A question I often get from clients is... "How much has the market changed/dropped since last year"
The answer, of course, is not a simple one. Different areas have been affected differently and even if similar markets different product has had different % drops in the year May 2008-May 2009.
One thing is for sure, whether you think it is a good time to buy or not.... Houses and condos are more affordable than they were a year ago or two ago.
How much more affordable? Well lets take an example, realizing that it isn't perfect and won't be the same as a percentage for any two properties.
Let's take a home that sold in May 2007 and then at its value in May 2009. The value has dropped 13% (again, don't use this number as the gospel, but I am using a specific Metro Vancouver home here)
So, the 2007 value was $700,000
In 2009, it is worth 13% less, or $609,000
So 13% less, right? Someone in 2009 is going to get a WAY better deal than 13% off the 2007 value, even if they pay the $609,000
To understand, let's look at interest rates.
In 2007, the price was $700,000. Let's assume the buyer is putting down 20% so we don't have top deal with CMHC fees (dispite me making this go away for the sake of simplicity in this example, REMEMBER to ALWAYS FACTOR IN ALL CLOSING COSTS, they add up! - talk to your Realtor)
So, $700,000 with a $140,000 down payment leaving $560,000 to Mortgage. Interest rates were 5.25% for a discounted 5 year rate (we'll do a 25 year amortization - 5 years is just the mortgage term)
Payments on that $560,000 are $3337 per month
Now, it is 2009, you are buying the house for 609,000 and putting the same $140,000 down, leaving $469,000 to be mortgaged. The kicker? Today you are getting a 5 year Mortgage for 3.69% (we'll use 25 years as our amortization again)
Payments on that $469,000 at 3.69% are $2388 per month! That is a savings of $949 per month, or 28.4% less expensive per month!