Real Estate Market in Vancouver: Let's look back

Vancouver BC housing market grew for nearly seven consecutive years, one of the longest and fastest growths ever registered in Canada. Average home prices between years 2001-2007 nearly doubled, while inflation in the same period was less than 14%. Of course this situation meant that many people, especially the ones entering the housing market for the first time, couldn't afford just to buy a house.
After the US housing market got into problems, its Vancouver relative still worked fine for some time and managed to grow until the beginning of 2008. However, in that time the pressure of affordability demand started to influence our market and realtors noticed slowdown, which grew even stronger in next months. At first, the average price stabilized, but later declined, and under the influence of the global economic crisis in the autumn 2008, the housing market of Vancouver got into record-low values in January and February 2009. People were generally afraid of the deep and long taking real estate crisis as the one in the USA.
If you believe the same, look at the statistics around – February 2009 was the point of rebound, not the beginning of stagnation! Since then, all real estate crucial statistics in Vancouver BC show positive trend. If we look at the sales numbers, we can see that the figures in June 2009 reached almost 6 times higher than the level from February and almost twice higher than the results from summer 2008. The percent increase in June 2009 was 75.6% confronted to June 2008. Average price fall stopped in December 2008, remained flat till March, since then continues to increase steadily again. The prices in June 2009 reached again the same level as they were in October last year.

Does this amaze you? Just look at the statistics closely. Look at the new listings change graph. The rapid inflow of new properties on the market stopped many months ago in October 2008, after this month the overall inflow was falling.

This has an easy explanation, which lays in the obvious advantage of residential real estate, which is that people just need a home to stay. People do really need a dwelling, while they can pretty well survive without cars, hairdressers or holidays. Even though the demand may decrease, it is unlikely for it to reach zero level, even for a limited period of time. Certain rules should be kept at the supply side. Your home often is the most expensive item of your whole property. When prices are declining, it may be a good decision to hold your property and refuse selling it, but then this kind of approach helps new housing starts. Finally, buyers and sellers have to reach some point of consensus and the earlier they do, the better for both.

So what are the underlying factors behind Canadian market's fast recovery, regarding that the US market is still fighting with the crisis? The worst part of the US story - wave of foreclosures - was successfully avoided in Canada. The Canadian institutions and individual home owners are in better fiscal situation than the ones in the US. It doesn't mean we are richer; it means we are better prepared to cope with acute financial problems. One of the sectors most affected by the crisis in the US was the subprime mortgages, which is much less common in Canada. Of course our economic fundamentals could be in a better situation now, but they are still quite stabilized.

So what future development can we forecast for the Vancouver BC property market? Sales and average prices are likely to grow steadily during the few oncoming months. Nevertheless, the situation will calm down after getting to the pre-burst level, due to overall economic slowdown. Next year will be awesome especially for first time buyers – with record-low interest rates and prices still under the recent peak, homes won't be so affordable forever!

Vancouver district map by svacher