Who says so ?
Barbara Yaffe of Vancouver Sun: –
Don’t bank on Vancouver’s real estate bubble bursting
Is it a bubble? Is it a balloon? No, it is Canada’s real estatemarket, and it finally looks as though it may be losing some of its zip.Is it a bubble? Is it a balloon?
No, it is Canada’s real estate market, and it finally looks as though it may be losing some of its zip.
An assortment of gurus have suggested recently that, where the housing market is concerned, we are all in for what is known as a “soft landing”.
That is, instead of a balloon bursting, as though pricked by a pin, the market is to deflate with a soft, slow pffffft.
That said, Vancouver’s housing sector often does its own thing, making the extrapolations of national analysts and experts something of a mug’s game.
Here is what we know about Vancouver’s now world-famous mercurial market:
We are, of course, outliers within Canada, with the highest prices by far for housing, be it for condos or detached homes.
The typical price in December of a detached property in Greater Vancouver was $927,000, reflecting a price increase of 2.5 per cent from the previous year, reports the Greater Vancouver Real Estate Board. (The typical price for all types of residential properties in the region is $603,400.)
Prices here obviously are out of whack with other markets in Canada, although this has not always been the case.
Historical graphs show Toronto prices were more expensive than Vancouver’s from 1982 to 1992, and from 1988 to 2005. Since 2005, prices here have soared.
Another graph, charting home prices from 1987 to 2011 in relation to prevailing economic fundamentals — rate of inflation, personal disposable income, growth in per-capita GDP, and even rents — shows the trajectory of Vancouver house prices has had a life of its own, zooming upward in a manner unrelated to the modest, mundane path taken by all the economic fundamentals.
This reinforces the notion that Vancouver real estate is unaffordable, taking little account of inhabitants’ ability to pay.
Forecasters have warned for a while that Canada, along with the United Kingdom, Australia and Spain, has a housing bubble, with prices that are overheated — unconnected to domestic economic fundamentals. Ripe for bust.
Imagine what they would predict for Vancouver’s hot-to-the-touch market.
The Canadian Real Estate Association earlier this month reported, with some relief, that national home sales have declined modestly in each of the last three months, signalling that the soft landing is upon us.
But in Greater Vancouver, while home sales experienced a 9.3-per-cent decline from September to October, they in fact grew month over month both in November (by 5.3 per cent) and December (by 5.6 per cent).
Numbers out this week show that home sales again recorded a month-over-month drop of 9.9 per cent in January, but those sales represented a 30-per-cent increase from the same month in 2013.
Sotheby’s International Realty Canada recently reported that sales of $1-million-plus homes surged 74 per cent in the last half of 2013 over the previous year.
The Business Council of B.C., meanwhile, is predicting an increase in both sales and prices in 2014 of about five per cent.
A recent Royal LePage house price survey predicts price increases in Metro Vancouver will average about 4.4 per cent, while the B.C. Real Estate Board is projecting price growth in the one- to two-per-cent range.
All of which suggests that no one really has a clue where Vancouver’s market is headed, or whether it will be in line with national trends.
Read more: http://www.vancouversun.com