Five Reasons Why Vancouver Real Estate Market will Stay Strong
The current economic crisis is shedding serious doubt on the strength of the Vancouver housing market. Many homeowners and even real estate experts are predicting that the slowing economy will drastically reduce the average housing prices in Vancouver. However, with one of the strongest real estate markets in North America and rental vacancy rates hovering around 0.3 per cent the most likely prediction is that Vancouver real estate will stay hot. The following are five reasons why you can expect the housing market throughout Vancouver to stay strong.
Reason 1: The market correction and housing prices are not necessarily linked.
At the moment, there are probably tens of thousands of homebuyers waiting for housing prices to slide so that they can get a great deal on a house. Even after housing prices have dropped in the beginning of 2009 and further drops of up to 13 per cent, the average price for a family home is around $396,000. This means, the average person hoping to discover prices that are within their reach are likely to be disappointed. The potential buyers that are waiting for price drops are likely never going to see the declines they'd need in order to afford a house. Ultimately, the buyers market has not changed so drastically as to influence the overall price of homes.
Reason 2: Rentals do not fall as home prices fall.
The Vancouver region boasts one of the lowest rental vacancy rates in Canada. In a 2008 survey, of the approximately 54,000 rental units in Vancouver only 160 were vacant. So long as the demand for rentals remains high, rental prices will not change. This means that owners are not at risk of losing income from their properties and are therefore not more likely to sell.
Reason 3: Condo rentals are too lucrative.
Ultimately, housing prices fall because there is an excess of sellers in a market with not enough buyers. Condos are one of the most lucrative rental properties and investors know this. As a result, they're always going to be willing to buy these properties which they can often rent out for much less than the mortgages. Where there are investors, there are buyers and this will continue to buoy the real estate market in Vancouver.
Reason 4: Building more homes does not reduce property values.
First of all, the new construction market throughout Vancouver and the Lower Mainland reached a peak over the last 5 years. Still, with unprecedented growth, housing prices did not fall. In fact, they grew. Moreover, with economic concerns, new construction has slowed significantly meaning that buyers are looking at the existing property market rather than potential new homes.
Reason 5: Government subsidizing will not affect the housing market.
The argument that government subsidizing can help the middle class to purchase new homes is somewhat flawed. This is because government supported housing for the poor or mentally ill is not tied to investment in new construction. Typically, the most cost effective way for the government to help the communities we live in is to address housing for the poorest among us. This means there is little evidence that subsidized housing will have any affect on the overall housing market in Vancouver as it stands now.
Reason 1: The market correction and housing prices are not necessarily linked.
At the moment, there are probably tens of thousands of homebuyers waiting for housing prices to slide so that they can get a great deal on a house. Even after housing prices have dropped in the beginning of 2009 and further drops of up to 13 per cent, the average price for a family home is around $396,000. This means, the average person hoping to discover prices that are within their reach are likely to be disappointed. The potential buyers that are waiting for price drops are likely never going to see the declines they'd need in order to afford a house. Ultimately, the buyers market has not changed so drastically as to influence the overall price of homes.
Reason 2: Rentals do not fall as home prices fall.
The Vancouver region boasts one of the lowest rental vacancy rates in Canada. In a 2008 survey, of the approximately 54,000 rental units in Vancouver only 160 were vacant. So long as the demand for rentals remains high, rental prices will not change. This means that owners are not at risk of losing income from their properties and are therefore not more likely to sell.
Reason 3: Condo rentals are too lucrative.
Ultimately, housing prices fall because there is an excess of sellers in a market with not enough buyers. Condos are one of the most lucrative rental properties and investors know this. As a result, they're always going to be willing to buy these properties which they can often rent out for much less than the mortgages. Where there are investors, there are buyers and this will continue to buoy the real estate market in Vancouver.
Reason 4: Building more homes does not reduce property values.
First of all, the new construction market throughout Vancouver and the Lower Mainland reached a peak over the last 5 years. Still, with unprecedented growth, housing prices did not fall. In fact, they grew. Moreover, with economic concerns, new construction has slowed significantly meaning that buyers are looking at the existing property market rather than potential new homes.
Reason 5: Government subsidizing will not affect the housing market.
The argument that government subsidizing can help the middle class to purchase new homes is somewhat flawed. This is because government supported housing for the poor or mentally ill is not tied to investment in new construction. Typically, the most cost effective way for the government to help the communities we live in is to address housing for the poorest among us. This means there is little evidence that subsidized housing will have any affect on the overall housing market in Vancouver as it stands now.
Labels: Vancouver Real Estate
posted by VancouverResidence
