Friday, November 8, 2019

Stock Market Rally Pushed Rates Up!

It is not uncommon at all, in fact it is quite normal to see mortgage rates move up when the stock market is strong. The last several days saw a tremendous run up on wall street with nearly every index blasting through all time records. Mortgages are competing with stocks for investor cash and equity has been moving to stocks all week. Investors are not looking for higher returns on mortgages and we saw a sharp adjustment yesterday.

Buyers don't need to panic, but this is an example of the potential for volatility in mortgages and thus the buying power of borrowers. This is a great time of year to buy a house. It tends to be a little more quiet and sellers are anxious about getting an offer before the holidays. Meanwhile sellers can rest assured that the people outside braving the chillier late autumn temps along with rain and snow are serious about buying a house.

Buyers can relax it is only a matter of time before investors start taking profits on all these stock gains and then that money will likely move back into the warm embrace of mortgage securities. This will release some pressure and lower rates again. These last couple of years have been wonderful for mortgages even with this latest uptick. This is not the normal state of mortgage affairs and a return to higher rates is inevitable at some point. Buyers are well advised to strike while the iron is hot and get the home of their dreams while it remains affordable.

Friday, November 1, 2019

Rates Continue to Drive Market

Interest rates have continued to stay stable and low. This is one of the biggest market forces in real estate and it is getting buyers off the fence and into homes. Despite the slowdown in the rate of appreciation, the volume continues to impress with the number of monthly closings now pushing up into the pre-crash figures.

Overall the local median price has stabilized and I believe this is more about the imbalance of market segments than a real pricing contraction. Most of the activity in the market is in the bottom half of the price range. This heavy weight towards lower priced units definitely effects the median price. That does not mean that an upper price range house has lost value, but rather that it will take longer to sell.

Sellers are well advised to be careful with price, the days of overpricing a house and expecting a swarm of hungry buyers is past. These days, well priced homes will move and overpriced homes will sit. We have a slight glut at the top right now and remain tight on sub-median inventory.

The Downtown urban condo scene is doing pretty well, I monitor Vancouver USA urban condos very closely on my site Urban Living in the 'Couv' and inventory is tighter now than it was over the summer. That bodes well for Vancouver's emerging urban scene.

Buyers should feel very good about the current interest rates and the slight softening on appreciation as they can feel confident that houses are generally well priced at the moment with fewer overpriced properties and the best rates we have seen in a long time.


Friday, October 25, 2019

Building Subcontractors in Scarce Supply

I have touched on this issue before and it continues as home builders continue developing both urban and suburban projects. There is a large amount of urban projects that feature mid rise buildings. Often these types of structures have a concrete and steel base with 4-5 floors of wood framed structure above. This type of construction takes framing subs away from other housing projects and that mean increased time to build and higher costs.

Higher building costs can have a negative effect on new homes, but generally a positive effect on resale properties as those simply become more attractive as new homes get more and more expensive.

The current economic cycle is getting long in the tooth and that means a slowdown is now more likely than not. I do not think we are headed for a major recession, but a slower rate of economic growth is likely, even a short and probably mild recession are coming sooner rather than later.

But for now we are still seeing a construction boom and even as the economy slows, real estate has always been a safe heaven for investors and that bodes well for our local market to ride out any slowdown with light effects.

Sellers on the fence waiting for prime market conditions are now at a crossroads. Did the market already peak? Is now a good time? Now is probably as good a time as any that will arrive in the next 6 months, near as I can see. The future is always a bit cloudy and skies over that future are never really clear. Sellers with a desire to upgrade or downsize are well advised to think sooner rather than later, especially if they are downsizing.