Real estate market

In the midst of the economic storm, Bob Rennie is one cool real estate marketer.

His message to consumers is the same he recently gave to his office staff — to calm down, withstand the storm brewing from a lack of consumer confidence, and look for market stability toward February.

Nobody understands what is going on with the world economy, he says, but here in Vancouver, the basic real estate fundamentals are good.

"You want fundamentals, not hype. Hype is not going to get us through," says Mr. Rennie, who has been averaging $2-billion worth of condo real estate sales a year. "The headlines are so sensational, it's depressing. Anybody can say the sky is falling."

But is the sky falling?

The degree of the market fall is anyone's guess, but economists and industry professionals agree that this is more of a temporary slump than a permanent new reality.

Economists expect the market to pick up moderately by mid-2009. A recent provincial housing forecast for 2008 to 2010, from Central 1 Credit Union, said house prices would fall by 30 per cent by the end of 2008. In 2009, there would be another 17 per cent drop, it said, with the economy improving in 2010.

The forecast estimated that the average B.C. home would cost $385,000 in 2009 and $366,000 in 2010 — down about 20 per cent from this year. In 2003, the average was about $250,000.

The B.C. Real Estate Association, the umbrella group for real estate boards across the province, released a less gloomy report on Wednesday. Its chief economist, Cameron Muir, forecasts house sales to decline by 28 per cent this year with a slight increase of 4 per cent in 2009.

But Helmut Pastrick, chief economist for Central 1 Credit Union, says that in this volatile economy it's impossible to be certain of what lies ahead.

"There is a great deal of uncertainty," Mr. Pastrick says. "Events are moving quickly. We have the same variables, but just more volatile.

"When there is more volatility it's more difficult to be accurate on what their future path will be ...

"No one knows when consumer confidence turns around, when the credit markets will loosen up, when the financial markets will turn higher," he says. "I'm just expecting we'll have several tough weeks and months ahead before turnaround … There'll be some improvement in mid-2009 and that will carry on in 2010."

Real estate players such as Mr. Rennie know that their upbeat views will be considered biased. But he insists that Vancouverites need only look to the fundamentals for guidance: a rental crisis, a shortage of housing supply on the market, and the 2010 Olympics just around the corner.

"You have to base it on supply, opportunities, and culture. We are a real estate town — real estate is a sport," Mr. Rennie says. "You go to Calgary and it's oil and gas. You go to Toronto, it's business. In Seattle, it's technology. We're real estate ... And the world likes us. The world likes to live in Vancouver," he says.

"Out of all the markets in North America, this is a wonderful market to be participating in, because we do have the fundamentals."

For now, however, the Vancouver-area market is suffering from a lack of consumer confidence. Mr. Rennie advises not to sell right now, unless you have to.

"If your client is not motivated to sell or for any reason [the property] is overpriced, take the home off the market until February and we'll sit down and have some clarity," he suggests.

On the other hand, for investment buyers, it's an excellent time to buy, he says.

Another bright side to the overall market adjustment is that people who never thought they could own a home in Vancouver are suddenly able to. On the city's east side, there have been multiple offers on houses whose prices became reasonable compared with prices last spring. A few of the homes have even sold above asking price.

"The couple that is looking to get in on the east side for a home for $900,000 is suddenly able to buy something for $725,000 and [the seller] has two or three offers happening," Mr. Rennie says.

Dave Watt, president of the Real Estate Board of Greater Vancouver, says 3,200 people have bought and sold real estate in Vancouver in the past two months, down considerably from the heady levels of the past few years. "It is definitely slower but the problem is, we are comparing it to the last three years," he says, adding: "I can tell you right now, my most serious investors that are always in the marketplace, they are out there right now bargain hunting."

But according to west side real estate agent Marty Pospischil, new-built houses, homes on busy streets, and empty lots are not selling.

"Who is selling right now, and taking advantage of this market, are the upgrade buyers," he says. "They are selling their condo or townhouse and they are upgrading to a more expensive detached home."

Central 1's Mr. Pastrick agrees that those buyers will have an impact. "One of the stimuluses to sales is lower prices," he says, "and that will certainly become an increasing factor over coming months."

(prepared by Kerry Gold/Globe & Mail)