Posted by: Daryl & Wendy Ashby | February 11, 2010

Paradise is Worth Talking About

This article maybe somewhat repetitive, but I believe it is worth the ink.

In 1992, the real estate market on the West Coast slid 35 per cent to the level of 1989 prices and for the average pessimist, the outlook was dire with no hope in sight.

Add to this, some 787 U. S. banks had collapsed in the preceding three years and the “resolution trust” (in other words, “bad bank”) was busy disposing the “non-core” (read: “toxic”) assets of banks.

(Does this sound all too familiar?)

What every Chicken Little had to remember at the time (but chose to ignore), was that we live in a part of the world that everyone is striving to get a piece of, that the market will always recover and that if they purchased any property at that time, they would enthusiastically kiss the Realtor who introduced them to it a few years later.

It was an easy to call the shots then and it is easy today, because the fact remains, values grow where people want to be – and people want to live and play here in the Pacific Northwest.

In today’s gloomy environment, we must remember that urban real estate always has a use and thus always has an asset value. People live in it, play in it, use it for business or even grow their tomatoes on it.

Even with the short term gyrations, urban apartment properties have been a spectacular investment. Slightly used condos in downtown Victoria rose from $95,000 in 2001 to $270,000 in 2008. Office space and industrial properties have often outperformed the businesses they housed in the same period of time.

During the 40 years that I have been purchasing real estate in Victoria, the average house price has jumped from $16,000 to $700,000. But we didn’t get there in a straight line.

Real estate is local in nature, as well as cyclical – and the up-cycle quit in Victoria last spring after we had seen values double over the preceeding three years.

In the Spring of 2009 values began to drop and they continued to do so until we reached what appears to be roughly 20% below 2008 prices, but  for the most part they have settled there with only the odd exception. But the happy side of the equation is; they will rise again.

As Mel Gibson said in his latest flick, “Will you be on the cross or hammering in the nails?” Put another way; will you be benefiting from this settlement in values by allowing yourself an opportunity to invest or will you remain a victim?

We do not live in an “average” world. Some prices may adjust further – watch closely the likes of overbuilt condo areas in the downtown cores – or other oversupplied areas the likes of Vancouver central and the Okanagan.

Recreation property areas have not escaped, as historically they will always follow – down or up – the markets in the major cities.

Previous downturns have lasted from one to three years and each have seen an average of 17 per cent decline from top to bottom. The years 1981 to 1985 were not average – the downturn lasted longer and cut deeper.

From an investor’s perspective, cash-flowing properties anywhere is optimum – such as where there is a good employment base, low vacancies, capital investment and a good price-to-rent ratio.

From a home purchase perspective, there will still be some great deals in new construction and a fine time for sourcing out opportunities. The key is to shop wisely, get a professional Realtor, research, overcome your fear and make offers, lots of offers if needs be.

Buy waterfront if you can – and if you can’t, buy semi-waterfront; if you can’t, buy a great view; if not that then buy a peek-a-boo view.

What we are experiencing today, is identical to what we experienced in 1992, 1987, 1981 and 1974.

On the West Coast we are buffered from fatality when it comes to real estate pricing. Our region offers a majestic environment, where the climate is temperate and the vistas from most every locale is simply spectacular. There is a crisp quality in the Pacific Northwest. Whether it be the fine mountain air, the fresh ocean spray, the balmy tropical sunsets, or the clear blue Pacific skies that stretch beyond the horizon.

Beyond the obvious, there exists an entrepreneurial, innovative flavour, a generosity of spirit, with open arms to anyone wishing to move here. There is an embracing of life in the outdoors where any individual has the freedom to grow to his or her own future best.

People from all parts of the world are coming here, bringing with them their individuality, charm, wisdom and business acumen.

They become Canadianized and when they do we’re the greater for it.

To work here is a privilege. To live here is a true blessing.

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