Friday, February 6, 2009

The bottom

From the EREB January report

“Nobody rings a bell when prices hit the bottom,” said Charlie Ponde, president of the REALTORS® Association of Edmonton. “The bottom is evident only after several months of rising prices. One month does not make a trend but the market is certainly welcoming to home buyers.” He pointed to the lowest interest rates in years, the large selection of homes available and recently announced economic stimulus packages as reasons for the increasing market activity. The amount of RRSP savings that can be applied to a first-time home purchase was increased from $20,000 to $25,000 and a tax rebate for home renovation expenses were announced in the recent federal budget. Both measures will encourage home buyers.
I actually don't have any problem with the new president. I just wanted to throw in my two cents.

Really, so what if a buyer misses the bottom? Unless the market goes back to the extereme appreciation of the boom in the near future, which I suspect is unlikely. Generally real estate will move slowly and buyers can make their decision on other factors besides price swings. If you biggest motivation for buying is you worry about appreciation in the near future then forget it. People should buy because they want good value and are comfortable with the property and the price.

What is happening now isn't the result of buyers acting irrationally but a correction of the distorted economy that had existed in the boom.

1 comment:

Mike (authentic) said...

People won't invest into homes like they did in 2000-2007. Sure, there always will be "home-buyers" but they are out numbed by "home-investors". As long as the investors stay away, RE prices will decline to the level "home-buyers" want to buy a house at.

Home sales are down 50% in 3 cities (Vancouver, Toronto and Calgary) and this speaks volumes to who is buying and who isn't.

Also RE will be looked upon for years to come as a "tainted asset" and investors will go elsewhere, thus prices won't do anything in 5-10 years.

Mike