BC Sunshine Coast real estate by Menno at Royal lePage Real estate on the BC Sunshine Coast

What do you think, is the market gonna go up or down? Well, if anybody could actually give the proper true answer to that, we’d all be rich. The fact remains that nobody can know – it remains an educated guess at best.

You've heard it before and you'll hear it again. Predictions of what the market is going to do. Although nobody actually knows, many feel the urge to pronounce predictions.

Yet, it’s probably the most frequently asked question in my line of work. Clients, both buyers and sellers, keep on asking me what I think. Others already have an opinion and don’t mind sharing it with me. I hear the most interesting kinds of reasoning why it’s good (or not good) to buy (or sell) now or later. If only we’d know ahead of time what the real estate market is going to do. Of course,  nobody really knows what the future will bring. That being the case, what’s with all the predictions?

Some people beat themselves up over not having bought or sold at a certain point in the past. Well, that’s a pretty pointless exercise unless you can apply your knowledge to the present or future. Others think that they “know” what the market is going to do (up or down) and base their current decisions on that.

If one were to know “for sure” that the market is going to go up, it would indeed be smart to buy now or delay the sale of a property. The other way round would be smart too: if you knew the prices are going to come down, well then you should sell fast and delay a purchase. Of course, it doesn’t quite work like that because nobody can ever be sure about future events. There might be “trends” but really, that’s all we got. Sadly, our society focuses on market developments and how they can enrich us. Just look at the stock markets, commodities, money markets, real estate!

The market went up 10% over the past five years; therefore the market will go up another 10% over the next five years. Oh really, shall we believe that?

EXTRAPOLATION DOES NOT WORK

When we can look at stats covering past market performance; we can endeavour to predict future real estate market developments. Based on that, we can estimate what’s going on in the marketplace right now. When buying or selling real estate today, all we can expect to be happy with is a result in today’s market. If that very same property sold 10 years ago for a certain amount, it means very little in today’s market situation. Similarly, what the market may do in the future has no bearing on today’s values. How could we know what the market is going to do in the future anyway?

The “here and now” principle is quite strong in real estate. Not only must we concentrate on the right-now (not yesterday or tomorrow) but also on the right-here. However much this property might have sold for if it were located 100 km from here, is irrelevant. The astute reader might ponder: well, this is all nothing new. Precisely true, it’s always been like this. However, you won’t believe the large amount of clients I have worked with who are eager to compare with a market in another time setting or in a different location. No matter how you slice it: it won’t work like that.

As often as I hear “should I sell now or later”, I hear “should I buy now or later? Which is better? In reality, you’ll (of course) only be able to say so afterwards. That’s because nobody knows … for sure. There are cycles, so it would be great if you could time it such that you buy low and sell high – just like the most successful stock broker would.

It's entirely possible that the market went down a certain percentage from 1 year ago and up a different percentage from 2 years ago. That's great but it proves nothing.

SHORT CYCLE, LONG CYCLE

When looking at long cycles, one can be pretty much assured that real estate is a great investment. In every 20-year period in history, real estate has been worth more in the end. Sometimes just a little bit more, sometimes a lot more. It’s pretty much the same with the stock market. You can lose in the short run, not the long haul. The commodities markets? Same thing (with rare exceptions of course).

When lots of people are looking for homes but not many are for sale, it’s called a sellers’ market. This is because the seller has something everybody wants. When there are lots of homes for sale and not many people buying them, it’s called a buyers’ market because buyers have more power of choice. It’s very hard to state what kind of market prevails at any point in time. It’s not at all a black and white issue.

To make it more complicated … it could be a buyers’ market in one segment (say big houses) and a sellers’ market in another (say small houses). In the next village, it could even be the opposite situation. Logic to all of this doesn’t always exist. It’s stop and go, even in the Sunshine Coast real estate market today. In a sellers’ market, top price and a fast sale can go hand-in-hand. In a buyer’s market, more sellers are competing for that rare potential buyer. This pulls prices down, to a point. It gives buyers a lot of strength to force their best deals through.

When we've had a slow month, we can joke that's because of too much rain. Had it been a sunny month, it would've been because of temperatures that were too high.

THE CYCLE OF THE WEATHER

We’ve all seen inflation statistics that were “seasonally adjusted”. There would be some truth to that in real estate sales as well. In two feet of snow, it’s not easy to go look at houses. When you have to hold on to your hat in blistering cold weather, it’s no fun to be looking around houses. Under those conditions, it would be understandable that there are fewer sales during periods of harsh weather than during periods of more pleasant weather. Of course, we don’t get really harsh weather on the Sunshine Coast. Therefore, our weather cycle is minimal.

Nonetheless, we do have a bit of an annual cycle. Our sales tend to “pick up” in the Spring and into the Summer, then slowly decline to our worst month: December (people are busy with other things). Does this mean that the “dark months of the year” have a decreased likelihood of selling your home? Not necessarily so … because the number of listings on the market also tends to drop off during the slower months. In all, it remains a level playing field, of sorts, throughout the year. There is no bad time of the year to go on the market.

Since there is no “bad time” to sell your home, there’s only today. That applies to buyers too, of course. I don’t know what’s going to happen tomorrow and those that say they do are possibly wrong. I do know (or I can look up) what happened last week, last month, last year or ten years ago. That can be a useful exercise but past performance is no guarantee for future performance. The smartest advice might be to concentrate on today’s market conditions. Whatever happened in the past is not relevant. Whatever might happen in the future …

As long as we realise that statistical information can not extend itself into the future, there's nothing wrong with studying the current market situation.

MORE – To get a bit more of a feel for what’s going on in the Sunshine Coast Real Estate Market today, here are some more blog articles about it. Enjoy!

Buying a home now, for later: http://www.mennorealty.ca/Blog.php/decision-tothe-future

Ever changing real estate markets: http://www.mennorealty.ca/Blog.php/market-when-to-change

Ask a real estate agent or maybe not: http://www.menno.ca/?p=20247

You can ask what you want, but: http://www.mennorealty.ca/Blog.php/list-price-difference

Home insurance to the top of your list: http://www.mennorealty.ca/Blog.php/insurance-tips-more

Market up or down (financing): http://www.mennorealty.ca/Blog.php/rate-hold-to-approval