company logo
  • Home
  • Sam's Story
  • Google Reviews
  • Search MLS
  • Commissions
  • Blog
  • Links
  • Contact
  • Properties
    • Active Listings
    • Sales
banner image

< back to article list

Vancouver Real Estate Prices Continue to Push Up - How Long Can This Last?

Sam Wyatt Personal Real Estate Corporation | February 27th, 2008

     The prices for Vancouver housing both for re-sale and new construction continued to push up by double digit percentages in 2007 in spite of the doom and gloom seen south of the boarder.  Housing starts are up for 2007 and were at the highest levels since 1994 for Vancouver .  Volumes of sales were also up in the re-sale market by about 13% according to the CMHC Housing Now January 2008 report.  Immigration both inter-provincial and international has also continued to provide substantial growth in  Vancouver ' s population.  The CMHC ' s Rental Market Report for Vancouver issued in late 2007 shows extremely low vacancy rates and increased rental rates in both purpose built and "secondary" rental markets.  The secondary market actually comprises 25% more accommodation than the so called "primary" market.  The secondary market is mostly comprised of apartments owned by individuals who rent them out.  The CMHC report shows private condominium rental vacancy rates at 0.2% in 2007.  Mortgage rates are still historically on the low side and forecast to marginally decrease over the short term.  All of these statistics point to a continued strong demand for homes.  There are several mitigating factors that would suggest however that we may be starting to hit the ceiling in terms of pricing and that volumes of sales will begin to fall.  
     The first factor and most cited over the last several years is affordability.  In late 2007, Vancouver ’s affordability as measured by the CMHC (the % of household income needed to service a 25-yr amortized mortgage with 25% down) creped above the 75% mark and is the highest it has been since 1990.  Most first time buyers can not afford to purchase a home – either they need higher than average down payments or higher than average incomes to be in the running. 
     The next factor relates to speculators.  New construction and the “pre-sale” market has long been an attractive way for “investor” (read ‘flipper’) buyers to make substantial gains.  By putting down between 5-20% of a purchase price, waiting 2 years and garnering  price lift from between 20-40% over the two year period, many of these “investors” multiplied their down payments many time over upon the sale of their properties.  What appears to be happening now is that the combination of the number of people flipping their property immediately after closing and the diminishing affordability of those properties is creating an increased number of listings and longer turn over time at freshly completed new developments.   Case in point, the Tapestry building by renowned builder Concert Properties presently has over 30 active listings.  The Vine in Kistilano and the Pomaria in Downtown False Creek North have now cooled down respectively to 8 and 10 active listings.  By Sam Wyatt Vancouver Real Estate Agent.
     The third factor is the US economy and the real and perceived threats that it poses for Vancouver ’s real estate market.  The perceived threat is that the mortgage crises that spawned the downward spiralling housing markets in the United States will happen here.  This is an unfounded fear.  The reality is that there is an extremely small percentage of loans in Vancouver that are “B” graded or “Sub Prime”.  There is a substantially lower risk here of home owners being unable to pay their mortgage and so a wholesale sell off here is far from likely.  The real threat from the floundering US economy and its corresponding weak dollar is that as a whole, the US purchases the vast majority of Canadian exports and Vancouver and BC’s economy do depend on those sales.  In particular, the forest sector is beginning to suffer along with the film and television industry in BC.  Although these losses will likely be comparatively small in the overall picture, the cumulative long term effect of less robust sales will be a diminishing of the “Wealth Effect”.  People’s sense of financial stability may be affected by the imagined risks as well as the real risks of market sell offs and job losses. 
    Ultimately the economic outlook for Vancouver appears to be good and we can reasonably expect the market to remain stable and strong but it seems likely that as increased listings coupled with lower sales, affordability, and the perception of lower future returns grow, that more people will choose to “play it safe” and pull their money out of speculating with presales and renovation flips.  With lower certainty, we are likely to see a decreasing volume of sales and much slower price growth over the next coming years.

 

THIS ENTRY WAS POSTED ON February 27th, 2008 BY Sam Wyatt Personal Real Estate Corporation | POSTED IN Vancouver Real Estate Statistics
  • Email
  • Tweet
  • facebook share

Categories

  • Assignments
  • General
  • Listings
  • Mountaineering Trip Reports
  • Tax
  • Vancouver Real Estate Statistics

Archives

  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • October 2015
  • September 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • April 2009
  • March 2009
  • January 2009
  • December 2008
  • November 2008
  • October 2008
  • September 2008
  • July 2008
  • May 2008
  • April 2008
  • March 2008
  • February 2008
  • January 2008
  • December 2007
  • October 2007
  • September 2007
  • May 2007
  • April 2007
  • March 2007
  • January 2007
  • December 2006
  • November 2006
  • September 2006
  • August 2006
  • July 2006
  • June 2006
  • August 2005

ATOM RSS RSS 2
Stilhavn Real estate footer logo



Inquiries

  • Sam Wyatt
  • 36 East 5th Avenue,
  • Vancouver,
  • BC,
  • V5T 1G8,
  • CA
  • 604-722-3734
  • 604-988-1239
  • sam@samwyatt.com

FortBlanc by Ubertor © 2018 All Rights Reserved.

  • Sitemap
  • Privacy Policy
  • Real Estate websites for Agents