Mixed Signals are becoming routine.
Here we are rapidly approaching the Spring market. It is fair to say the industry is expecting brisk activity, but how the market will actually unfold remains to be seen. Despite news coming out of the Lower Mainland of a significant slow-down in actual sales, the situation that is not being weighted is the low inventory throughout the region and apparently the Province. Demand remains strong, and with this lower inventory, basic economics would suggest that we are going to continue to see prices increase. However, there needs to be warnings and caution to those entering the market.
Prices on the Sunshine Coast are reaching new highs, but the question is: where can it go from here? My biggest concern remains how sustainable our prices are, and when an eventual slow-down will occur. This week I pulled an ad from the Squamish area which is showing a very ordinary rancher in the $700k range and a more elaborate one in the high $800’s. These are tremendous numbers that are starting to reflect pricing in North Vancouver. But there are major differences between the Coast market and the Sea to Sky, namely the amount of economy and industry that flows throughout that area. North Vancouver is bustling with billions of dollars going into ship building, and the Sea to Sky is easily manages billions in tourism dollars. Squamish is also sandwiched between Whistler and West Vancouver which have the highest real estate values in the country so there is the rub!
The Sunshine Coast, on the other hand, remains a very optional retirement area with a largely undeveloped tourism industry and zero manufacturing (Coastal Craft aside). Therefore our local market conditions will be more subject to retirees entering the market and the general consumer confidence in the Lower Mainland. We are also anticipating increased costs of borrowing this summer with the Canadian economy doing quite well and our lower dollar providing incentives for exports. So while I do predict that our prices will rise this year, I see some increasing stresses coming to bear towards the end of 2017 and into 2018. This all translates into maintaining a balanced attitude toward where our market can go, and should make decisions a little more challenging for both buyers and sellers.
Bottom line? All parties should proceed with cautious optimism with a left eye on the trends.
Next week we will review what those trends are looking like - I made some predictions earlier this year so let’s review and revisit to see how things are shaping up.
Have a great day and if you are in the market or know someone entering it, let me know and I’m always happy to provide a free market evaluation and report for your area of interest.