Consumer confidance key to 2009 housing market recovery
A recently released survey by the realty firm Re/Max has provided some indicators on how the housing market might continue to adjust into 2009. The survey points out that the real estate markets across the country will continue to be mired by the economic slowdown and their performance will depend on how government stimulus affects consumer confidence. It goes on to predict that the threat of global recession will also continue to weigh heavily on the markets, and the beginning of 2009 will look a lot like the end of 2008.
Consumer confidence is a main theme of their survey as without a doubt it plays a significant role when we look at 2009. The first quarter of the New Year they estimate to be a continuation of the trend we're seeing now, with reduced transactions and average prices coming down in Vancouver and throughout British Columbia. Consumers should have a better idea after the first quarter of 2009 what kinds of stimuli governments plan to inject into the economy, which should hopefully bolster confidence through the rest of 2009.
The good news, from a homebuyer's perspective, is that homes will become slightly more affordable, and allow some consumers to enter the markets that were previously unable to. These buyer's can often negotiate next year's potential price declines off listing prices today and take advantage of the high amount of inventory to find the right home for their needs.
The Re/Max survey accurately points out that Metro Vancouver will have experienced a 33-per-cent drop in sales by the end of 2008, and estimates that 2009 sales should end at the same level. Vancouver's average price at the end of 2009 they report will be seven per cent below 2008's average price.
Re/Max's assessment is the latest of the fall forecasts tracking B.C. and Canadian real estate markets. Not all I've come across have come to the same conclusions. Canada Mortgage and Housing Corp.'s 2009 forecast is for B.C.'s average price to decline nine per cent in 2009 and provincial sales to fall just under one per cent.
However, BC's markets have geography and demographics going for them in the long run. With over 35,000 people on average migrating to the province each year we will continue to see demand for housing. "There's no reason for British Columbians to be overly concerned about the value of the real estate they're holding today," said Elton Ash Re/max executive VP of Western Canada "It will come back in a big way."
