Low Interests Rates and Price Reductions drive Rental-Apartment Sales
While it continues to be a buyers market, rental-apartment real estate sales have increased moderately in Vancouver. According to recent commercial realty reports, low interest rates and reduced prices have led to a slight jump in overall sales. Still, compared to the first quarter of 2008, 2009 has seen a modest decrease in total sales. At the end of the first quarter 2008, 26 sales valued at a total of $92 million were completed while the number dropped in 2009 to 17 sales totalling $59 million.
However, there was a significant jump in sales from the fourth quarter of 2008 compared to the first of 2009. The 17 sales already mentioned represent a rise of 10 sales since there were only 7 completed sales at the end of last year. Arguably, little has changed in the market between November and January but the market still seems to be picking up. There seems little doubt that the lower interest and higher capitalization rates. In fact, capitalization rates are on average 1 to 1.5 points higher than they were last year. Typically speaking, capitalization rates offer buyers an estimate of their return on investment.
In addition, prices are between 10 to 20 per cent lower than the pinnacle they reached over the last 2 years. The combination of all these factors (low interest rates, rising capitalization rates, and reduced prices) is attracting buyers and larger equity requirements do not seem to be deterring them. Buyers are further encouraged due to CMHC supported mortgage insurance which makes rental-apartment real estate more secure.
While there are definite strides being made in the Vancouver housing market, there is still a large number of unsold listings. Many sellers are holding on to the hope that they will sell at peak prices rather than considering the current economic climate. This could mean that more affordable buildings are on the horizon as owners accept that last year's prices are not attainable.
However, there was a significant jump in sales from the fourth quarter of 2008 compared to the first of 2009. The 17 sales already mentioned represent a rise of 10 sales since there were only 7 completed sales at the end of last year. Arguably, little has changed in the market between November and January but the market still seems to be picking up. There seems little doubt that the lower interest and higher capitalization rates. In fact, capitalization rates are on average 1 to 1.5 points higher than they were last year. Typically speaking, capitalization rates offer buyers an estimate of their return on investment.
In addition, prices are between 10 to 20 per cent lower than the pinnacle they reached over the last 2 years. The combination of all these factors (low interest rates, rising capitalization rates, and reduced prices) is attracting buyers and larger equity requirements do not seem to be deterring them. Buyers are further encouraged due to CMHC supported mortgage insurance which makes rental-apartment real estate more secure.
While there are definite strides being made in the Vancouver housing market, there is still a large number of unsold listings. Many sellers are holding on to the hope that they will sell at peak prices rather than considering the current economic climate. This could mean that more affordable buildings are on the horizon as owners accept that last year's prices are not attainable.
posted by VancouverResidence
