Let's get one thing clear. Statistics are boring. Well, to most people, they are. And it has been said you can use them to support any idea you wish to promote.
I don't want to bore you with a bunch of numbers that don't mean anything to you. The purpose of this post is to take a look at the question many of you ask your Realtor friends.
"How's the market doing?"
And to give it some meaningful context.
Today, information is readily available, and the cost of housing has been at the forefront of our news feeds, along with inflation and interest rates.
So much so that it seems to have informed the opinions of both Buyers and Sellers to the point where our market is responding differently than it has in the past. That's my opinion.
But let's get back to the question.
If you are an investor asking the question, you typically want to know how your investments are doing. Has my investment increased in value, or is it about to drop?
If you are a first-time buyer, you might want to know if 'is now a good time to buy?' Maybe you are wondering if you will ever get to buy a home since property values have increased so much recently. Or, you are a homeowner whose life circumstance has changed, and you need to downsize, or you need more room, you want to know if it is a good time to Sell. Can I maximize the value of my property? The answer to all these questions is the same. It could be Yes. It might be no, and Maybe, might also be an option.
Context is everything.
World events also add context.
According to Forbes.com, "The Covid-19 pandemic has fundamentally changed the way real Estate business is conducted". We saw changes and wished things to return to normal, but our new normal isn't the same as the old normal. And there have been other significant events. Do you remember Y2K? 911? The 2008 Financial Crisis? The Gulf War?
These were some of the more recent noticeable events that could have affected your property. The point is, Context matters, and your specific context matters as well. I was born and raised in Abbotsford, so I've seen a lot of changes over the years. So for a few minutes, I want to go down memory lane and look at how our real estate market has changed over the last 50 or 60 years. In the '60s, our family lived in a small bungalow on Mayfair Street. When My brother was born, the house was no longer big enough for a family of 6. Mom and Dad sold the house for about $8,000.00. Sonya and I were newlyweds, and in 1976 we built our first house on Sentinel Drive for about $45,000.
In the late 70s, our Real Estate market went crazy, and the price for that house probably went up to over 100,000. A steal today, right!
Unfortunately, we sold it a few years earlier for 48,000.
I remember thinking how unlikely it was we would ever be able to purchase another home because prices were so high.
At the time, interest rates were crazy high, and the economics of the day caused a meltdown, and the price of that same property would have fallen to $65,000.00. They seem like small numbers by today's standards but percentage-wise, the price doubled and then fell by about 35%. Maybe that sounds reminiscent of our recent volatile market.
1984 was the year I got into Real Estate, and I remember Our Market remaining flat for several years as the interest rates began to fall from highs of 21% to 15 -12 and then to under 9.
In 1989, we began to see prices rise; by the fall, they were going up about $10,000 monthly.
Our 1976 house on Sentinel was probably worth about 150,000 at this time, but our Supply of listings dried right up, making for a difficult market to begin in 1990. I remember counting the listings in our catalogue. (That could be another topic. "How Technology has changed the way a realtor does business") We had 275 houses for sale at the end of 1989. Interest rates took a bit of a bump up by, I think, 1/2 point. We noticed a problem because everyone had seen prices escalate quickly over the previous 5 months, and the expectations for sellers exceeded the buyers' expectations, so sales dropped off, and inventory levels tripled.
By the fall, these factors adjusted, and a more normal time continued for quite a while.
These were times of tremendous growth in Abbotsford, and we saw a large influx of people into our area.
Looking back like this and seeing the growth, it might be easy to think it was all good. And really, considering the larger context, it was. What is easy to miss is the 'in the heat of the moment' times and the current context of how people felt going through it. I mentioned 9/11 earlier. A time when there was a great deal of uncertainty, and our market went on hold for a time. People were glued to what was happening in the Persian Gulf, and buying and selling real Estate was put on hold for a while. But we adjusted.
Or in 2008, when the world economy took a beating. Our market went on hold for a while. And we experienced a price adjustment of about 8 - 10% . There was a marked change in activity in our RE market in both instances. Sales dropped as people seemed to be in a state of shock for a while, wondering what would come next and if life would ever be the same again. In March 2020, many thought the end had come, and real estate activity plummeted. You know what? After a couple of months, we realized that life would continue. Things were different, but people still needed to make decisions about their housing that made sense in their circumstances and context. We figured it out.
The same holds true for the more recent change. Interest rates began to rise. Putin invaded Ukraine, and other things made life a bit uncertain. Again, it feels like our market has been a roller coaster ride.
There have been those who will predict the real estate bubble's burst and those who believe it will only continue to grow. Availability, affordability and what drives them will remain significant issues for us to work on, and they will be a part of the greater context. Our homeless crisis has also been impacted, so hopefully, we will come up with some answers here as well.
So to answer your question, "How is the market doing?" The answer is it depends. What is your perspective? What is your context? I can tell you the long context says the market is doing very well. Remember my family home on Mayfair? The one Mom and Dad sold for about $8,000.00 in 1964? 2 years ago, it sold for $1,315,000. Crazy right! The fact it was now in a redeveloping area really made a difference. Something our Sentinel house didn't enjoy quite so much, but all things considered, selling for $850,000 in 2022 is still a pretty good return on the original investment of $45,000.
Looking back, I can easily say we should have kept more of our properties, but our context at the time didn't allow that to occur. The same as your current context means you might need to make different decisions. Statistics matter. But they count more when considered in your current contextual environment. If I can be of any help to you in your current context, let me know. I am here to help. Thanks for listening.