That has to be the most topical question at the moment. So much so that more than a few people are playing a waiting game to see “where the bottom of the market is”? Sometimes a dangerous game to play for many people.

Let's look at why you might take that approach, and what type of real estate purchaser you are.

For the majority of people, the house, whilst it is an asset (or liability depending on how much of it you own!) is not primarily an investment, it is shelter, a place to raise a family and call home. Many people need that sense of security. For that group of people, the bottom of the cycle in terms of prices has no relevance. Precisely because in their world, everything is relevant. In the cycle of the market, they buy and sell and if you do your research, you will see that everything is relative and you “trade values” at a particular point in time when you buy and sell a home. If you are wanting to sell a home and you wish to wait before you list your home and then look at purchasing, you may actually be surprised by a sudden lift in the market just after you have sold your home that may in fact weaken your purchasing power. The assumption in this dialogue is that the client is buying and selling in the same or similar market.

The other type of purchaser is an investor the type of client who is patient, can play the waiting game and benefit from it. An investor would not lose in this scenario since they are not committed to a purchase for shelter or security. To them, it is like buying stocks, buy low, sell high, wait and don’t commit until you see the “right deal”.

What is happening currently, is with the bombardment of headline driven articles - mostly negative - towards very generalized real estate markets, the division between an investor and a “home-owner” is very weak. Many people seeking the security of a principal residence or a vacation residence are waiting in the sidelines thinking they are investors and missing out on some fabulous opportunities, hoping to get more signals from the media that things are changing. Whilst there is a softening in the market towards a buyers market with more choice in listings than last year, it is nothing more than a return to normalcy that we have not seen for several years. A return that we predicted in last years articles was long overdue and likely to happen this year.

In thinking about this article, I decided to tabulate and graph some longer term history for you. The following table and charts indicate growth in several real estate sectors over a five year period with May 2008 thrown in for comparison to previous years.

Much like oil prices, it is possible to see that the trend is upwards. With real estate over long periods of time, the trend has always been up. Yet have you noticed the headlines when oil drops $2 in a day - “Oil plummets on fears...” - in reality that represents a one day fraction of a percent decline, not a plummet, that is commonly recovered the next day, yet warrants such a radical headline. Such is the nature of our “knee jerk” information society. Again, as we have spoken in the past, we have very short term memories today.

What I found out in studying the average sales values (which can be an awkward measure to use because in certain instances, it can be skewed by one or two low or high value sales) is that looking back to 2001 we have seen waterfront lots rise from an average of $199,667 to $1,206,666 in 2007. Similarly in the single family home market we have seen a gain from $190,552 in 2001 to $476,506 in 2007 with May 2008 average showing $531,454. Interesting parameters after reading the headlines. Yes, our market is softer, and yes that is beneficial for the home buyer who has more choice and a less pressured market to make that choice in, but the market is still moving upwards and is forecast to do so through the rest of this year and next year. Should you hold off and wait? Not if you are a home buyer and perhaps yes, if you are an investor looking for isolated opportunities that give you a good entry price, however, the statistics are not supporting that theory across the board.

Given that a fair gain on home values in a stable market might be 5% to 7% per year, it would mean that our “average single family home might have gained value to $285,967 in 2007 yet in the Okanagan we saw that grow to $476,506. If we see a slight decline in a month, have our real estate values gone backwards? Yes, in that one month time frame, but 5 year average growth values are off the charts, in fact, what we have seen represents a compounded 16.5% growth that in Canada is tax sheltered if it is your principal residence for a 6 year period.

As we have maintained in previous articles, Kelowna is a beautiful place and inbound migration will continue as the boomers move into retirement years. The Pacific Northwest is one of the richest and most stable economies in the world. Our neighbours to the East who fueled so much of the activity last year might have taken a brief respite, but our short term memories probably forget that the spring market is often a little quieter than later in the year. In point of fact, Alberta is sitting on some of the fattest bank accounts in the nation as oil tops $130 per barrel and natural gas is closer to market realities and set to climb for many years to come. Kelowna is a great place to live, people will still keep buying homes here and interest rates are at an all time record low and set to turn around anytime. Don’t delay, the market today offers you good value, affordable money and great selection, if you wait until the fall, it might be a costly mistake.