Falling housing market tough for both sides – Buyers plagued by doubts even as sellers lower their prices
Derrick Penner
Sun
Lori and Ray Keyland and their son Bryce, 2, recently moved into a new home in Maple Ridge. They decided to buy during a downturn in the market, which presents problems and opportunities. Photograph by : Jenelle Schneider, Vancouver Sun
Maple Ridge management consultant Mike Smith and his wife Tanya thought they were being shrewd in April by listing their house for sale at a price below its assessed value, but ran smack into the Lower Mainland’s real-estate slowdown anyway.
By October, even after reducing the asking price three times to $799,900 from an initial $839,900, the Smiths’ 4,000-square-foot house on an acre of land in east Maple Ridge (with a 2008 property assessment of $842,000) is still on the market waiting for an offer.
“People keep saying, ‘We’ve got to sell our house first’,” he said.
The Smiths knew the real estate market was softening when they decided it would be best to sell and downsize, but “we didn’t realize the bottom was going to drop out as quickly as it did.”
“It was amazing how fast everything around us came down,” he added. “Even swimming downstream is tough.”
Although B.C.’s economy is in better shape than many jurisdictions, Lower Mainland real estate markets have slowed, with sales falling and prices declining from high points earlier this year.
University of B.C. real estate economist Tsur Somerville recently completed research showing that Metro Vancouver housing values had gotten out of equilibrium and that there was room for prices to come down.
However, in an interview, Somerville said that the unfolding world financial crisis has added more downward pressure to the market.
In his study, Somerville estimated that a standard, detached two-story house in Greater Vancouver was 11 per cent over its equilibrium point. However, the Greater Vancouver benchmark price has declined 15 per cent from its peak.
“Markets tend to overreact in the other direction,” he added.
Luckily, the Smiths have found a homebuilder willing to reduce the price on the house they want to buy, allowing them to make reductions on the home they’re selling.
Ron Antalek, the Smiths’ realtor with Re/Max Ridge Meadows, said that is an example of the deals buyers can negotiate in the current market.
Mark Dinsdale was luckier selling his family’s two-story east Vancouver house they bought five years ago for $366,000.
He added that they had detached themselves from the notion they were going to get last year’s price, and took the advice of their realtor, Lorne Goldman of MacDonald Realty Lorne Goldman, to not “chase the market down” on price.
The result was a sale within 10 days at $628,500, which was still about three per cent below asking.
“We looked at it as a shame we hadn’t been selling a year ago,” Dinsdale said. “But we’re happy we were selling now as opposed to six months from now.”
As buyers, Ray and Lori Keyland are a little nervous about falling prices, but decided that with a young son, they couldn’t wait to buy a house any longer.
“I think if I might have waited, I might have got a better deal,” Ray Keyland said, referring to the three-bedroom, 1,779-square-foot house they picked up for $399,000.
However, Keyland added that he also worried they might run into higher interest rates.
Now that they’re in the house, “We’re in it for the long haul.”
© The Vancouver Sun 2008
