As most people in the Fraser Valley already know the real estate market out here is nuts. Just how nuts? Well a realtor in my office recently did an open house with over 230 guests in a 3 hour period which produced 29 offers and an accepted offer of more than 70k over list (list was 399), keep in mind this was a mid-range home in west Abbotsford that a year and a half ago would have been tough to sell at 380.
So what does all this mean and how do you go about making a sane decision with all the competition out there?
Let’s start with being a seller. Speaking directly to the detached single family homes it is definitely a sellers’ market; there is a ton of competition out there and people are paying more than what you would normally think for the right property. Inventory is low, sales are up and you could basically call it the perfect storm. This is all great but if you are looking to buy again you NEED a plan. Don’t list your house on a whim and just say well let’s sell now and we will figure out buying after. Depending on what you are looking at buying it can be very tough to find the right house for you and even when you do find the right house there is no guarantee of getting it.
My advice to sellers; if you are looking to head in the townhome/condo route and pull equity then it’s a good time, however, if you are thinking of going detached to detached then you need a solid plan and a very specific direction in which you want to go because depending on the area and you’re timeframe you could end up renting before you find something!! Try and get a longer than normal closing to buy yourself time and have a backup plan!!
Now let’s look at buyers. 2015 was definitely a recovery year for detached prices in the Fraser Valley. Near the end of 2015 it was more than recovery it was evident at that point that the average benchmark prices were heading upward and weren’t showing any signs of slowing down. With January 2016 sales coming in at 57% over the ten year average the market is still crazy.
So how as a buyer how do you navigate these times and how do you make a sound decision when prices are skyrocketing?
Firstly, you need to set yourself a budget. Buying in these conditions can often lead to multiple offers and if you’re spending cap is 450k then it is probably in your best interest to look at houses as low as 390k or even less. This will give you a solid cushion should you find the “perfect home” and also find yourself in a bidding war.
Secondly, you need to assess your situation and determine what length of time your investment will endure. If you are buying for a short term flip or a few years of “equity building” to get into something bigger then don’t get yourself into a situation where you can overpay from a short term perspective. On the flip side to that if you are going to be in your investment for ten years and are looking at buying for long-term then paying over list today will affect you a lot less when that investment is stretched out. In 2005 people were in the same frenzy and prices were at “all-time highs” and now we are seeing the same behaviour in the same areas with prices trumping those “all-time highs” by 100k or more.
I personally feel that with the projected growth of the Fraser Valley it will only be a matter of time before we see this cycle repeat itself again. Of course there will be dips and dives in prices between then and now but it’s inevitable.
Real estate in my opinion has and always will be a great investment because last time I checked they aren’t making new land, with that being said though, it is ultimately going to come down to how you approach, navigate and nurture your investment which will determine whether or not you are going to make great decisions.
Thanks for reading and happy hunting/selling.