Saw this interesting article about our neighbors to the North. Hopefully some of their mojo will come our way soon 😉
While many American and central Canadian cities have seen slowing sales and falling prices in the past year, the most pessimistic thing any real estate expert can say is that Vancouver housing prices are not expected to rise quite as steeply this year as they did in 2006 and 2007.
"What we’re expecting is a bit of moderation," said Robyn Adamache, senior market analyst with the Canada Mortgage and Housing Corporation. "Prices are going to continue to increase, but at a slower pace than we’ve seen over the past couple of years."
Check out the full article here.
Wendy, I appreciate your optimism about the Vancouver market, but the information is a bit “skewed” when considering the source (Robyn Adamache, seniore market analyst with Canada Mortgage and Housing Corporation). Actuality, prices are already leveling, and in many areas FALLING in the Vancouver market. Inventory is at an all-time high within Vanoucver, and much of the units that have been gobbled up in the past two years, some 40%, were bought on speculation in hopes the future Olympics will continue to spur higher prices. Of course, prices have increased since that time, but more recently they have abruptly stopped the incline. There is no market where after an Olympics is over that prices did not fall shaprly (typically 10%-17%) Well, the housing slump is now happening in Canada, much like it began here in the U.S. Give it 6 more months and you’ll likely find that Canada, including Vancouver, will be in one of the biggest market corrections they have seen in decades. Much like in the U.S., Canadian banks are reluctantly “fessing up” to the fact the Canadian market is slowing while they downplay the significance of the correction. Banks do this as not to be alarmists and inspire panic within potential buyers, recent buyers, and sellers. Unfortunately, these kinds of tactics only hopefully keep at bay what is impossible to stop in economics (its a science) and market corrections/adjustments.
http://news.sympatico.msn.ctv.ca/abc/home/contentposting.aspx?isfa=1&feedname=CTV-TOPSTORIES_V3&showbyline=True&newsitemid=CTVNews%2f20080515%2fhousing_market_080515
Thanks for sharing MD. The article you linked concluded that there was a “low risk of a major correction” for the following reasons:
* Home prices in Canada are not substantially overvalued
* There is still little evidence of widespread speculative home buying that often accompanies the late stages of a housing boom.
* Canada’s real estate market is not overbuilt.
* Households, for their part, are not overleveraged.
* Overall mortgage quality is still sound.
Seems to me like the two news articles are only disagreeing about how soft the landing will be; i.e., neither are predicting problems like we’re seeing in many regions of the US?
Wendy, agreed with your recap of the news link. The point I was making, however, was that the news (as the one I had linked) is majorly downplaying the Canadian market and what is to come of it. In areas such as Toronto, I feel those are undervalued markets and a fall, if any there, will be soft. However, in markets such as Vancouver, it is going to get VERY rough in the course of the next three to four years. The fall out of the Vancouver market hasn’t begun yet as the developers are desperately trying to hold on as long as they can to the price points of yesterday. I predict the market there will continue to soften by 2%-3% by end of 2008. By end of 2009, you will witness a drop in price/sq. foot on new construction by 12%-15%. By 2010, most units not sold will either be rented short-term for the Olympics. After 2010, a serious correction will ensue within Vancouver. There is simply no industry in that market to sustain price points pushing that of NYC or SF. It is a well-known fact that sustaining higher home prices are a direct reflection of job growth and economic stability in industry (both of which Vancouver has very little of). It is a beautiful place to visit, but offers very little to a person seeking long-term employment that can sustain high home prices. Thus, it means most units being sold there are either speculative buying, which artificially inflates the price per square foot in the short-term, or they are a secondary home market for international buyers (again, secondary home markets provide very little support for long-term sustained high prices).
I agree with The MD here. The real estate in Vancouver is royally FUBAR. Have you ever seen downtown Vancouver at night? It would have only half of the lights lit up in the condos when compared to Seattle. So, I would venture to say not even half of the condo units in Vancouver are actually owner-occupied. Much of it is just a farse of investment properties and speculative buyers from international markets. Additionally, I would like to point out that Rennie marketing ( http://www.rennie.com ), the largest condo marketer in the Vancouver area, actually has SEVERAL re-assignments in the high end realm for contracts that were bought on speculation. This goes to show that the media and Canadian banks only will portray what it will in order to demonstrate a “solid” market. MD is right that the information is incredibly off base. Seattle, however, has a much better grasp on its downtown urban buyers as it has significantly higher standards of more stringent investor caps from building to building. Additionally, I have found that Seattle developments do not permit re-assignment of contracts. Seattle’s real estate market is healthier by far in the long run. We all know that markets that permit re-assignment of contracts typically do not fare well in the long run. Vancouver real estate – think “Miami!” of the Pacific Northwest (or Southwest of Canada). The only difference is international markets, such as Canada, will usually lag that of the U.S. by 10 months to 18 months. So, the point is this – the downturn in Vancouver is only just beginning.
Yeah, I definitely don’t want ANY of Vancouver’s so called “mojo.” I prefer to keep my value of my condo steady as it comes right here in good ol’ Seattle.
FYI, Vancouver housing market is recovering and will continue to rise long after the 2010 Olympics. The Vancouver housing market has been significantly over priced for the last 10 years when you consider the Average Income in Vancouver. The only way they will be able to sustain rapid or even moderate increase as they have is to keep importing wealthy Chinese businessmen. Once these new immigrants have to rely on a Canadian Income or the imports of Chinese businessmen declines that is when the market will crash and hard.