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The HOT Vancouver Island Real Estate Market Explained. (Oct /2020)

Home > Market News > Nancy’s Blog > The HOT Vancouver Island Real Estate Market Explained. (Oct /2020)

Will Real Estate Prices Continue to Climb ?

  • Photograph of Nancy Smith
  • Qualicum Beach REALTOR®
  • Published: Oct 25th, 2020 at 3:50 pm

Money in the bank seems to have depreciating value. $5,000 will get you $0.22 cents in annual interest, but the scary thing these last few years, every year you actually are losing close to 10%. To simply explain this concept, visualize you can buy a $5000 chesterfield set one year ago for $5,000. Today, you would buy the same chesterfield set for $5,500.22. So in effect, you have lost 10% of your purchasing power, and it is called inflation. Why are homes sales strong during the last half of 2020, because people have no where to invest their savings. Bonds and bank accounts do not pay, stock market is a casino(ask the Robinhood investors), and people have been accumulating cash from past investments, pensions are paying their daily expenses, but with Covid-19, we are not enjoying the luxuries like travel, restaurants and entertainment. So, the cash piles up for the financially prepared. North American financial history looks favorably on real estate investment, and as is said, "they don't make any more land". As world population grows, and some areas of North America have become less pleasing to live in, whether due to climate events, politics or financial devastation, people need a secure place to live. The more comfortable places are sought after, setting price records as people compete for desirable homes. Alberta, Canada has lived through a financial crisis brought on by a severe drop in world oil prices, so when there are fewer jobs, some people need to sell and move. These less desirable markets are suffering from real estate price decreases, and it has been an eye-opener for homeowners to sell and buy in more desirable areas, out of necessity. This population shift also causes shortages in home rentals, and people are resorting to living in RVs, which has also pushed up prices for living accomodation. Old trailers that are at end of life are being patched up and lived in. Some transistional homeowners believed they could buy a piece of remote property, park their RVs or trailers and live there until they could afford to build. This isn't legal, as there are concerns for sewage, garbage, drinking water, and the proliferation of non-permitted structures.
The point is, in the current Vancouver Island market, we have waiting lists of home buyers. This is causing fear in the local markets where people with a desire to sell, are now afraid they will not find 'their dream home', they do not want interim living arrangements and they especially do not want to get priced out of the market by further 'inflation'.
Some buyers are getting caught in this grey area, where they place an offer on a desirable home, only to get outbid. They are trying to buy with yesterday's prices and when they finally come to the realization they have to dig much deeper to pay higher prices, bidding only increases the market median. Without action, they become homeless, where the $600,000 home they could have bought last year, will now cost $660,029.04 .

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