Yes folks 2007 has dawned; B.C., Greater Vancouver and our own North Shore have just come through another boom year, economy-wise and, of course, “real estate value-wise”.

Many of us have just received our Property Tax Assessment notices and after the annual Wows!, tsk-tsk’s and good griefs, have moved on and can calmly and rationally reflect on the fact that this is the natural result of the forces revealed in Ecomomics 101.

The commodity is desired (demand): it is in short supply (e.g. number of town homes, apartments and houses on the North Shore); buyers are competing for ownership and therefore (minor “voila”) the value of the commodity is (and has been) rising. Question: will it stop rising?  Question: will it start falling? Question: will it continue rising? Answer: all of the above … but, these phenomena (called fluctuations) will occur in relatively short term spates. Yes, 2007 will be a more “gentle” year but the real answer (the one which should be pre-eminent) is that the long term must reflect further gains.

It is in fact the rate of these gains that fluctuates. My reason for making this “bold” (or obvious?) statement is a strong belief in the sustainability of demand for this commodity.

Again, I’ll use only the North Shore home values. Yes, “regrouping” and slow down in activity will take place, but it’s not logical to see this as a precursor to “collapse”. This is sometimes the wishful thinking of those desiring to become owners. Spells of calm are essential to stability and this balance is the key to a sane perspective. It was, I believe, Matisse who said “what I dream of is an art of balance”. We are experiencing this to a small extent at present. It is however only truly present in an economic sense when supply equals demand and prices move neither up nor down.

 As we take our first faltering steps into the breaking dawn of 2007, the greatest unknown is the intensity of demand in the short term (and the length of that “short term”?!!). Look at the inventory figures below (active listings) for evidence of a less than buoyant supply – will it stay that way or grow apace? With 2007 listings emerging tentatively, it’s most likely that January ‘07 will be a low volume month!

 Now, our year in review (vs. 2005).  Number of N/Van detached sales was 6% lower. Average prices +14% and inventory same as last year. On the attached (t/hse) front, sales numbers down 10% while apt sales were down 14%.  Average prices up 16% (t/hse) and up by 15% for apartments. Yes, values are certainly “leveling off” but all prices are markedly up over ‘05. Inventory (t/hse) unchanged from ‘05, and (apt) up from ’05 by 47% (unsold newer product).

Alan