Recently I have had many clients ask me, “Will real estate prices continue to rise?” Some people share their opinion with me suggesting, “Prices have to rebound at some point…we are in a bubble, right?”
Well, several people have reported on The Vancouver Board of Trade’s panel discussion on the topic of “Bubble Trouble?”
The discussion panel was made up of a solid core of industry professionals including Dave Podmore, CEO and Chairman of Concert Properties; Eugene Klein, President of The Real Estate Board of Greater Vancouver; Ward McAllister, CEO of Ledingham McAllister; and Richard Wozny of Site Economics Ltd. The ideas surrounding the health of Metro Vancouver’s market, continues to perform well despite global troubles.
– The panel felt strongly about the market continuing to be positive as population based demand will keep growing in Metro Vancouver, with 20,000 new households created this year.
– The resale market is now in a buyer’s market as supply has overtaken demand; but low interest rates will continue to stimulate First Time, Move Up, and Investment purchases, keeping the market moving forward.
– Developers are currently having to slash prices and offer incentives on new home products, as the lack of HST transition rules is hurting new homes over $525,000, as there are no rebates offered at this point (unless the developers chip in…).
– The Real Estate Board indicated that 10%-12% of all home buyers this year are moving to Metro Vancouver from outside of Canada (only 3% are foreign investors not planning to reside in Vancouver). **I am not at all sure about those numbers but that was what their poll indicated!
– Richard Wozney indicated that China may not continue to be the silver bullet that everyone expects, as China is likely facing a bubble of their own. In China millions of residential, commercial and industrial properties are vacant, and speculation is over there is rampant. Wozney also commented that due to interest rates likely remaining low for some time we will not be seeing a bubble in Vancouver.
– While there was some debate over the numbers, the sentiment is that immigration will continue to put demands on Metro Vancouver’s housing stock. McAllister quoted the Canada Mortgage and Housing Corporation forecasts for 17,000 housing starts in 2012 (14,000 of which will be strata units) in Metro Vancouver. In terms of immigration, CMHC also calls for 52,700 people moving to B.C. this year, and 61,000 in 2012. The theory is most immigrants will move into Metro Vancouver, (approximately 42,000 this year and 46,000 the following year). Others on the panel thought that there could be some negative migration as housing affordability starts to get out of reach. Employment opportunities in the Lower Mainland continues to be strong. The unemployment rate in Metro Vancouver is lower than the rest of the Province and better quality full-time positions will play a role in the real estate market as well.
Ward McAllister predicted a further price increase (an average resale increase of 7%) across Metro Vancouver next year while other pundits such as Ozzie Jurock stated in his news letter JREI is not calling for a bubble. But while we…”Trust in Allah, we urge you to tie up your camel!” We are predicting a slow down into the winter and next year but higher prices in 10 years.
With predictions of rates remaining low there is no pressure to get buyers moving quickly at this point which keeps pressure off of prices. We will likely continue to see things move, all be it at a slower pace than recent history (which will still be ahead of the rest of the world) but slow by the recent history in Metro Vancouver.