Oh Dear What Can The Matter Be? Up Or Down Home Prices 2017?
You made have heard there was a recently released report predicting an 8.5 per cent drop or was it 85% in home prices in 2017 across Metro Vancouver?
It also indicates the market decline would likely be worse if not for the “remarkably resilient” urban condo sector, which offers more affordable prices, and the region’s nation-leading economy assisted by further pre election government intrervestionism.
“It is expected that Greater Vancouver will experience a near double-digit correction in the new year, as sanity returns to the marketplace, causing the region to give back much of the appreciation witnessed in the first half of 2016,” said the report penned by yet another "expert."
“However inventory will continue to be the story in the new year, as any movement within the market will be exaggerated at their current, extremely low levels, meaning that if sentiment remains unchanged, conditions could worsen and prices may fall even further.”
The report also predicts foreign investment in Metro Vancouver will wane further due to the foreign buyers’ tax and China’s imposition of new, stricter requirements on currency conversions.
The Fraser Valley and especially Langley, South Surrey, Surrey and Abbotsford however remain a desirable place for homebuyers, which could affect prices in a positive way. Have you seen first hand the number of townhouse developments underway in these cities?
Langley saw aggregate home prices rise 25.7 per cent to end the year at $786,720.
While markets in pricier parts of Metro began to struggle in the latest quarter, the report says many buyers were drawn east to areas throughout the Fraser Valley including Langley in search of affordability, resulting in more sales and competition over listings.
Environmental designer Erick Villagomez with Metis Design-Build says, broadly speaking, the urbanization process seem to be a current worldwide phenomenon.
“So, in the absence of any specific global ‘events’ that could interfere with the current trends, one can assume that over the long-term real estate will continue to increase in all successful urban centres — including the Lower Mainland,” he said.
Villagomez doesn’t believe the real estate bubble will burst.
“All other things being equal, it (rising real estate prices) has been continuous for the past three decades, over which time many have predicted the ‘bubble bursting.’”
Demand will lower, says TWU prof.
Meanwhile, a Trinity Western University economics professor foresees the real estate market in Metro Vancouver continuing to cool over the next two to five years.
Sung Min Yoo, Associate Professor of Economics at TWU’s School of Business, said while it’s “extremely difficult” to forecast interest rates, he believes they will increase in the near future.
“With higher interest rates, the mortgage rates will be also higher,” he said. “From that perspective, demand for housing will be much lower over the next two to five years.”
Before the foreign buyers’ tax took effect in August and created a cooling effect on the market, the price of real estate in Langley and across Metro Vancouver and the Fraser Valley skyrocketed.
As a byproduct of the hot summer market, B.C. Assessment said the typical increase in property assessments was 30 to 50 per cent, depending on the neighourhood and other factors, for detached houses in most urban parts of Metro Vancouver and the Fraser Valley.
And some homes have seen increases well over 50 per cent.
Yoo said two key factors led to the extreme price jumps in the Greater Vancouver area over the past two years.
“The first factor is an extremely low interest rate, which is translated into extremely low mortgage rate,” he offered.
“With such an extremely low mortgage rate, many home buyers could pay relatively reasonable monthly payments, even though the housing price was extremely high.”
That, he said, caused an increased demand for housing and a “huge appreciation” in housing prices.
The second factor, he said, was the increase in foreign demand for housing in Greater Vancouver area, prior to the introduction of the foreign buyer tax affecting real estate transactions in Metro Vancouver.
“A significant portion of this foreign demand was from China. Since the Canadian dollar has depreciated (over the) last few years, the cost of buying (real estate) in Greater Vancouver in terms of foreign currency has not increased significantly even though housing prices in Greater Vancouver area has increased significantly in Canadian dollars,” Yoo said.
“This increase in foreign demand was another major factor.”
While Yoo said it is very difficult to predict what will happen to foreign demand for housing in Greater Vancouver area but noted, “it is expected that the foreign demand would be reduced over time.” However, metro Vancouver is predicted to house the worlds largest Chinese population oustside of mainland China over the next twenty or so years so don't expect that to change.
- March 2018 (1)
- February 2018 (2)
- January 2018 (2)
- December 2017 (1)
- November 2017 (2)
- October 2017 (2)
- August 2017 (3)
- June 2017 (3)
- April 2017 (3)
- March 2017 (3)
- February 2017 (1)
- January 2017 (3)
- December 2016 (4)
- November 2016 (2)
- October 2016 (3)
- August 2016 (3)
- July 2016 (1)
- June 2016 (3)
- April 2016 (3)
- March 2016 (3)
- February 2016 (10)
- January 2016 (5)
- December 2015 (1)
- November 2015 (4)
- October 2015 (3)
- September 2015 (1)
- August 2015 (3)
- July 2015 (3)
- June 2015 (10)
- May 2015 (4)
- April 2015 (9)
- March 2015 (3)
- February 2015 (5)
- January 2015 (12)
- December 2014 (7)
- November 2014 (13)
- October 2014 (13)
- September 2014 (9)
- August 2014 (4)
- July 2014 (10)
- June 2014 (12)
- May 2014 (10)
- April 2014 (5)
- March 2014 (23)