Here is a transcript of this conversation. It has only been lightly edited.
Rod Janz: Welcome to the Fraser Valley Lifestyle Podcast. My guest today is Mike Wilson. Mike’s actually the publisher of Fraser Valley Lifestyle. It’s one of the services that he offers to his clients and so yeah, We’ll be chatting about the state of the real estate market here in the Fraser Valley, British Columbia. I’m sure it’s a question that you get so often. What’s going on in the market? What’s happening with home prices? Are we finally going to see a balanced market? So many questions!
Mike Wilson: Yeah. The best way to talk about it is to publish and be your own guest. That’s the best way to do this. Anyways, Rod, I appreciate your time. Yeah. You had a little headliner there. You were gonna run.
Rod Janz: Exactly. I was, I was doing some of my own research about what’s going on in the market and wondering what’s going on. Are we in a more balanced state? What’s happening with property sales? Is the number of real estate listings up or down? And I came across this, article by the Fraser Valley Real Estate Board that quotes the president of the fvreb Sandra Benz. Of course, they are always publishing statistics, and their recent headline is, “The Fraser Valley housing market signals further settling as sales continue to stall in response to interest rates.”
And I’m just wondering what you thought about that as we, as we were talking about beforehand.
Interpreting the headlines
Mike Wilson: Yeah. You know, it’s interesting cuz there are headlines like that and then there are other headlines that say that you know, we’re gonna have a five per cent decrease compared to last month. And then there’s another headline that says there’s a 20% decline in values. And you know, everybody’s a prognosticator when they get into these kinds of things. Inevitably we have a settling after a hypermarket, and this past market was beyond the typical extreme markets that we’d seen.
History of my history in the business, which is, you know, I’m a fairly new realtor of 34 or five years, so, you know, I, I’ve seen a couple of these cycles. But it’s interesting because the conversations inevitably are very similar and, you know, there’s always a new generation that comes through. Whether it be a buyer or a seller, or realtors or professionals, it’s always a new generation that comes through and it’s a bit of a shock to them when we see these kinds of changes and interest rate hikes, but it’s, it’s really not a shocking development in real estate.
You have your ups and your downs, like any business, stocks, or whatever the business is. Sometimes you’re in the ebb and sometimes you’re in the flow. You know, the statistical aspect of. Subject to bean counters moving around you. You can manipulate numbers if you like. I think the general consensus is pretty obvious out there.
Supply and Demand
We had a Fraser Valley market where we were we didn’t have enough supply of single-family homes and real estate in other categories for quite some time. And so the demand was way, way outstripping that supply, which was creating an increase in pricing. And the pace of the market and the fear of possible further hikes in price were such that people were making decisions quicker and quicker without a lot of due diligence and not necessarily finding the perfect home either.
So it got a little bit dangerous in some respects. People were buying a new home really on the spur of the moment, and not necessarily the right property for them on the foot of the car. Price gains were happening super fast. So that is one of the challenges that we had. That marketplace and price growth and with the swing, it feels very, very large this swing because we, we stopped that. Now you can write an offer on a property that’s subject to financing, subject to inspections, you know, subject to a number of things which you couldn’t do in the other market. And so it makes that swing feel even more pronounced. And numbers statistically wise, you’re seeing, you know, pretty substantial changes. So for the same time last year, we would’ve had about 1500 listings with about a thousand or 1100 sales. So, you know, a good portion of those listings were being taken up last September.
Now you’re getting into a similar number or more listings, and you’re getting down in the four or 500 range as far as sales. So you can see the absorption is dropped. Mm. So now a person asks to take a look at that and say, Well, how does that affect me individually and what are my needs? And so there’s always gonna be people that are investing for speculative reasons.
There are also people moving for lifestyle reasons, and then their growth of family, those sorts of things. There are some great opportunities out there that weren’t available to the buyer six months ago because of the highs of recent months. Opportunities like being able to actually use several homes that may suit your needs are opportunities of being able to actually make a negotiation, doing a negotiation with a seller rather than just simply agreeing to what the seller’s requests or requirements were.
And also shopping around as far as finance goes. So finance. For a period of time there, when we were selling all these homes in the supermarket, the brokerages and the banks were looking at a necessity of two to three weeks to do financing. And so we’ve changed that. It’s back to about 48 hours. So your financing ability is a lot smoother now than it was during these hypermarkets and you will start to get greater value for your real estate investment as a buyer as prices decrease.
The negatives of the current market and how to deal with them
I guess the negative to the market if you’re gonna look at it right now, as a buyer, the concern is the interest rates have risen, which is a, it’s a fact. There’s no question that they’ve risen. So the actual stress test level has gotten higher. If you’re not sure what the stress test is, that’s a great opportunity for either you and your realtor or a real estate professional or your mortgage broker or your bank and discuss it.
