What is forecast for Vancouver’s real estate market?
There is no real estate bubble in Vancouver and 2013 is a good time to buy — as long as interest rates remain low, immigration targets are met and Europe’s economy doesn’t melt down, a panel of real estate developers told more than 1,100 real estate professionals, business leaders and B.C. politicians on Thursday.
Colin Bosa, CEO of Bosa Properties, Tony Astles, executive vice-president of Bentall Kennedy, and Eric Carlson, president and CEO of Anthem Properties provided the Urban Development Institute’s annual market forecast while Diana McMeekin, president of Artemis Marketing, moderated.
Bosa said that as long as people continue to move to British Columbia, the real estate market will remain stable. He compared conditions in 2009 to those today and found that demand is similar, although immigration numbers were down in 2012 and two federal immigration programs — the investor program and the skilled worker program — are under review and could be subject to change.
In terms of supply, he said, more units were built in 2012 than 2009, but not many more than the 15-year average.
“The good news for all the salespeople in the room is, you’re going to sell lots of real estate this year, but the bad news is you’re going to have to work at it,” Bosa said, adding that projects near transit service will continue to sell well.
Southeast False Creek and Coquitlam Centre are two areas with a lot of unsold inventory, Bosa said. He said realtors in those areas might have to “sharpen their pencils” and that prices might decline.
However, he said Metro Vancouver condominium developers showed in 2009 that developers can “turn off the tap” quickly when the market slows.
Bosa said he believes people — and their money — from China will continue to flow into B.C. because they want to invest outside China and they want their children to grow up in North America.
“They like it in British Columbia because it’s safe and they’re accepted here,” Bosa said. “There is a good quality of life with universal health care and good schools.”
Two things that could stop the flow of people from China in to British Columbia would be a recession or a change to Canadian immigration policy, Bosa said.
“If you buy good real estate at fair prices, you can’t go wrong,” Bosa said. “It’s not that hard.”
Carlson said B.C. and Canada were protected between 2009 and 2011 while the rest of the world was reeling from the economic crisis. Canada did not really need the extremely low interest rates as much as the rest of the world, and the low rates coupled with immigration, stimulated the housing market.
“We felt a bit smug if we were provincial in our outlook. That ended in 2012. … We started to feel the malaise for the first time,” Carlson said.
But he forecast that 2013 would be a stronger year because of B.C.’s ties to China and the U.S., which are both seeing economic recovery.
“I think this is the year that the fear factor goes away,” Carlson said, adding that he believes immigration will pick up this year and recovery in the housing market in the U.S. will mean many new jobs are created.
“U.S. unemployment will go down to 6.5 per cent this year, while U.S. gross domestic product will be trending towards three per cent by the end of the year,” Carlson said, adding that he thinks 2013 is a good time to buy real estate.
“I don’t think there is a bubble at all,” Carlson said.
Astles predicted the office building market will remain stable in 2013. He warned that a lack of supply means no rent relief until 2016.
He said Burnaby and New Westminster might have some oversupply, but Vancouver’s downtown is healthy. He said multi-family rentals were a low-risk investment, particularly because of limited supply.
He said there are some challenges when it comes to labour, with employees leaving for higher pay in Edmonton and points North, and with many experienced workers retiring.
Source: Tracy Sherlock, Vancouver Sun
January 26th, 2013 at 2:54 pm
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January 26th, 2013 at 5:03 pm
” There is no real estate bubble in Vancouver and 2013 is a good time to buy — as long as interest rates remain low, immigration targets are met and Europe’s economy doesn’t melt down, a panel of real estate developers …”
Sounds good …. except here’s reality:
1. There is pressure for interest rates to rise. Rates have been historically low, and those days are numbered.
2.The rate of Immigration has slowed. Vancouver is not the “hot’ market that it once use to be. If you believe in the theory of Asian money increasing Vancouver home prices, then consider China is facing economic issues as well. Remember any rate of growth less than 10% is a slowdown for China. The economy is built on a 10% growth, so a forecast 7 or 8% growth is a recession. China is also experiencing their own real-estate crisis. Also, more people are moving out of BC then those entering.
3. Europe’s economy is still very fragile. Thank God for Germany, but all the other countries are still trying to figure out how to get out of the financial crisis. Look at the sensitivity of stock markets around the world. What does that say about investor’s nerves and the current world financial situation?
Lastly, consider the source, a panel of developers. It is in the interest to have an optimistic outlook given they are in the industry. For a realistic perspective, ask your friends what they think? Who is still buying? Research analysis nationally and globally and what are they saying about Vancouver? Don’t get me wrong, I LOVE Vancouver, but does the city warranty to be more expensive then New York, San Francisco, Paris, London, Tokyo? Any middle-class person will go broke living in Vancouver. Current housing cost is unsustainable for the working class. Don’t take my word for it, do the math on a $750K home given your income.
Good luck all, it’s going to get rough before it gets better.
February 1st, 2013 at 10:03 am
Hi Prospective Buyer:
Thank you for taking the time to post your comments.
I agree that interest rates will rise at some point – possibly towards the end of this year. This does make it prudent to lock in now to a fixed rate deal but many buyers seem to be sitting on the fence wondering if Vancouver’s house prices will drop lower.
With China’s new president, there may be a change in the strict real estate ownership rules that were brought in to curb their over-inflated market, so it’ll be interesting to see how this plays out in terms of overseas investment from Chinese nationals.
As for Europe’s economy, I think this will continue to get worse before it starts to improve, which overall I can see taking 5-10 years.
And yes … the panel was made up of developers!
Nicola
April 22nd, 2013 at 3:17 pm
Hi there,
I just wanted to put my two cents in and say yes, the market right now is rough, but there is hope!
I read a couple news articles and it said Chinese investors will be coming back to Vancouver! They didn’t specify when but they did say it would happen late this year or maybe even for the next upcoming Chinese New Years! Chinese investors are always looking for a good place to put their money.
As for them buying homes for their children this is also true! Hopefully it will be sooner than later.
Great post! Hopefully all goes well! Don’t give up!
April 22nd, 2013 at 5:44 pm
Hi Naz:
Thank you for taking the time to post your comments.
I think there’ll always be waves of overseas investors in Vancouver’s real estate market, be it buyers from mainland China, Russia, Korea, or other overseas markets that see Canada as a stable investment.
As you say, the Vancouver market – especially the westside – has taken a bit of a hit recently in terms of prices and sales, but for the longterm buyer, it still seems a good investment.
Nicola