Agent Success Club

Real Estate Market in Vancouver: Let’s look back

The housing market in Vancouver BC was very strong for almost seven years in a row. It was one of the Canadian records among market growths, and one of the longest and fastest too. Average house prices between years 2001-2007 almost doubled, whereas inflation in the mentioned period was less than 14%. Of course, affordability of properties in Vancouver, especially for first time buyers, was seriously lowered by this combination of factors.

After the US housing market got into trouble, its Vancouver relative still worked fine for some time and managed to grow until the beginning of 2008. Anyhow, the market slowed down as it’s been influenced by the pressure of affordability demand, and the market freeze persisted for a few months. At first, the average price stabilized, but later dropped, and under the influence of the global economic crisis in the autumn 2008, the housing market of Vancouver got into record-low values in January and February 2009. People were generally worried of the deep and long taking real estate crisis as the one in the USA.

If you believe the same, look at the graphs around – February 2009 was the moment of rebound, not the beginning of stagnation! And from that moment on, all the key figures concerning the Vancouver BC housing market are telling us that things are going fine. Sales in June 2009 were almost 6 times higher than in February and almost double compared to the last summer. In concrete numbers, the sales in June 2009 were 75.6% higher than in the same month previous year. Average price decline stopped in December 2008, remained flat till March, since then continues to grow steadily again. The price level of October 2008 was achieved again in June 2009.

Is this amazing? Not so much, if you follow the numbers carefully. Let’s examine the graph of new listings change. New buildings kept flowing to the market till October 2008, then the general inflow began to decrease.

This has a simple explanation, which lays in the basic advantage of residential real estate, which is that people just need a house to stay. People do really need a home, while they can quite well live without cars, hairdressers or holidays. Demand can decrease, but this drop hardly can reach zero, even for a short time. Some regulations should be followed at the supply side. Real estate items mostly represent the most valuable part of your personal property. When prices are declining, it may be a good decision to hold your home and refuse selling it, but then this kind of approach helps new housing starts. Eventually, an agreement has to be reached at some moment both for sellers and buyers, and the sooner the better.

So what are the underlying factors behind Canadian market’s fast recovery, regarding that the US market is still struggling with the crisis? Canada managed to avoid the most severe event – wave of foreclosures. Compared to the financial health of institutions and individual house owners in the USA, the Canadian ones are doing much better. Canadians don’t necesssarily have to be better off, but apparently they are more ready to cope in case of any sudden financial problems. Subprime mortgage sector (the most affected one in the United States) is much more limited in Canada; our economic fundamentals are not in the best condition now, but still quite stabilized.

What future shall property market in Vancouver BC expect? We can expect solid sales and average price growth in the next few months. Nevertheless, the situation will calm down after reaching the pre-burst level, due to general economic slowdown. Next year the interest rates should still be low and prices still under the recent peak, which will make properties very affordable and thus a wonderful opportunity especially for first time buyers!

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