The Wall Centre Complex by vancityhotshots
Real estate action full speed ahead in November 2014. Sales up, confidence in real estate as investment up, low inventory, high prices.
There was an interesting theory put forward in the Globe and Mail Report on Business December 4 regarding low interest rates and the the high price of houses. Gregory Thwaites an economist at the Bank of England posits that it all started with the falling prices of investment goods: the machinery and equipment used to make products and to offer services.
In the last few decades a lot of investment goods were in the form of computers whose cost has declined dramatically and therefore profit margins of purchase and use have declined. Businesses can buy goods at a lower cost. The manufacturers are making less on each item so are not availing themselves of pools of capital to expand because of missing returns to pay off the debt that would be incurred. This lack of demand for capital triggers low interest rates.
The consumer who is buying products at lower prices also has access to a large pool of capital at rock bottom rates and so feels confident in carrying a mortgage and building up household debt. More people can buy than want to sell so house prices escalate. As good an explanation as any and better than most.
In expensive markets such as Metro Vancouver younger buyers who do not want to move to the suburbs with a long commute are looking for creative ways to finance a house. An interesting move is to buy with friends. This requires a close and comfortable relationship with a similar values system. There is due diligence and legalities to move through so that the title is properly secured to all parties involved and a formula for selling/buying the other party out is agreed upon and legally executed. In the end though for the right people there is a home in a desirable community and mutual support for bringing up young children.
In the matter of the City of Vancouver Heritage bylaw that was discussed here in November there is continuing fallout. Some people who have already razed and built a new modern home in a classic Vancouver neighbourhood are supporting the restrictive bylaw that requires renovation of a pre-1940s Vancouver character home. They want to look out at the charming homes of yore.
Apparently there is a huge outcry against the bylaw in the Vancouver Chinese press. That community does not want to have to renovate an 80 year old house. They want new houses and expected to be allowed to tear down their previously purchased investment property.
It's clear that the bylaw is creating inequities in the marketplace. It is an idea whose time has come and gone. The Vancouver City Councils of the Expo 86 era are responsible for the wholesale destruction of early Vancouver homes. This thinking and appropriate bylaws should have been enacted 30 years ago, not now. More to come.