impact home prices going forward until the inventory is worked thru the market in addition to a new wave of foreclosures about to hit. Homes that the foreclosure process was halted during the last several months as lenders try to work thru various loan modification options and as they decide how they need to rebalance their books after the recent stimulous package.
On the other hand with the Spring and Summer home buying season in our windshield combined with historically low interest rates and huge home valuation decreases many buyers who were previously sidelined by not qualifying due to high prices are jumping in head first. They don’t want to miss out on homeownership this time around. On the other hand there are plenty of buyers who are waiting it out a bit longer as they are in the bear crowd and think prices may fall further. That thought process thinks like this: A home that today sells for $100 per square foot might go as low at $75.00 a square foot sometime in the near future - so I’ll wait. It is very difficult to time the market. The lower prices go and as the market heats up it will also lead to higher interest rates.
For example - and these figures are not accurate in the least just to let you know.. No calculator is being used..this is just off the cuff made up figures to try and make a point. Any lenders who wish to chime in with some accurate examples in the comment we welcome your input. Let’s say a home is $200,000 and it could be purchased with a 4.5% 30 year fixed rate. If the home price fell to $150,000 but the rate had increased to 5.5% it would partially nullify the price differential. So, if you could purchase it at $150,000 right before rates jumped by 1% or more than you did well. But, you will have to pay close attention to the market and at some point simply jump in with the best educated guess you can come up with. The other problem is that if you are looking for a particular floor plan or neighborhood, suppose it’s not for sale when you have decided the market has bottomed and rates are about to increase. Than what do you do? Exchange home style and neighborhood for the lowest price and rate? Also, have you ever been in an endless bidding war during a fast paced buyers market?
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