As usual, everyone has an opinion about the future of Vancouver’s real estate market! That includes the home buyers and home sellers, the economists, the banks, the news media and of course most Realtors. But it’s all a guess, no-one can foretell the future, but here is the current buzz on Vancouver’s real estate market
Globe and Mail just published an article saying the future is far from clear because house prices are still higher than they were a year ago. On the other hand, month over month sales have been on the downturn since June. Some forecasters predict prices to drop over the next two years , followed by years of stagnation. The Canadian Centre for Policy Alternatives describes housing bubbles as being rare in Canada but sees a possibility that the big six Canadian cities , including Vancouver, follow the sharp downturn Vancouver had in 1994. Historically Canadian house prices have stayed in a narrow range of 150,000 to 220,000 inflation adjusted dollars, once outside of that range they are more susceptible to rising interest rates. They point out that a US style house correction is the most extreme scenario. Secondly, when the US economy recovers, this will benefit Canada and interest rates will then rise. That likely means today’s prices won’t be sustainable once interest rates begin to climb quickly. In conclusion they feel a correction of 9-21% may be in order.
C.D. Howe think tank disagrees and points out that Canadian housing policies have been put in place to avoid a real estate crash but they do agree that the prices are overdue for a correction. TD Bank predicts 10-15%, CIBC says 14%. Overall prices have adjusted down about 5-7% this year.
Then there’s CMHC who predict Vancouver real estate activity to stabilize in 2010/11 as the provincial economy grows at a moderate rate and accompanying job gains will support housing demand. Strong international immigration will grow the population by 28,000 households. Existing home sales on MLS is expected to be slightly lower than last year’s level. The forecast is that resales will remain in line with job and population growth, approaching 82,500 sales in 2010 and 86,400 sales in 2011 in BC and the resale price will increase 5.6% in 2010, on gains made during the first half of the year.
CMHC forecast 2010 sales in Vancouver to drop by 6.2% over 2009 and for 2011 sales to drop by 2.9% over 2010. Average MLS price will be 10.6% higher this year and 2.3% in 2011.
What do you think? Share your story with us if you are currently a buyer or seller.
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