In the last year or two, unless you have been on a beautiful island somewhere, you have been hearing about the Canadian real estate market….and Vancouver in particular. And, you have probably seen the many news reports, some of which are predicting a possible correction in the future. For instance, the Bank Of Canada stated that Canada’s overall real estate market is overvalued by 10 to 30%, relative to incomes and interest rates. And we are likely heading for a correction:
And here we are in 2016, and once again some are predicting an overheated housing market, especially in Vancouver. In fact, Canada Mortgage and Housing Corporation, the Bank of Canada, and a variety of lenders, all are stating that supply is low and that prices are skyrocketing. Now, when looked at against possible interest rate increases, a continuing low dollar, discussion of new regulations around foreign investment, and a varied unpredictable job market, perhaps times ahead will not be so great! Or will they?
Now anyone who has lived in Vancouver for awhile knows that Vancouver IS NOT comparable to other cities, financially or otherwise. Our city has become varied in the economy, diverse in its population, and unique in its neighbourhoods. Tech and film, agriculture, vibrant tourism, and strong financial savvy have all made Vancouver an emerging city on the world stage. And day by day, it keeps growing and constantly ranks high in population growth and quality of life as compared to other global cities.
And more people coming here equals more demand for housing. In fact, so much so that many boards and financial think tanks have bumped up their forecasts substantially, predicting escalating prices and a jump in the number of homes sold. It was not too long ago that the BCREA predicted home sales would fall because of a lack of supply. It now says the jump in new home construction is set to help meet demand.
“Waning inventories of newly completed and unoccupied units are being offset by a market increase in the number of homes under construction,” the BCREA said in a news release.“Total housing starts in the province are forecast to climb 20% to 37,800 units this year, before edging back to 34,200 units in 2017.”
Here are a few more recent stats for you:
-The British Columbia Real Estate Association forecasts unit sales in the Greater Vancouver region will increase 8.9% in 2016, from 43,145 homes sold in 2015 to 47,000 this year.
-For B.C. as a whole, unit sales are forecast to increase 12.3% to 115,200 units, breaking the previous record of 106,310 units sold in 2005.
- The average sales price for homes in Greater Vancouver is expected to reach $1.125 million this year, up 24.6% from $902,801 in 2015. Across the province, the average price is forecast to increase 20.4% this year, from $636,600 last year to $766,600 in 2016.
As a local real estate investment specialist, here is what I recently said when asked about Vancouver real estate and my predictions for 2016 and beyond:
“As a seasoned Vancouver realtor in both residential and commercial real estate, none of this is a shock to me. In fact, I have been predicting this based on the fundamentals. As always, this market is unique.Caution and downgrades have been replaced by new construction, decreased supply of single family homes, and more baby boomer money helping people buy homes. And all indications are that increases will continue into 2018.”