Vancouver Real Estate Market is always moving. Understand the Market Trends, the 2019 Real Estate Bubble and how things may affect you.
Get it from one of Vancouver’s Top Realtors Jamie Hooper.
Everything you need to know about Vancouver’s Real Estate Market –
BELOW IS A WRITTEN VIDEO TRANSCRIPTION
Please remember that these are not “market forecasts” that I am giving. These are my thoughts on things that I believe could affect the market one way or another, either in a positive or negative way. The reason I don’t like to forecast is because I am simply not qualified to do so. I am a realtor and they did not teach us anything about economics in real estate school. When I see economists unable to get many predictions right, I really do not think any of us realtors (unless they have their economics degree) would be able to predict with much accuracy. I can tell you how we got here and where we are, but as to how things are going in the future, if you know I’d like you to share it with me!
Let’s start with some positive stuff. First of all, some things that are happening in Canada, in British Columbia and more specifically in Vancouver that could influence our market in the next year. The number one thing is population growth and immigration in Canada. Right after WW2, in 1945, there were only 400,000 people in Vancouver. In less than 74 years, the population has grown almost by 7 times. By 1986, the year of Expo, the population was 1.4 million. By 2000, there were 2 million people, and today, in 2019, there are approximately 2.7 million people. They say that in 2040 there will be 4 million people in a city that is completely landlocked with no more property to build on. What that is going to do, from a Real Estate perspective, is ensure a continued high demand.
Unemployment across Canada is relatively low, and we have 2 elections coming up this year that could influence the market. The first one is going to happen Jan 30th in Nanaimo where there will be a by-election. If the Liberals were to win a seat that has been predominately NDP for 30 or 40 years, that could have an effect on the market in a positive fashion. It might give developers and business people more confidence in the local government resulting in a willingness to come back and invest in British Columbia. The 2nd election is the federal election, which is going to happen next October. In articles I been reading and in listening to “experts”, they think that the politicians are going to try and entice the Millennial voters, which is becoming a large segment of the voting population. There may enticements for first time buyers, such as easing up on things that have been implemented to slow down the market. Those are some of the positive and good things we can see happening to the market.
As for my concerns, the first is that the December market was the slowest December that we’ve had on record since 2000. 2000 was pretty much the bottom of a slow market that lasted from 1994 to 2000. More recently, we need to go back 2 ½ years to August of 2016, when the government began to try and slow down the market. In August of 2016, they implemented the Foreign Buyers Tax, which slowed down the higher price points of the detached housing market. A year ago, we saw the arrival of the Mortgage Stress Test, increased Property Transfer Taxes, new Speculation and Empty Home Taxes and we’ve also had 5 interest rate hikes over the last 18 months with 2 more expected next year. As far as the increased interest rates, economists say it takes about 18 months to feel the effect. It has been 18 months and we will see if it will have any more of a negative effect on the upcoming spring market.
The next thing to talk about that could affect the market in a negative fashion is the slowing global economy. Sluggish economic conditions are not just in B.C. or Canada, they are happening in most economies around the world. Another concern is debt for Canadians, which is at an all-time high. Mortgage money has been so cheap, that people have essentially been using their homes like ATM machines. Many economists are forecasting more interest rate hikes, and people will move away from taking on more debt to purchase things if that is the case. Typically, if interest rates are low, debt is high, and when rates are high, debt is lower. We will find out in the coming years if that plays out.
One of the bigger concerns I have right now is the pre-sale condo market. This could be kind of like the sleeping time bomb that may develop over the next year or two. One statistic we do not know is how many people have bought pre-sale condos, who may not have the ability to close on their purchase. We are only going to find that out when a lot of these building under construction complete and are finished. If we start to see a bunch of buyers who are unable to complete, I’m concerned about what that is going to do to developers. If a lot of these people live in foreign countries and the developers have no recourse, this could be a concern.
In closing, I want you to remember that these are not forecasts, these are the thoughts and musings of a guy that has just sold real estate for a long time and has this stuff going through his head all day long. Vancouver is an amazing place to live and it’s become a world-class city that is not very different than New York, London or Hong Kong. One thing I want to say is that prices will never go back to what they were in 1990 or 1998 or even 2005. In a world-class city it is going to cost money if you want to live here. Our parents were able to live here back when they bought in the 40’s or 50’s, my generation moved to the suburbs, our children’s generation will be moving inland – Vancouver Island, Northern B.C., or the interior of BC. Unfortunately for those of us who do not want the place to change, it has already happened and inevitably will continue!