Increasing Prices Likely to Slow BC Real Estate Growth
Nobody will deny that the British Columbia real estate market has been buoyed in recent months by low mortgage rates. In order to respond to the economic downturn, the Bank of Canada lowered interest rates so drastically that many home buyers couldn't resist the bargains. Unfortunately, some experts are concerned that the low interest-induced rebound may have used up the majority of market growth for the coming year or 18 months.
At the moment, most real estate experts are expecting only moderate growth, around 3 per cent, in 2010. This is a prediction of 90,100 sales in 2010. More surprisingly is that these same experts are predicting a 3 per cent drop in growth, to 87,500 sales, in 2011.
When it comes to average prices, the forecast is for a five per cent increase to $490,900 in 2010 followed by a meager 1 per cent increase to $494,800 in 2011.
The main long-term issue is without question affordability. At the moment, home prices in Vancouver and Victoria are inching back toward record levels and all evidence points to increasing mortgage rates in 2010 as well. This means the cost of owning and maintaining a home may be out of reach for many new buyers.
Because of our recent economic problems, the cost to own a home dropped significantly. Mortgage rates, average prices, and even property taxes were cut dramatically at the end of 2008 and throughout 2009 but these trends will not continue.
For the most part, markets that have come back the strongest in 2009 should see more moderate growth in the coming months. This may give way to some of the slower markets catching up with Vancouver and Victoria. Still, the cost of owning a home is going to start creeping up again and this will likely stall real estate growth in 2010.
At the moment, most real estate experts are expecting only moderate growth, around 3 per cent, in 2010. This is a prediction of 90,100 sales in 2010. More surprisingly is that these same experts are predicting a 3 per cent drop in growth, to 87,500 sales, in 2011.
When it comes to average prices, the forecast is for a five per cent increase to $490,900 in 2010 followed by a meager 1 per cent increase to $494,800 in 2011.
The main long-term issue is without question affordability. At the moment, home prices in Vancouver and Victoria are inching back toward record levels and all evidence points to increasing mortgage rates in 2010 as well. This means the cost of owning and maintaining a home may be out of reach for many new buyers.
Because of our recent economic problems, the cost to own a home dropped significantly. Mortgage rates, average prices, and even property taxes were cut dramatically at the end of 2008 and throughout 2009 but these trends will not continue.
For the most part, markets that have come back the strongest in 2009 should see more moderate growth in the coming months. This may give way to some of the slower markets catching up with Vancouver and Victoria. Still, the cost of owning a home is going to start creeping up again and this will likely stall real estate growth in 2010.
posted by VancouverResidence
