EMAIL
| PRINT
| REPORT TYPO
| SEND YOUR FEEDBACK
|
Ask a real estate expert: Gregory Klump
- March 16, 2009 12:39 PM |
- By Your Voice
With all the economic news out there it can be hard to make sense of where we're headed when it comes to the real estate market.
What's the outlook for the market? Is this the right time for buyers to get into the market? Should you sell now or wait it out?
Gregory Klump, Chief Economist of The Canadian Real Estate Association (CREA) and a member of the National Housing Research Committee, took your questions.
Before acting on any of the information, please make sure to see a certified agent for advice on your area and personal circumstances.
Read his answers below.
Make sure to check out more on this story on The National.
Categories
All News blogs
Most Commented
Most Recommended
Your Interview
Most Commented
Most Recommended
Recent Entries
- Staying healthy: How to monitor and reduce your risk of disease
- For decades, the most popular tool for assessing a person's risk for obesity-related problems like diabetes and heart disease was the body mass index, or BMI. But some experts think physicians should focus on their patients' waist measurements, and a... Continue reading this post
- Privacy online: How to stay secure in the age of social media
- Following another round of criticism over its privacy settings, Facebook is tinkering with its policies once again. But many users are starting to ask whether it's too little, too late. The site has struggled with negative user feedback, while continuing... Continue reading this post
- Your Interview: How to talk to your kids about sex
- By Renee RamsarranSex education is an ongoing process that usually starts at home. Children learn about sex and sexuality through their parents, yet families often hesitate to talk about certain issues with their kids. How can you take an active... Continue reading this post
Comments (9)
A new waterfront condominium is being constructed in Traverse City Michigan. I would like to make an offer on a unit. Normally I would go in 10% below listing. Given the market, I would like to go in at 20% below listing. I would be pleased to receive guidance as to what is expected, standard when making an offer below listing. I do not want to offend nor do I want to go in too high.
Gregory Klump: I analyze the Canadian housing market, not the American housing market (which is a horse of a completely different colour), so I'm not qualified to answer your question.
Why aren't house prices in Winnipeg dropping? Is it just that people are now paying the asking price rather than offering a ridiculous mount over asking price and we will see the correction now?
Gregory Klump: Home price increases reflect the balance of supply and demand. The shorter the supply relative to demand, the bigger the price increases. Until recent months, demand has remained high relative to supply in Winnipeg. Supply has increased in recent months, but Winnipeg remains one of the tightest major markets in Canada; price increases in this market reflect that.
A more balanced Winnipeg housing market in recent months has resulted in smaller year-over-year average price increases. Average price increases may continue shrinking if recent increases in listings for sale persist in tandem with a further softening in demand.
I am a first time home buyer with single income, and wondering if it is the right time to buy a house (both USED and NEW). Should I wait little more for the real estate market to cool further? I know most of the real estate agents are pushing their clients to buy now for understandable reasons, but I am looking for a genuine answer keeping economic and employment outlook in mind.
Gregory Klump: The right time to buy a home is when you're ready, willing, and able to do so. If you aren't sure whether you'll have a job tomorrow, then I'm guessing you won't be buying a home tomorrow. If you have your eye on a particular home and aren`t prepared to make a realistic offer, then you won`t.
"Timing the market" can be a bit of a throw of the dice. Sales activity picks up before prices do, so if you have your eye on a particular property that's on the market, it may sell before you make an offer (since price reductions are designed to attract offers.)
Moreover, homes at the more affordable end of the price spectrum sell faster and their prices tend to be cut by less than those at the upper end of the price spectrum when the housing market cycle is past the peak. It really is a matter of your own personal financial and social circumstances.
Is it better to put money into the stock market now or the real estate market?
Gregory Klump: The stock market is by and large about placing bets as to whether the value of share equities will rise or fall. But you can't live in a stock portfolio. Buying a home should be less about speculating on its change in value, and more about meeting your basic need for shelter, living where you want, and being able to afford it regardless of the home's change in value in the short run.
In the long run, a home is a forced savings plan with a number of intangible benefits that share equities don't have. As to whether the change in value for equities is greater or less than the value of a home: it depends on when you buy/sell, the share equity in question, and the home.
I am looking at recreational property. Do you think prices are at their bottom here in Canada or is there more room on the downside?
Thanks.
Gregory Klump: Canada is a big place; real estate is local, with local prices that evolve accordingly. Where is the property located? What facilities does it offer? Are you looking to buy it as an investment, or as a second home? Info re: your prospective purchase is insufficient to provide an answer.
What is your prediction for the trend of real estate prices in greater Vancouver?
Gregory Klump: CREA does not forecast local real estate markets. In its forecast released earlier this year, CREA predicts that prices will decline provincially in B.C. by 11 per cent in 2009, and then stabilize in 2010.
Is this the right time to buy a brand new condo? Will the price of a brand new condo drop even more? If yes, please explain. If no, why not?
Gregory Klump: Whether the price of a brand new condo will drop more depends on the market segment. Are you buying as an investment property? If so, check local rental rates (current & outlook.)
If buying as a principal residence, at what end of the price spectrum is it and where is it located? It is difficult for me to provide an answer without more information.
I sold my place last July, 2008 and I've been renting, while waiting for the market to bottom out. I've read that in many of the Olympic venues real estate goes through a slump, after the event is over. In the case of Vancouver, the possibility of a prolonged slump in real estate will be coupled to the possible continued hurt of the global economic crisis. So my question is, is it better to wait it out until well after the Olympic games are over?
Gregory Klump: Canada has hosted the Olympics twice before, in Calgary and in Montreal. In the case of Calgary, there was no spike or drop. In the case of Montreal, the only impact was an increase in supply of rental housing (conversion of the Olympic Village.)
As for Vancouver, my call re: the impact of the Olympics on the Vancouver housing market would be purely speculative.
I keep hearing that Foreclosures and Power of Sales are a great way to get into the real estate market and make a great return on your investment...do you think this is a viable option for someone looking to buy a property or one that has too many risks and should be avoided?
Thanks,
P
Gregory Klump: You keep hearing about them from news media in the U.S., where there are many. Many purchases of these properties are speculative — which is part of the very same problem that got the U.S. housing market into trouble in the first place!
Homes in Canada available via Foreclosures and Power of Sales are still a rarity.