Vancouver real estate no bubble says economist
Posted: Sep 16 2011 Topic:
B.C.‘s real estate market may be slowing down, but there is no sign Vancouver’s sky high prices are caught up in a bubble that is about to burst, according to a new report
The Central 1 Credit Union report, which was issued on Thursday, forecasts the B.C. market will slow this year and total sales will drop slightly from 2010, but prices will continue to rise an estimated 6.8 per cent next year.
According to the report’s author economist Brian Yu, low interest rates that show no sign of rising quickly and the limited supply of land will keep values rising – all familiar arguments.
The British Columbia housing market will slow this year and total sales will drop slightly from 2010, says a new report by Central 1 Credit Union. The British Columbia housing market will slow this year and total sales will drop slightly from 2010, says a new report by Central 1 Credit Union. Jonathan Hayward/Canadian Press
But Yu says there is another important reason to believe prices in Vancouver are unlikely to collapse. Market speculation —commonly known as flipping — currently accounts for only about two or three per cent of the market.
Yu says that is a normal level, which shows most people are living in the homes they buy.
“Our research shows few signs that speculators are overly active in the Vancouver market, which means we are unlikely to see a speculation-induced bust,” he said.
“Even if the economy slows and employment slows, we expect to see individuals hold on to their homes, rather than sell them in a weaker market,” he said.
Prices may be way up for detached homes in Richmond, Vancouver and Burnaby, but Yu insists there hasn’t been a price surge across the region and concerns about a possible dramatic price drop in Vancouver are overblown.
“Price jumps that have received media attention have been in localized areas and we have not seen a region-wide price surge,” he said.
Read more: http://www.cbc.ca/news/canada/british-columbia/story/2011/09/15/bc-vancouver-real-estate-bubble.html