Slow and steady growth forecast for residential real estate…

Victoria’s real estate market posted significant gains in the fourth quarter of 2007 and showed little sign of the traditional seasonal slowdown. We experienced strong and steady activity, and recorded a rise in average house prices. The fourth quarter also saw slightly lower inventory levels, well-priced product and the unwavering demand in most categories continued.

After the strong house price appreciation and record number of sales that characterized 2007, economists recently forecasted “steady, yet moderate growth in the residential property market for 2008″. As we move into the New Year, activity levels are expected to wane from the frantic pace that we experienced in 2007. While economic prospects will continue to improve in 2008, few major markets are expected to exceed record sales levels set in 2007. However, average prices are likely to continue to rise, albeit at a much more moderate pace.

The good news for potential buyers is that the overheated housing market is expected to cool off. 2008 will be a much better time to buy a home than in previous years because eroding affordability will reduce demand, allowing the market to move toward balanced conditions, with lower levels of price appreciation, and fewer homes trading hands.

In any market, in terms of unit sales, first-time buyers are the most active group. If you look at all the homes sold in a year, first-time buyers range from 40 per cent of all transactions in a very slow market, up to 70 per cent of transactions in a very active market. How does this affect you if you are not a first time buyer? Keep in mind that the first time buyer market is the driver that triggers the move up market.

Current interest rates and new loan products create an excellent opportunity for first-time buyers to come into the market, if they are working and confident. The good news is that Victoria’s economic engine is still firing on all cylinders and people are working and they have trust in the economy. The buyer believes that in 2008 they are going to have jobs and they’re likely going to be paid more than they were in 2007. It is this certainty that is spilling over into the real estate market and this confidence that suggests that if people have jobs and they want to buy, they will find a way to do so.

Victoria buyers and sellers can expect healthy, balanced conditions in 2008 - the best environment for a strong and sustainable real estate market. Should you want to further discuss the market, or have any question regarding your own Real Estate needs, I would be happy to be of service. Call me…Let’s Talk.