I have a confession to make. I don't buy the paper, but every Friday I seek out the Future Shop ad that comes with it. I usually confine myself in a quiet place for a few minutes and I check out the prices on the tech gadgets. I'll even admit that I may just be a bit obsessive about it. I have no plans on buying anything right now, but if you were to ask Ms. HHV about this, her answer would definitely contain some nervousness, because she knows that I have difficulty resisting a deal.
I can admit it's pretty much always been that way. I have trouble walking past the take an additional 70% off rack in The Bay without seeing if that suit jacket, pants or shirt I've been eyeing is on it. Heaven help me if I'm in a bike store and something is on a "too good to be true" sale shelf. Lately the obsession has turned to televisions. I don't know why I'm watching their prices so carefully, we have a perfectly good one at home. But the idea of watching Hockey Night in HD is attractive, despite knowing that the purchase price of the TV doesn't include the extra $200 per year in cable fees or the $350 for the HD box. I've narrowed the purchase choice down to brand, picture type and size, now I'm just evaluating based on price. But I will still argue, vehemently, that I am not going to buy a TV no matter what its price is in three or four weeks because I know the manufacturers will be discounting them further, and thus the stores will be too, as the recession deepens.
Still with me? I know you're thinking "HHV, what has this got to do with real estate? Please don't tell me you're gonna start writing about politics next."
BC Assessment's database for 2009 valuations is active now. Depending on the property, two numbers are available: the July 2007 assessed value, and if the place sold in 2008, the sale price of the property. For a lot of people, I'm guessing here, there will be no sticker shock.
Regular readers and me, we've been obsessing about real estate prices together for the better part of two years now. We've been expecting prices to come down. We've been calculating, analyzing, graphing, discussing, arguing and maybe even, dare I say it?, proselytizing the great benefits of cheaper real estate for our much-loved city. But we're the minority in this town.
Most people don't give a damn about what their house is worth. They know it's worth more than they paid for it. They know they no longer have a mortgage or know they can afford the one they've got. These people are the silent majority in our real estate market, and probably number close to 50 per cent of homeowners in Victoria. They probably won't even look at their assessments for more time than it takes to shred or file them. It doesn't matter though, because what these people do does not effect the market price at all, because they aren't active in it.
For a small percentage of Victorians, I imagine the "frozen" assessments of July 2007 delivered as July 2009, may come as a surprise. These people are the active buyers. They've all heard by now that the market "ain't what it used to be." They've got REALTORS actively presenting low ball offers and encouraging sellers to accept them. Buyers out there are seeking the "good deals" the "experts" quoted in the MSM tell them are everywhere. And they don't trust inflated market values set by the industry players as they currently are. They may be looking to government assessment numbers for a baseline to calculate their requested discounts from. Could this lead to further price reductions?
Say you decide to buy a Yaris and they are on sale. You walk on the lot, kick some tires and read some stickers. You see the manufacturer's suggested retail price and then you see the dealer's discounted sale price of 7% savings. What happens if that MSRP suddenly gets rolled back to the price of a Yaris two years ago? That discount the dealer is offering you probably isn't so deep anymore is it? But you've heard the deals are a "once in a real estate cycle opportunity" and you need to act fast. The numbers just don't add up though.
You've probably already decided to buy. And you've already decided you are going to get a discount. So you're probably going to demand it. And if you are patient, you are probably going to find someone who will give it to you.
Time will tell, but I can see frozen assessment values greasing the downward price slide. Buyers may use them as the new MSRP to calculate their proposed deals off of. What's a must-sell homeowner to do? And what kind of advice do you think their REALTOR is going to give them, especially if sales have been light in the last little while?
How do you think the assessment numbers will play out in the market?