So it’s a little bit more involved than just what we’re doing right now. But in essence, it’s the qualifying mark. For a mortgage for a buyer. So tho that rate has gone up, which makes it a little bit more challenging for some people to qualify. It also affects how much a person might qualify for, and so that has to be considered. But on the flip side of that is that from six months ago, you may be looking at a fvreb single-family home, for example, that may be three or $400,000 less, obviously, depending on the type of property and the type of valuation, but some substantial drops in. Those drops in price are better or they’re more advantageous than paying a little bit higher interest rate.
So we know that the interest rate you’re gonna get on your mortgage is going to be for a term, which could be anywhere from six months to five years to 10 years. And in that period of time, you’re gonna see some adjustments on those rates. So those could come back down at some point where your affordability gets better. But what will definitely happen is you’re gonna see as a cycle solidifies, you’re gonna start to see property values get firm again, and you’re gonna start to see some gradual increases. So, great opportunity for people that have not been in the market or people that are looking for an additional property that was maybe too expensive before.
So there is some great opportunity out there. It’s just a matter of having the finances in comparison to the purchase price and having that perspective of what, how much am I saving on the purchase that may outweigh what you’re paying a little bit extra in the interest rates. I’m obviously biased about this, but real estate agents and mortgage brokers can definitely help with this so make sure you talk to one and create a plan.
We inevitably go through a reevaluation period when we see the market change and people really reevaluate what their needs are. And that’s a pretty important thing. Again, you need to be working with a real estate professional to help you identify the timing of your next move.
Creating A Game Plan is Essential
There are lots of things to be considered and lots of detailed information to be gathered and used in your listings as a seller and to consider as a buyer. Lots of things to be considered in a game plan so that you can move forward in such a way where you’re not overburdened, but you are put in a place where you’re living the lifestyle that you’d like to live and within your needs. So that’s what the real estate professionals can do to help you as far as that part of the plan.
And brokers obviously for financing are a great help as far as affordability. So, so stopping there, just going back to the conversation within the real estate profession, you know, inevitably when we see a change in the market, we have lots of conversation about what’s going on in the market, new listings, and all the different property types. A good portion of real estate professionals will help you find solutions, and a portion of real estate professionals will be more looking at what the negatives are. So you need to find yourself a real estate agent that believes in solutions and opportunities for single family homes and all other categories of real estate, and I think that will help that buyer and seller. To move into the market where we are right now, I need to say we’re just in a transitional period of time, but that doesn’t last for long in our real estate industry out in BC anyways.
Rod Janz: Yeah. And that’s what I’ve always appreciated about you is you’re really good at coming up with a plan, and, and sometimes you’ve even said to your clients, this isn’t the time for you to buy or sell.
Mike Wilson: Yeah. I mean, it’s a challenge for all of us. We’re just people. So there’s a challenge that happens when we see a transitional market as a person. You know, we go through that period of not mourning, but we go through that period of real indecision and feeling very. You know, taken aback by what’s happening in the market. But I think experience helps some agents, and I’m not alone, but I think experience helps us to sort of go, Okay, but our job right now is to find solutions. So what are the solutions? And we’re not here to fabricate a solution. What we’re just here to do is help you take advantage of it and, and know what’s gonna work for you. But there are times when it’s best for people not to make a move. I hate to say that because it puts me out of business, but the reality is sometimes it’s not the right time and you need to know that too. I think, again, what your real estate professional can help you to identify, is this the right time? Is my motivation for the right reasons? And in this marketplace, does it make sense or do I, does it make sense for me too.
Rod Janz: You went and looked at a fvreb apartment or condo development recently and I think it was, it’s a great example of what’s going on in the market. Why don’t you just tell people what’s happening there? It really is the epitome of what’s, what’s happening.
Mike Wilson: Sure. Well, of course, developments when you’re speaking about, is a development in the White Rock area, and they had a reception, so over the inflated market period of. You know, anything that was being developed was being snapped up pretty quickly. But there’s al always that turning point where a development doesn’t get snapped up in time, and then the market softens and they have to become a little more aggressive in their marketing. So I, I just happened to visit a project locally that’s in the White Rock area, a beautiful development, and they didn’t quite get all their units sold, So now they’re having to make some adjustments, and some of those new projects, if you’re in the market for.
They may not do a major rollback on pricing because they wanna maintain their prices for anybody that’s purchased in the building. What they do instead of dropping prices is that’ll do promotions in a lot of cases. You know, whether it’s a decorating promotion or whether it’s a, you know, A number of options or promotions they have, and that allows them to maintain the integrity of their pricing rather than having to say they drop their prices. But inevitably, at the end of the day, these are promotions that make those units more appealing. Sometimes the GST will now be included in the purchase price. Sometimes as they say it may be a package. So we’re seeing that now. And we’re gonna continue to see that. The other thing we’re gonna see is less development in speed, I guess speed would be not the right way to put it, but developers are gonna take a breath. They’re not gonna rush to develop some of the land. The ones that are developing and are at a point of nowhere not turning it off or no shutting it down. No, they’re gonna have to just adjust their pricing. So again, great opportunity for a buyer to come in on some of these projects.
