FALL 2020 MARKET UPDATE
Well our market has been anything but normal this year. The post pandemic market correction is still looming but its still clear sailing with nothing but blue skies and open water in the Vancouver real estate Market.
The “Post Pandemic Euphoric Bubble” as I have labelled it, is bigger than we thought, and even looks like it will go on forever. Even BCREA has adjusted their projections as the graph at the very bottom of this update demonstrates (Forecasts vs. Actuals) below demonstrates what was supposed to happened did not happen.
The projected mass binge of listings and corresponding drop in prices did not happen as it was forecast . . . yet! So, this market, as you can see to the left (Unit Sales Graph) is out of control with no end in sight.
So why is the market so overheated, and why is this atypical? Apart from the reasons I mentioned in my monthly Facebook video market updates: Post lock-down frenzy, low interest rates, and low inventory levels, there are a few other factors.
This is not a typical recession. 1) In a typical recession, buyers pull back from buying and inventory levels increase as some owners need to sell due to unemployment, business failings, reduced incomes, etc. But here as you can see in the graph to the right (Employment Impact) mainly the entry level, front line service sector workers were hit the hardest. So, most mid-level and high-level income earners were not hit as hard.
2) Also, with most of the stores and services shut down there was a record level of household savings 28.2% and disposable income across the country. This increase in the available funds to families is also due to our fast-acting Federal Government and the available Canadian Emergency Response Benefit (CERB).
3) Not only did this increase the amount of money in many savings accounts, it also may have averted the need for many to sell their homes or investment properties. This excess purchase power available to the buyers along with virtually zero percent interest rates (with 2% inflation), the ability to defer mortgage payments, and the increased demand for safe, spacious housing, has resulted in this current super-hot market we’re in.
Throw into the mix that many who would have sold did not sell, and the fact that some home owners did not want the public coming through their homes in fear of Covid-19, the resulting lower inventory levels further (see Active Listings graph to the left) created a tremendous upward pressure on prices.
So, What Now? Nobody really knows, is the correct answer. We can speculate all we want and try to forecast based on past recessions, but we know already that this is not your typical recession. It is a post pandemic recession unlike anything we have ever seen. So many varied factors never before encountered make economic forecasting like playing darts with a blindfold on and spinning three times before each shot. Forecasting with any kind of accuracy is virtually impossible.
Yes, likely there will be an economic “payback time” as a result of all this free money, closed businesses, lost jobs, the end of government assistance programs, and the scary future tax policy changes needed to pay this all back. Our day of reckoning will come. We just don’t know when and how bad it will be.
We’re here to help you plan through this uncertainty. The best plan of simplification or investment growth will depend on where you are in life and what you wish to achieve. Remember it’s not necessarily how or what you buy/sell but more importantly when you do it and the reasons why you’re doing. it.
MAKE A SMALL BATHROOM FEEL BIGGER:
One of the more common questions I am asked is how to renovate a small bathroom or powder room. In most cases it is impractical to enlarge a bathroom, as this would impede on valuable adjoining bedrooms area or closet space. If done correctly, a small bathroom can be made to feel much larger and appealing.
The most practical first step in redesigning your small bathroom is to consider its function first. Who uses it, do you need a tub or would a shower stall do. In smaller second bathrooms, removing the tub and replacing it with a large shower is becoming a very popular space saving idea. If you pursue this idea consider a double headed shower stall made completely from glass (no metal frame). These stalls are very practical and easy to clean. Make one of the heads a removable hand-held showerhead for the children parents, and for easy cleaning.
Decide how many towel racks you need and where they will go. Is the vanity really needed or would a simple pedestal sink give the bathroom a more spacious feel. Maybe add a built in cupboard into the wall to make use of some of that empty space.
Changing the lighting can be one of the most cost-effective improvements in a small bathroom. Light gives the impression of more space. Try adding a bright row of bare bulb lights above the sink. If you keep your tub, install a few pot lights wired into a dimmer switch. This provides soft relaxing light for those long soaks with a glass of your homemade Merlot and your Albinoni’s Adagios cd playing in the background. While you’re at it, why not wire in a speaker into the bathroom ceiling from the entertainment centre. Remember to have it wired into a local on/off switch.
One of the most effective renovations I have seen in a small bathroom is the addition of a large mirror, which covered an entire wall. Placing valence lighting at the top of this mirror adds an amazingly larger feel to the bathroom. Consider adding a wall mounted mirror with an extension arm in the shower for shaving, etc.
As a final touch I have found that faux finishes which mimic marble, granite or even silk most effective in a small bathroom. Use a light coloured base coat with a darker pattern on top, and finish it off with a glossy topcoat to reflect the light. This combination gives the walls a 3-dimensional effect that actually expands the bathroom.
Dark colours, such as slate grey, black or burgundy can be very effective in small powder rooms but do make the room feel a lot smaller. Accordingly, I don’t recommend this for a main bathroom.
As a final note, think of the best way to eliminate clutter in a bathroom. Clutter makes a bathroom feel small. Install glass shelves for towels or better yet, install a simple plastic-coated wire-shelving unit for the towels above the shower head(s) in the shower. I have done this and it works very well. A little creativity can go a long way in reducing clutter in your bathroom.
If you are not the handy type and would like a professional to do your renovation, give me a call and I recommend someone who is reasonable and who my clients have been extremely happy with.
MORTGAGE MARKET UPDATE by Paula Siemens | Invis
We have been experiencing historically low mortgage rates as the expectation of further inflation is very low. Rates range from 1.74% for a 5 yr fixed for an insured purchase to 2.04% for a refinance. Rates fluctuate based on the type of transaction as well as the value of the property and the amortization.
We have seen a shift in lender attitudes since Covid-19 first showed up in Canada in early March 2020. Deferral of mortgages was quickly offered by the Federal Government and lenders, with the promise that deferring your mortgage would not negatively impact your credit. We are now finding that most lenders will not do a new mortgage for those who are currently in a deferred status on their credit. To be successful for most financing options lenders are looking to see that applicants have returned to making payments 2-3 months before the approval will be granted.
Those individuals whose employment have been impacted by Covid-19, will have to show that they are back to work and can show current pay stubs that are in line with their stated income.