February 11, 2014
Resourceful, resilient – and robust
The Vancouver market benefits from continued immigration and low interest rates.
BY MICHAEL BERNARD
Like the snowdrops that pop up every spring, naysayers emerge every year forecasting the bubble is about to burst in Vancouver’s real estate market. But the people whose livelihoods depend on predictability say Vancouver housing prices and sales will be just fine this year, thank you. Some are forecasting average price increases of up to 4.5 per cent this year, but most experts, including the BC Real Estate Association and Canada Mortgage and Housing Corp., say we can expect price hikes more in the range of one or two per cent.
“There was a shift in the last three quarters of last year when a number of investors stepped back from the market but a number of owner-occupiers stepped up (to replace them),” says Diana McMeekin, president of Artemis Marketing Group. “It was, overall, a pretty good, balanced market.” McMeekin, who advises some of Metro Vancouver’s leading developers, says she expects much of the same this year. “We have a couple of very good things to support our market. One is continuing immigration. And interest rates are forecast to stay at a very low level.”
Ross McCredie, CEO of Sotheby’s International Realty Canada, which has a significant share of Westside Vancouver’s pricier home market, says it was predictable that real estate markets would improve after the Liberals won the provincial election, but what was surprising was how well things came back. “In the market we’re in – homes over $4 million – there was a year-over-year increase of 50 per cent,” he said. He attributes that to the continuing huge transfer of wealth from baby boomers to their children, ongoing immigration, ultra low interest rates and foreign investment.
Experts say we can expect housing price increases in the range of one or two per cent this year. McCredie also suggests that risk also varies according to where you live and buy. For instance, a two- or three-per-cent increase in mortgage rates, while unlikely, would profoundly impact prices and affordability for many in more vulnerable markets, such as Surrey, Coquitlam and Abbotsford.
That makes it even more important, he said, to follow the classic commandments of good real estate buying: Don’t buy quickly, do your research and purchase real estate for the right reasons. George Wong, who leads Magnum Projects, one of Vancouver’s leading condo development marketers, says 2013 was a very good year for real estate buyers.
“There were more products in the market overall so the customer had the benefit of more choices and more competition. And overall sales volume was very healthy, much to a lot of people’s surprise.” He forecasts that trend will continue this year, especially when it comes to ultra-luxury projects like the Trump Tower and Telus Gardens, where average prices exceeded $1,600 a square foot and rose as high as $2,100 a square foot, thanks in part to strong foreign sales.
While it’s getting harder for young people to afford Vancouver prices, Wong says he is increasingly seeing “the Bank of Mom and Pop” stepping in to ensure that their kids get a spot on the Monopoly board. “Vancouver remains a resourceful and resilient real estate market.”
Wong isn’t alone in his optimism. Ian Thomas, a veteran development consultant whose firm has advised clients in 60 countries, says Vancouver continues to be a marketplace star of mixed retail-residential development. “Vancouver from a real estate standpoint remains one of the hottest markets in North America.”