Outlook for Greater Vancouver's real estate market for 2010 and beyond
Below is a quote by James Schouw, James Schouw & Associates, Published on January 02, 2010 in The Vancouver Sun:
"Greater Vancouver's real estate market will continue to be driven by the growing number of people that simply need homes. Speculation, the catalyst of a 'bubble', is largely absent from the market due to lingering fear from the lessons of 2008. A bubble will only materialize if overconfident developers and speculators manage to oversupply demand".
A review on current home prices and the market fundamentals are telling us that home prices at current levels are economically unsustainable.
Housing market dynamics
The supply and demand for resale and new homes are driven by market confidence. Home prices rebound due to ultra-low interest rates, and limited supply of homes. A case in point for Richmond, B.C, showed that in November 2008, there were 2,495 homes listed as compared to just 1,275 homes listed for sale in November 2009. The supply of homes was down by half!
The market dynamics may change again when market confidence is affected by external events beyond the control of the market players. A repeat of the housing correction that happened in late 2007 may happen again when there is a loss in market confidence. When signs of a market turning south are apparent, more sellers will want to sell, accelerating the price decline.
Cheaper to rent than to own
Buyers can opt to rent than to buy when they find home ownership is not affordable. A jump in mortgage interest rates will swing buyers decision, and will result in many of them staying on the sideline. Home prices are too high at current levels, as renting make more sense to many prospective home buyers.
You can view Vancouver and Richmond homes currently listed for sale.
thanks for sharing your Vancouver data. I think we're seeing the same cautious optimism in our area as well as the shrinking of supply. There are many fewer REO bargains this year compared to the same time last year. The buyers have seen to that.
Thanks Dave. I read that the housing problem in the US may go down some more as there are a lot more foreclosed properties to work through the system. In Vancouver, we experienced a quick rebounce after a panic sell off a year ago. How long the good market willl last is anybody's guess.