With the high possibilities of a recession, the pricing for houses have gradually decreased in recent months; however, people are not quick to jump at buying a house, because predictions say that the house prices will decrease even more in the next few months. This poses as a horrible problem for home owners, such as Mike and Tonya Smith, who want to sell their house. They put their Maple Ridge house up for sale in April below its assessed value, and now, 6 months later, it is still for sale, reduced three times, at $799,900 compared to its current assessed price of $842000. Luckily for them, the house they are planning to buy has also reduced its prices, allowing them to further reduce the price of their own home right now. It is easy to say that the sale of houses in BC today is not in its brightest of times.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=ccea6e0a-1ccd-44c2-93ee-93b50adeb788
The demand for houses is currently at a very low state, while there is a plentiful supply of houses up for sale. There are two very important factors that are influencing this trend, and they both have to do with the future: the future incomes of consumers and the future prices of the houses in BC, especially in the Lower Mainland. With a recession, a worker's future income will most likely be decreased; therefore, they would spend there money more wisely, and on things that are more of a necessity, rather than luxury at the moment. The future prices of houses are also predicted to drop even lower than they are now, prompting buyers to holt their purchases, and wait until the prices are as low as possible. However, if someone is desperate to purchase a home, there are many other cheaper substitutes to buying a house; homes such as condos, apartments, and rooms for rent are much less expensive.
If I were thinking about purchasing a house, I would not want to do it at this point in time, or any time in the near future. Why buy a house now at $800000, when it may drop to $750000 three or four months from now. Whatever the assessment cost of your house is, I believe you should assume it can only be sold for a maximum of $50000 less than that amount, and probably lower as the months go by. Buying a house now will also most definitely leave you with a deficit in the future, if you plan on reselling it in the next year or so. It is a good idea to keep your finances at a good steady pace, as there may still be some surprises in the near future.
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The housing market has unquestionably taken a hard hit with the coming of a global economic crisis. The value of houses is reflecting those of stocks, as they are plummeting down from previously high prices. This is a terrible dilemma for those who wish to sell their homes now, but is a fantastic situation for those who want to buy homes later on. Moreover, the market for tenancy, condos and apartments will also slide alongside the housing market. It would be a smarter decision to purchase a house, perhaps in a year, when the price drops about 30% than to purchase one now in the declining housing market. As the housing market is surely bound to bounce back up, it is only a matter of when it does. If I was looking for a cheap house, I would wait until the stock markets were not so volatile and reached a stable state.
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