Posted in Real Estate Assessment
Psst....the neighbours are talking!
And these days they are likely talking about the recent BC Assessment notice they recived in the mail. Upon gazing at the ever increasing 'assessed' value of their home, one of two things happen;
they pump their fist, say "Hell yeh, thats what I'm talk'n about" and high-five their spouse OR they shake their heads and say "Our place is worth waaaaay more than that, but if it keeps our taxes down, then thats ok" and they fold the paper up and store it next to last years paper.
If you owned a home for the past five or six years, it is quite likely the value 'on paper' has doubled! Apparently you don't have to be Donald Trump to make money in real estate. The thing is, unless you are selling your home, it remains a large amount of money only 'on paper'. I believe the sellers market is peaking, and especially if you are thinking of downsizing, now is the time to sell!
While, the BC economy has been humming along nicely, the same can't be said about the States. By now, we are all aware of the sub-prime mortgage problems south of the border and the effect it has had on home prices in a number of regions. Luckily, Canada's banking system doesn't allow similar mortgage issues, so we shouldn't have the same degree of problems here. However, as evident by what is happening to yours and my mutual funds AT THIS VERY MOMENT, the American economy's upset tummy troubles have created growls which are now being heard around the globe. Markets world-wide are down 400-500 points today, a drop of 5% in value over concerns the US economy will fall into recession. The TSX had its worse day since 2001 post-terrosist attacks. The U.S. markets are closed today for Dr. Martin Luther King Day, but will undoubtedly be very busy tomorrow.
This is unwelcome news for those of you nearing retirement. Hopefully you have been switching to lower risk investments the closer you get to hanging-them-up. At the same time, many young people have been contributing to their RRSP's and listening to the advice that "You are young, you can be more aggressive with your investments". With the market crashing, their RRSP's are being slashed in value and the pool of RRSP money they may have borrowed from themselves for a downpayment is suddenly much smaller. A smaller downpayment equals either a larger mortgage or a smaller house.
No doubt, the markets will come back, but just how long will it take? My guess (and I'm not an investment banker, nor have I played one on TV) is there will continue to be a stock market downward sprial, followed by investors snapping up good deals (a rise) and then it will settle again. Ironically, the market panic was caused by the economic stimulus plan president Bush announced on Friday. Now you understand why Bush as a 23% approval rating! One out of every four Americans doesn't like him and the 4th guy isn't quite so sure.
2008 is shaping up to be a very interesting year for your investments, both at the bank and in your home. If you are thinking of buying or selling a home this year, please give me a call to discuss your options, 604-NEW-HOME (639-4663).
Buckle up and enjoy the ride!