This week I found a really interesting article that I wanted to share with you. It predicts a shift in the housing market, not necessarily a drastic drop in prices as some would have hoped, but it is a start.

For some time now the housing market has been seen as a way to transfer wealth from long-time home owners to young first time buyers. Though in recent years and with the crazy market that BC has experienced, this has not necessarily been the case. Young people are seriously wondering how they are ever going to afford owning a home what with the seemingly continual rise in housing costs, and older people, looking to finally cash in on their long term investment are hitting the ropes.  There is hope on the horizon for both parties. The article high-lights areas across the country, as well as speaks of interest rates, economic outlooks and overall trends. I have included key passages below for you to read about and have added a few helpful hints at the end for you. You can find the whole article here at the Globe and Mail.

There’s a hint of change in the air As the all-important spring season for housing arrives….. Combine this with the mediocre short-term economic outlook and you get market conditions that could finally start to shift some advantage away from people who have owned their homes for ages to young buyers.
Buried in overall national real estate numbers that still look fine are multimonth price declines in cities such as Calgary, Winnipeg, Montreal, Ottawa, Quebec City and Halifax……the declines have in recent months ranged from 2.3 per cent in Calgary on a cumulative basis to about 5 per cent in Ottawa and Montreal. In February, the price index showed just three of 11 cites with a month-to-month price gain – Vancouver, Victoria and Hamilton.
Falling prices will help first-time buyers, but only if mortgage rates stay low. For the near term, that’s not a problem. In fact, the most notable mortgage trend for 2015 has been lower borrowing costs for home buyers. A well-discounted five-year fixed mortgage can be had for just 2.59 per cent these days….

Low mortgage rates are the main reason why housing prices have surged in the past six years. So you might wonder how it is that rates are moving lower and prices are doing likewise in some cities. It’s the economy. With oil prices falling, growth is weak. That’s why the Bank of Canada made that surprise interest rate cut in January.
House prices on average went up 17 per cent on a cumulative after-inflation basis from 2006 to 2012 ……Only falling mortgage rates allowed houses to remain affordable with house prices rising so much more than incomes.
Declining house prices in some cities in recent months suggests low mortgage rates have done all they can do to prop up prices. That’s why it’s time to strategize if you’re a long-time home owner sitting on a mountain of equity. If you plan to live in your home indefinitely because you love it, then do nothing. Staying in your home for 10 or more years should bridge you across any corrections that may occur in the housing market.
If your home equity is a big part of your retirement, then it’s time to start thinking about how theoretical price declines of 5, 10 and even 20 per cent would affect your financial plan. What you want to avoid as a baby boomer is trying to sell amid a market downturn in your city. That would encourage more boomers to try and cash out of their homes, thereby depressing the market even further.

First-time buyers, let the market come to you.Either prices fall enough to make a purchase affordable, or you just keep saving to build your down payment. Sooner or later, the balance of power in real estate will shift at least a bit to young from old. It may already be happening.

I found this to be a very informative article, and one that I do agree with based on my own experiences selling here in the lower mainland. If you are wondering how to do some of the calculations I have listed a few key sites for you below. You can plug your numbers in and start to see where you stand at this time. Real Estate is always an indicator of how the nation is doing economically and it will be no different this time. What with an election year approaching and an unsteady dollar much will be hard to predict until the dust settles.

If you are prepared you can get out ahead of the game and feel that you have the control. I hope that this article has shed some light on the ever important spring Real Estate trends. Of course, if you have questions, or simply want to talk all these changes out with someone, I am here and happy to help. Happy weekend to you all, stay dry out there!
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