February Sales Numbers hint at a slowing of the Housing Market fall in both B.C. and the U.S.A.

For the last decade, British Columbia’s real estate market has been like a high performance car running on pure ethanol. It revved out of control, the engine seized, and now it’s in the shop for repairs. Prices in BC rose to high levels because nobody wanted to miss out on a rising market. Properties ended up with vicious bidding wars, driving prices further and encouraging more buyers with dollar signs in their eyes to jump in. Queues formed for new condo developments in Vancouver, with many buying multiple units to ‘flip’ and skim off the cream. It became a self driving phenomenon. In a word, it was madness. It was unsustainable, as we are now finding out.

Where does that leave us in the Spring of 2009? Global financial panic aside, it seems as if the precipitous freefall of the economy is slowing in some sectors, the housing market being one of them. Of course we have to put this in context, with home sales and prices being a lot lower than the same time last year, but compared to what we have been fed in the media this last six months the sky doesn’t appear to be about to fall on our heads.

In the US, last month’s housing market was a surprise to most economists. According to www.thestar.com – “New home sales rebounded unexpectedly last month, but were still the second-worst on record and remained well below last year's levels, according to data released Wednesday. The Commerce Department said sales rose 4.7 per cent in February to a seasonally adjusted annual rate of 337,000 from an upwardly revised January figure of 322,000. Even after the revision to January's sales results, the month remained the worst on records dating back to 1963.Economists surveyed by Thomson Reuters had expected February sales to fall to a pace of 300,000 units.”

Bad news for sure, and this is not to say that the worst is over, but there seems to be a slight glimmer at the end of the tunnel.

As far as BC is concerned, there appears to be a similar trend. The Globe and Mail (www.globeandmail.com ) reported in its online business section the following on March 20 2009 -  “The (BC housing market) had spun into reverse, with scant sales driving down prices, thereby scaring off buyers and depressing sales volumes. Sales and average prices for November, December and January all reinforced that gloomy prognosis. And, at first glance, so do the data from February, with a continued decline in unit sales and average prices. But there are some glimmers of hope in the most recent statistics, with the numbers indicating that the B.C. housing market is pulling out of the dizzying tailspin of the last 10 months. Admittedly, it does take a burst of sustained optimism to find an upside to a 51-per-cent drop in February unit sales between 2008 and 2009, and a 10-per-cent decline in average prices in the same period. But Cameron Muir, chief economist for the British Columbia Real Estate Association, makes a critical point – sales and prices are dropping, but at a slowing rate. He notes that seasonally adjusted sales rose by 17 per cent from January to February, although that increase has at least as much to do with the unmitigated disaster of January than with any recovery last month. The fact that sales are not dropping as fast as they did through much of the winter could prove to be significant, though. Mr. Muir thinks the moderating decline could be the first indication that the market is stabilizing, saying it's possible the decline in sales, at least, could soon be ending.”

But this is the way things usually go. First there is a boom, then a bust, panic, doom and gloom, dire predictions, more panic, and finally a slow realisation that we are not all going to die or end up in the poorhouse. It is this time between this slow realisation and the rebounding of the market where buyers can make good real estate investments that will increase in value as the market recovers. Mood means everything in the financial and investment sector, and it appears that the mood is becoming ever so slightly more optimistic.

When is the best time to buy? I wish I knew, or had a crystal ball to let me know. However, I feel it very unlikely that we will experience a ‘crash’ in our housing market and prices have already fallen 10-15%. I had an awful November, December and January, but a good February and March, so my personal experience as a Realtor® seems to confirm the reports above.

So, once again I repeat my mantra for the present market. “Get a good deal, buy, and HOLD”. (And don’t watch CNN too much, it’s bad for the blood pressure).