Vancouver Housing Bubble Not Real
A number of real estate experts and pundits have forecast a strong downdraft of the Vancouver housing market, saying it is in the midst of a real estate bubble. Prices of Vancouver real estate have dropped about 10% but that’s not enough to dry up investment. Demand from Asia is still strong and will undoubtedly keep the market from tumbling.
A recent survey conducted by a national brokerage showed the average price of detached 1 and 2 story homes in Vancouver has risen by about 17% in the past year to more than $1-million — about three times the national average. In contrast, home resale prices for Canada rose between 5.7% and 7.8%. Vancouver home sales have been strong.
Just in September 2011, sales of detached properties on the MLS system was 957, an increase of 10.5 % above the 866 detached sales recorded in September 2010, yet still a 32.8% decrease from the 1,423 units sold in September 2009. Although not up to the high sales records of years ago, but Vancouver’s housing sales appear to be going in the right direction. With mortgage rates continuing low and employment stable, there’s no reason for big retraction in home sales for 2012.
CMHC forecasts new home construction to remain stable, with small increases expected in 2011 and 2012. Home starts are forecast to increase 5% in 2011 to 16,000 units and a further 9% to 17,500 units in 2012.
Vancouver Economic and Employment Looking Good
British Columbia’s unemployment rate fell 0.8 percentage points to 6.7% in September, the lowest rate recorded since January of 2009. BC’s jobless rate remains below the Canadian average which also dropped to 7.1% last month, its lowest level since December of 2008.
With employment healthy, new investment money coming in, and only a slight decrease in home sales expected, the Vancouver real estate market should be steady and not experience a bubble collapse. The BC forest industry and the rising market for shale gas extraction, along with strong commodity prices should create a strong BC housing market for 2012.
This graphic shows the areas that offer the best home buying opportunities for buyers.
Joe Flaherty, the current Finance Minister of Canada states “There’s some demand in Vancouver in particular, particularly from the Asian people coming to Canada who are investing in real estate. So there’s some demand there that is unusual in terms of the entire country, but overall across the country there’s been some moderation, which is good.”
With China’s economy picking up again, the demand from Chinese buyers should continue.
The Canadian economy is stable with the energy sector doing very well, and BC is enjoying a coming boom in shale gas production which raises hope for the future. Read more about the Canadian Housing forecast for 2012. The US housing forecast is not so rosy.
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