Vancouver BC real estate market grew for almost seven consequent years, one of the longest and fastest growths ever recorded in Canada. Average home prices between years 2001-2007 almost doubled, while inflation in mentioned period was less than 14%. Naturally, such development severely lowered affordability of housing in Vancouver, especially for first time buyers.
When the well-known problems began on the US real estate market, Vancouver real estate seemed immune and continued to grow till the beginning of 2008. However, in that time the pressure of affordability demand began to influence our market and Realtors noticed slowdown, which grew much stronger in next months. Average price first stabilized and later dropped. With the outbreak of global economic crisis in the autumn 2008, Vancouver real estate sales fell to record-low values in January and February 2009 igniting the fear of painful and long real estate crisis, the same one we witnessed in the USA.
If you believe the same, look at the graphs around ? February 2009 was the point of rebound, not the beginning of stagnation! Since then, all real estate key indicators in Vancouver BC show positive trend. Sales in June 2009 were almost 6 times higher than in February and almost double compared to the last summer. The percent change in June 2009 was 75.6% compared to June 2008. Average price drop stopped in December 2008, remained flat till March, since then continues to grow steadily again. June prices already reached the level of October 2008.
Is this surprising? Not so much, if you follow the data carefully. 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 declining.
It's because one obvious advantage residential real estate can boast ? people simply have to live somewhere. We can live without cars, hairdressers, or holidays, but we definitely need some shelter. Demand can drop, but this drop hardly can reach zero, even for a short period. The supply side has to follow some rules. Real estate items often represents the most valuable part of your personal property. You can hold it and refuse selling during the period of declining prices, on the other hand such attitude stimulates new housing starts. Finally, buyers and sellers have to reach some point of agreement and the faster they do, the better for both.
So why Canadian market recovered so fast, while US market still struggles at the bottom? Canada managed to avoid the most painful event ? wave of foreclosures. The financial health of both institutions and individual home owners is much better than in the United States. It doesn't mean we are richer; it means we are better prepared to cope with sudden financial problems. Subprime mortgage sector (the most affected one in the United States) is much smaller in Canada; our economic fundamentals are not in the best shape now, but still quite stabilized.
What future should Vancouver BC market expect? For the few next months we can anticipate solid growth of sales and average price. However, the situation will calm down after reaching the pre-burst levels, due to overall economic slowdown. Next year will be ideal especially for first time buyers ? with record-low interest rates and prices still below the recent peak, homes won't be so affordable forever!
(Data source: REBGV)