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Vancouver Real Estate Market: A look back |
Article Submitted by: Jay Banks
Friday, 07 August 2009
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Vancouver BC real estate market grew for almost seven consequent years,
one of the longest and fastest growths ever registered in Canada.
Average property prices between years 2001-2007 almost doubled, while
inflation in the mentioned period was less than 14%. Of course, such
development severely limited affordability of housing in Vancouver,
especially for first time buyers. The Vancouver real estate market kept its growth as far as till the beginning of 2008, whereas the many times described trouble of the US market started already some time before. Nevertheless, the market slowed down as it's been influenced by the pressure of affordability demand, and the market freeze continued for a few months. At first, the average price stabilized, but later dropped, and under the influence of the global economic crisis in the autumn 2008, the housing market of Vancouver got into record-low values in January and February 2009. People were generally worried of the deep and long taking real estate crisis as the one in the USA. In case you are of the same opinion, analyze the graphs in detail and you will find out that in February 2009, the sales were actually starting to rise again, not starting to go deeper down! And from that moment on, all the important figures concerning the Vancouver BC housing market are telling us that things are going fine. The June 2009 sales figures exceeded the February ones almost 6 times and the ones from last summer almost twice. In percentage, the June 2009 sales outcomes got 75.6% higher than in June 2008. In December 2008, the average price decline stopped and retained at the same level till March, and since then it keeps showing steady increase. June prices already got to the level of October 2008. These fact shouldn't seem so amazing, if we analyze the data in detail. Let's analyze the graph of new listings change. New houses kept flowing to the market till October 2008, then the general inflow started to decrease. This has a simple explanation, which lays in the basic advantage of residential real estate, which is that people just need a house to stay. Cars, hairdressers or holidays are not an essential condition for life, but of course a shelter to live is one. Demand can drop, but this drop hardly can reach zero, even for a short period. There are some regulationss that the supply side should keep. Your house often is the most expensive item of your general property. You can hold it and refuse selling during the times of decreasing prices, on the other hand such attitude stimulates new housing starts. Eventually, buyers and sellers have to reach some point of consensus and the earlier they do, the better for both. So why Canadian market recovered so quickly, while US market still struggles at the bottom? Canada managed to prevent the most serious event - wave of foreclosures. Compared to the fiscal health of institutions and individual property owners in the USA, the Canadian ones are doing much better. Canadians don't necesssarily have to be wealthier, but apparently they are more ready to cope in case of any acute financial problems. Subprime mortgage sector (the most affected one in the United States) is much smaller in Canada; our economic fundamentals are not in the best shape now, but still quite stable. So what would be the most likely next development on the property market in Vancouver BC? Sales and average prices are likely to grow steadily during the few oncoming months. Nevertheless, as soon as the situation gets to the same level as before the bubble burst, it should calm down, due to general economic stagnation. Next year the interest rates should still be low and prices still under the recent peak, which will make properties very affordable and thus a great opportunity especially for first time buyers! Article Source: http://www.ArticleBlast.com |
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