Vancouver Real Estate Blog

Where is the real estate market headed?

There are some factors to consider when speculating about where the real estate market is headed.

1. The economy

If the economy is strong, people will have jobs and can afford to buy property. Conversely, if the stock market crashes and people lose money, like what happened in 2009, then they cannot afford to buy property or even pay mortgage payments.

2. Supply level

If there are not enough houses, more will need to be built. In other words, if demand is higher than supply, there will be lots of new home construction.

If more and more people are moving into the area, it will cause prices to rise.

3. Interest Rates

Most people borrow money from the bank to finance their real estate purchase. If the interest rates are low, then people will be able to afford the monthly mortgage payments and can take a out a loan.

4. The competency of the government

If the nation’s finance minister has competent policies, the nation can avoid real estate crashes. Because if the market gets too hot or something, the government will bring out policies to correct the situation before it gets worse. An example of bad policies is the NINJA loans in the US. NINJA stands for no income, no job and no assets. People in the US could get mortgages on their homes even if they had no job, no assets, and no income. And the interest rates were very low, so too many people borrowed too much money buying real estate, leading to inflated prices and eventually a popping of the real estate bubble. Not only were there NINJA loans in the US (and probably still are), but mortgage interest payments are tax deductible in the US (but not in Canada), which makes taking mortgages even more attractive. Canada’s situation is much better because of more conservative banking policies.

5. Local Factors

If the crime rate sucks in one neighbourhood, the property values will suffer.

If there are prestigious elementary schools, high schools or universities nearby, many families from China will want to live nearby to send their children to school there.

If there is a subway station in the vicinity, the transportation will be very convenient and property values will rise.

If the house is next to a highway, the area surrounding the house will not be quiet and this will turn off many buyers, thus reducing the selling price.

If the city has some good industries like a financial centre, high tech hub, or oil industries, many jobs will be there and the economy will be strong.

Etcetera.

How does Vancouver score according to these factors? ……………

Vancouver is situated as a gateway between North America and Asia, and so benefits from immigration, trade, exchange of ideas and foreign students, etc.

Whereas many companies put their Western Canada head offices in Calgary, Vancouver only has smaller scale offices. Whereas Calgary has an oil industry, Vancouver has no similar killer industry. Although there is forestry in the interior BC, and mining/oil in the north.

The interest rates are low and the Canadian banking industry is expert. It is a desirable place to live.

Maybe this is why the prices in Vancouver are very high.

Vancouver Real Estate Blog

More Activity Forecasted for 2013

Although housing prices in the Greater Vancouver Region are forecasted to drop by 2.2% in the year 2013, this is far less than the 6.4% drop in the average Multiple Listing Service (MLS) price for the year 2012. So we could say that the prices are not dropping as much as they used to. And according to this report, in 2014, prices will drop by only 0.3%.

Previously and up until now, many potential buyers were waiting on the sidelines, waiting for and hoping that the prices would drop even more, and were planning on buying a home in the future at a better price. Now that prices have already dropped a bit, this year will see an increased number of buyers, and thus activity on the MLS.

This is good news for realtors  because they will have more business Рmore properties to sell.

Last year, it has seemed like prices would keep dropping indefinitely with no end in sight! But of course prices cannot continue to drop forever, because once the prices are low enough to be affordable and a good deal, the buyers will come in.

The market is like a roller coaster, going up and down.

 

BC Housing Forecast for Upcoming Year