Eric Beauchesne, Canwest News Service Published: Thursday, May 15, 2008"
Here is a quote from Scotiabank economist Adrienne Warren
"Unlike in the U.S., home prices in Canada are not substantially overvalued, the real estate market is not overbuilt, households are not over-leveraged and overall mortgage quality is still sound, she said."
Can this be true in major Greater Vancouver city centers like Vancouver, Burnaby, Richmond, Coquitlam, etc. that house prices will continue to move up?
At local level, the Greater Vancouver real estate market especially new condos may face serious selling and pricing pressure due to high prices, more inventory and changing home buyers psychology. Any cooling or correction in the market will drastically reduce the demand thereby depressing house prices.
If sales drop off substantially, more selling pressure could result in home prices correcting by 10 % or more. The April benchmark prices as reported by the Real Estate Board of Greater Vancouver for detached houses, townhouses and condos were $771,321, $477,900 and $389,070 respectively.
Sounds like the market up north of the border did not overheat as much as our market down south.
It may be a matter of time before the Canadian real estate market align with the economic reality of "fair return on investment" expected by home owners/real estate investors. In the major city centers around Greater Vancouver, it is cheaper to rent than to own.
I think when house prices stop going up, some home owners will unload their investment properties, accelerating the decline demand and house prices. Speculative investment in Vancouver was reported to form more than 25% of the purchases over the past years.