And they may pay a hundred thousand dollars or $200,000 less than they would’ve paid six months ago if the market had kept going. So, I’m throwing around a number. You know, we’re certainly seeing certain sectors of the market that are maintaining their price a little more, but we’re seeing some areas of the market where there’s a pretty substantial adjustment and price and what you can get for your real estate dollar.
And you know, it’s interesting too, the median price or the benchmark price for a home. And Langley is a great example of the Brookwood Langley area. You, your pricing right now sits at about $1.5 million for a home, and that means condos. Their medium price is sitting at over $850,000. So it’s a, it’s interesting the numbers, how astronomical they are, even from 10 to 15 years ago. And it’ll continue. You know, I’ve, since I’ve been in the. Sort of on a 10-year average, you see property values double and you know, with the growing population and certainly with the popularity of bc, you know that’s not gonna be ending in the foreseeable decades.
The big winners…
Rod Janz: I have a relative that I was just talking to who lives in the Cloverdale area, who bought a townhome for around $350,000. This was 10 or 15 years ago. Yeah. And one was just listed in there for 1.2 million. A townhome,
Mike Wilson: Well, you know, one of the big winners in the marketplace that escalates as it did is for a buyer who’s been in the market on a, with a property for several years. Obviously, this is a great example of Cloverdale, the other buyer that really benefits from the big bump in values is that buyer that got in on the marketplace with a very minimal down payment. So we’re, we’re gonna say 5%. So, you know, throwing out a hypothetical, a person that maybe bought a condo for four and five down, well, with that condo went up to $600,000. That extra hundred and $50,000 or increase in value becomes an equity stake for them. It’s all equity at that point. So that’s where you see a lot of those people being able to make that move to the next level. And that was one of the benefits of this market is that people that you know, maybe had 10 or $15,000 down on the condo instantly, they had $215,000 down. So there were some real benefits to that. It doesn’t eliminate qualifications based on your work. You still have to qualify for the payments, but you’re now going to your next property with a pretty substantial down payment. And that was one of the big benefits of this market for a lot of that first-time buyer group. They were able to jump up to the next level and invest in a townhouse or a house. So good opportunity again, bonus, to have that equity growth for sure.
Back to Interest Rates
Rod Janz: I just want to go back to, and, and maybe we can close with this unless you have something else to share, but I mean, interest rates aren’t terrible, you know, comparatively, we, we’ve been used to them being so low, but they’re still, you know, compared to what geezers like us are used to. For a long time. For a long time, there was a long stretch where you were. Be 4, 5, 6, 7%,
Mike Wilson: Yeah. It’s very, very interesting. You know, again, the young, the young generation that’s come into the marketplace, you know, they can’t fathom that we would’ve paid 15 or 16%. Yeah, so back in those days you paid, you bought a home based on how much paid for the home. Now you buy a home on the basis of how much your monthly mortgage cost. So it’s a real change in the mentality. But if you go back to it, it is interesting how it’s reversed itself. If you go back to the days when you paid 15% or 20%, Well, if you paid, if you bought a home for $300,000, you still paid a huge amount of money. Now that home has gone up to $600,000 and your interest rates are less, but sort of the numbers have sort of leveled off where you didn’t pay as much for the house back then, but you paid a huge interest rate. Now you’re paying way less interest rate, but you’re paying a huge amount for the house. So again, it’s an interesting way. To move the beans around, but you’re absolutely right. One of the dangers for today’s marketplace is that with the interest rates if they did actually escalate to a number in the higher numbers, higher single digits a lot of people that got into the marketplace would struggle with those numbers because we do have a society that tends to leverage their money on a payment plan. So there is some concern about that.
If people are concerned about interest rates, putting them in a position where they can’t afford to hold onto their home at some point my suggestion, again, first and foremost, talk to your broker, but it’s wise to look at the longer term locked-in rates. At that point, you could potentially put yourself in a position where you may get a longer-term rate that may be a little bit higher rate now, but it may be an affordable number if you gamble on the interest rates and they go too. It may become unaffordable for you or for you to maintain your home. So you’re gonna have to balance that. Again, a good broker or bank will be able to give you an idea, and you have to look at your own finances. What’s your debt load and how much can you afford to keep paying on your mortgage? So lots of, again, these are, these are why you have professionals that are out there that can help you with sort of looking at your plan and saying what makes the most sense for you and your family or yourself and take advantage of that. Take advantage. The brokers that are available, they’re, they’re worth your weight in gold in helping you answer those questions. Realtors are, we are worth our weight in gold if we’re, if we’re given an opportunity to sit down with you and talk about your motivations and, and what the market’s doing. So there’s some really good professional help out there and people need to open up to allowing those people to come in and choosing someone that they can trust and then working with them.
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