Experts Predict Cool Spring...for Real Estate
The Canadian real estate market surged to recovery after the economic woes that plagued the country in 2008 and the market looks to remain heated through the spring. With low mortgage rates motivating buyers along with more favourable prices, sales have been steadily increasing throughout 2009 and the beginning of 2010.
Nevertheless, most experts are predicting that the market will cool toward the end of spring as mortgage rates are expected to rise. The last decade marked the strongest price appreciation in the past half century and the economy needs time to catch up. Job creation and wage increases need to be more balanced with the real estate market after an unprecedented decade for Canadian real estate.
But as the media continues to publish stories of an impending rise in interest rates, buyers have been swept up in a climate of urgency. As buying has soared, listings of new properties have actually lagged which has resulted in bidding wars. Consequently, average prices are setting new peaks both for new and resale homes. In fact, some experts estimate that national averages for house price are about 10 or 15 per cent above fair market value. And the markets that are most overpriced are those in the west.
During the recession, Vancouver suffered a dramatic drop in sales and prices but this was met with an equally dramatic recovery in 2009. Following these economic woes the average home price fell marginally, from $593,767 in 2008 to $592,441 in 2009. However, in the first quarter of 2010, average prices have jumped to $630,028.
The unique geography and popularity with foreign investors makes Vancouver real estate among the least affordable in Canada. Some experts expect low mortgage rates to continue and as long as the economy in Canada continues to improve it's unlikely that real estate prices will correct. Instead, property prices will plateau and a normal period of adjustment where other economic factors improve will balance the real estate market. Canadians will likely focus on paying off debt as a strong Canadian currency will slow economic recovery.
Nevertheless, most experts are predicting that the market will cool toward the end of spring as mortgage rates are expected to rise. The last decade marked the strongest price appreciation in the past half century and the economy needs time to catch up. Job creation and wage increases need to be more balanced with the real estate market after an unprecedented decade for Canadian real estate.
But as the media continues to publish stories of an impending rise in interest rates, buyers have been swept up in a climate of urgency. As buying has soared, listings of new properties have actually lagged which has resulted in bidding wars. Consequently, average prices are setting new peaks both for new and resale homes. In fact, some experts estimate that national averages for house price are about 10 or 15 per cent above fair market value. And the markets that are most overpriced are those in the west.
During the recession, Vancouver suffered a dramatic drop in sales and prices but this was met with an equally dramatic recovery in 2009. Following these economic woes the average home price fell marginally, from $593,767 in 2008 to $592,441 in 2009. However, in the first quarter of 2010, average prices have jumped to $630,028.
The unique geography and popularity with foreign investors makes Vancouver real estate among the least affordable in Canada. Some experts expect low mortgage rates to continue and as long as the economy in Canada continues to improve it's unlikely that real estate prices will correct. Instead, property prices will plateau and a normal period of adjustment where other economic factors improve will balance the real estate market. Canadians will likely focus on paying off debt as a strong Canadian currency will slow economic recovery.
posted by VancouverResidence
