Today I thought it would be both fun and interesting to go back and look at the history of the Vancouver Real Estate Market from January 1977 to the end of March 2018.
So lets talk about the period first of all from 1977 to 1981. In 1977 the average cost of a property in Greater Vancouver for a detached house was approximately $80,000. Four years later in 1980 the average cost of a house had risen to almost $180,000. So if you think some of the things we’ve been seeing here over the last decade are new, the also happened years before. The problem was during that time the economy in both the United States and Canada had massive inflation issues. How to combat inflation is to raise interest rates. By the end of 1981 interest rates had risen to over 20%, and what that did is it caused a crash in the real estate market. I remember back in that period of time I had a savings account paying me 18% interest just to leave my money in the account. Why would you have your money anywhere else? It took a lot of speculators out of the market, and made it a real safe place to have your money until the end of the 1980’s.
So after the 1981 crash when houses came down approximately 50% of the value, the next five years between 1981 and 1986 were extremely flat for the Real Estate Market.
Gas was 39 cents a litre, the city was preparing for Expo, BC Place Stadium was built and there wasn’t much happening in the Real Estate Market in those days.
With the opening of Expo in 1986, it seemed to create new life for the Vancouver Real Estate Market. They only expected about 12 million people to go through the gates and if I remember correctly it wound up at over 20 million people. That’s what changed the city forever, and that’s when the international community discovered Vancouver.
The real estate market in Vancouver saw some pretty steady gains through the next 8 year period from 1986 to 1994.
The markets began to cool in the mid 90’s. From 1994 to 2001 the BC Economy was not in very good shape. While the rest of North America was booming in Real Estate and just the Economy in general, and that’s in the States and Canada, BC was sorely lagging behind. During this period of time you probably saw the value of your home drop by 17 or 18%. The markets didn’t tank by any stretch but they trickled down by a couple of percent a year. There was a lot of Hong Kong buyers and residents in the country during that period after expo to 1997 – because they didn’t know what was going to happen to Hong Kong when 1997 did occur. When they found out it was business as usual, a lot of that money left British Columbia and returned to Hong Kong.
Two events had major impacts on the real estate market in the city in 2001. First of all in May of that year there was a provincial election and the provincial government changed. What that did is it made the phones ring more than I have ever seen them ring since I have been in Real Estate, just that one little thing. Between May and the summer after the provincial election the phones rang like I have never seen before. Another event happened in September of 2001, if you recall September 11th happened. Now how could that impact the real estate market around here? If you recall the Americans were afraid that the DOW Jones would crash. They shut the markets down on the Tuesday after September 11th happened and they didn’t open them until the following Monday. What they did is they dropped their interest rates 1 full point that week and the Canadians followed. Within the next month and half they dropped them another point which the Canadians did as well. All of a sudden we had interest rates in the high to mid 3 percent range and the markets took off like we’d never seen and continued to do so all the way up until 2008.
2008 brought the first big hiccup that we had seen in seven years since the markets took off in 2001 and that was caused by the US Banking Meltdown. The Vancouver market slowed down dramatically for a 12 month period between mid 2008 and mid 2009 – However, by the end of 2009 the markets were back where the were before and on their way upwards again.
2010 to 2016 was another boom era for real estate in our markets locally. House values appreciated almost 50% during that time and things continued to roll along until the summer of 2016.
So all of these things lead us up to our current day market. I am hoping that this era will not be know as the era of government regulations. My personal opinion is that governments have no place interfering with free markets, but unfortunately the government doesn’t care what I say. Over the last few years we have seen many things happen since the summer of 2016. We have foreign buyers taxes affecting the market, a vacant home tax, stricter mortgage qualification rules, increased property transfer tax figures and we’ve also got a speculation tax. All of these things are having impact on the higher end of our market.