Best time to Buy?
Interesting to read the British Columbia Real Estate Association (BCREA)’s report this week indicating that April was the third consecutive month of increasing home sales in BC. It seams cliché to say “this is a good time to buy” but it seems that many people are agreeing that it is. Whether we are now at the bottom and end of the current price correction will remain to be seen, but does it really matter? When buying real estate, your holding period will generally be long term. People flipping pre-sales will not comeback anytime soon; but for people who want to buy a home to live in or a property to hold as a investment; this may be a best time to enter the market. While the Bank of Canada has indicated interest rates will be set until summer of 2010, I believe the market will force change over the next year. In speaking with mortgage brokers who’s opinions I respect, they note the long term bond rates are starting to move up and bank borrowing interest rates may follow. If we look at cost of real estate in terms of monthly cost, interest rate is a huge component. Whether the prices drop another 5 or 10 % over the next year seems irrelevant, if we can assume they will gain that back over the next 5 years and a 1% increase in borrowing interest rates would have a more significant in the purchaser’s real cost of real estate.
I know in my office, I can echo the BCREA report’s sales volume numbers. Our conveyance volume jumped in February after a quiet December and January. March and April continued to be busier and based on our May calendar and volume of new deals coming in; I am confident that May and June will continue to demonstrate increased activity.