Real estate downturn

Figures released by the Greater Vancouver and Fraser Valley real estate boards on Monday confirm what everyone knows: The housing market is in a slump.

Sales dropped 35 per cent last year to the lowest level since 2000, and the price of a typical home in Metro Vancouver fell by 15 per cent from its peak.

But before you pull out your calculator to figure out how much equity you've lost, reflect on the reasons you bought your home. Did you buy it to flip it and make a big profit in a hot market?

Or did you buy it because it had a fenced yard for the kids, a deck for summer entertaining, large windows that let the sunshine in, beautiful hardwood floors, a gourmet kitchen, the right number of bedrooms for your growing family, a playroom in the basement and a fireplace in the living room?

Perhaps it was closer to schools, transportation and shopping than your previous address, or maybe you were moving from a rented apartment, with all the limitations that implies, to a place you could call your own. You bought because you liked the neighbourhood, the quiet street, the mature trees, the stunning view.

Most buyers purchase a home because they want to live in it. Real estate is not like other investments. Financial assets -- such as stocks, bonds, gold or term deposits -- don't offer shelter, comfort or pride of ownership the way a home does. A home reflects your personality and stores the memories of your life there. Once the mortgage is paid off, you'll never be out in the cold no matter what happens to the market.

Of course, for many a home is their largest asset and that raises some financial concerns. For instance, you don't want to be so highly leveraged that you owe more than the market value of your home. Nor do you want to be forced to sell at a loss.

Unless you are planning to buy or sell now -- or you make your living selling real estate -- market fluctuations are largely irrelevant. And if you are planning to buy, lucky you. Conditions haven't been this favourable on the buy side in a decade.

Since you've got your calculator out anyway, let's put some of the numbers in context.

The benchmark prices of a detached home on the west side of Vancouver dropped 16.6 per cent to -- wait for it -- $1.2 million, or about 20 times Vancouver's median income. The price has soared 64 per cent over the past five years and 22 per cent over the past three. Owners there haven't exactly fallen on hard times.

It's a similar story across the Lower Mainland.

In Richmond, prices are down 4.8 per cent over a year, but up nearly 58 per cent over five; in Port Coquitlam the one-year decline is 4.8 per cent and the five-year gain is 64 per cent; in Maple Ridge the year-over-year drop is 9.7 per cent, the five-year advance is 31 per cent; in Burnaby prices are down 14 per cent for the year, but up 47.5 per cent over five; and in New West the one-year drop is 10.4 per cent, while the five-year gain is 59 per cent.

It is clear that real estate has held up far better than stocks, which have seen price declines of 40 per cent from the peak on average. To be sure, real estate sales are down, listings are up and prices are falling. But the market will recover -- yes, it will -- so owning your own home continues to be a sensible financial goal.

What recent market turbulence has done is make that goal a little easier for many to achieve.