Vancouver Real Estate’s Hissing Balloon

Hissing Balloon

A good and knowledgeable friend Rudy Nielson of Landcor Data Corporation fame has scribed another outlook on British Columbia’s Real Estate Market. In his March 2012 Residential Sales Summary Rudy suggests that real estate markets in general appear to be a hissing sagging balloon.

Some Highlights

  • resource areas hit the hardest
  • assessments declined in most areas with few exceptions
  • Vancouver fixated on incoming ‘outside’ money
  • neighbourhoods such as Kerrisdale, Shaughnessy, and the Cambie corridor reveal ‘strong legs’ as some assessessment gains reach 38%
  • as outlying homeowners look at their own, rather limp assessment values, they do the math and wish they’d bought in the Lower Mainland, many years ago.
  • referring to Demographia: Vancouver is the second most unaffordable city in the world with a severely unaffordable ratio of 14.1 – Demographia says affordable is 3.0
  • long term owners of single family homes and attached homes are winners
  • “pile them high” condo values are ‘slip slidin away’.
  • Vancouver single family homes year over year are up on average even with a quarterly slip

Yet

  • quoting Stuart Levings risk officer at Genworth “it won’t be an abrupt correction but more like a soft landing”
  • quoting BMO the market “is far removed from bubble territory with a caveat – Vancouver” and that BC overall is ‘the Nations new weak spot, with prices generally declining”
  • TD report projects home re-sales in BC to slip 3.7 percent in 2012, prices to dip 3.5 percent. In 2013, the ongoing ‘correction’ will see unit re-sales fall a further five percent, prices off another 4.4 percent

Hardly Bad News

Rudy says that “placed against the absolute price gains in the last few years, the TD prediction is hardly Chicken Little horrifying. Assuming you haven’t bought at the peak and on the further assumption that, even if you did buy high, your aim was to own a home, not buy an investment, you’re in for the long haul and you can afford the mortgage. If so, then a (temporary?) slippage in prices is hardly bad news. Far from it, especially in light of the Lower Mainland’s increasingly unobtainable ‘affordability’ for most all of those hoping to work and live in the area . . . assuming there even is a slippage.”

So What!

“Central 1 Credit Union agrees that final figures for 2011 will show that the BC housing market has slowed, total sales have “eased slightly” but median prices have kept on trucking.”

Overblown

“Will the Vancouver market go pop! or badly deflate? Central 1’s economist Bryan Yu believes the fears (hopes?) are overblown. According to Central 1 research, Vancouver is not the happy hunting ground of speculators, which precludes a “speculation induced bust”, and the eye-widening price increases that garner so much media attention are in “localized areas” and aren’t representative of a “region-wide price surge.”

* Subject to formatting all quotations from the Landcor Corporation 2011 Residential Sales Summary ** For complete statistical details and more of Rudy’s outlook Read this Report.

About Larry Yatkowsky

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*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

vanpro Says:
April 3rd, 2012 at 1:24 pm

A lot so “if’s” in Rudy’s outlook – same sort of if’s the real estate prognosticators used right before the housing market imploded in the US and rest of world…..

Bubbleboy Says:
April 3rd, 2012 at 3:40 pm

It’s obvious that not everyone is listenIng to Mr Yu. You could smell the fear from his voice. It’s like Gregor Robertson saying the city was prepared for June 15 2011. I said all along, there will be a riot. And???

The end!

Iggy Says:
April 3rd, 2012 at 5:09 pm

I don’t know why all these economists keep bringing up the “soft landing”… the thing that went up still comes down if you have a soft landing. It certainly doesn’t jive with those that think that real estate values never go down.

AG Says:
April 8th, 2012 at 6:50 am

Small, but important fix…

referring to Demographia: Vancouver is the second most unaffordable city in the [English Speaking] world with a severely unaffordable ratio of 14.1 – Demographia says affordable is 3.0

April 8th, 2012 at 8:14 am

@AG
Thanks
you may also want to point that out to Landcor since they are the source of the quote

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