Login / RegisterB.C.'s real-estate market looks good despite uncertain economic times ahead
On the day Mark Carney appeared before the finance committee of the House of Commons in Ottawa, Miguel Escueta went about his regular routine in Vancouver.
While the governor of the Bank of Canada talked on Parliament Hill about risks associated with the economic crises in the U.S. and Europe, it was business as usual for Escueta, a realtor of several years.
Global equities and financial markets may be wobbly, but according to Escueta, this is keeping interest rates down in Canada. This can only be good for property buyers out to make a move.
“We feel positive about the real-estate market,” Escueta told the Georgia Straight in a phone interview.
Escueta may not see most of the data that Bryan Yu goes through as an economist with the Vancouver-based Central 1 Credit Union, but the latter arrives at practically the same conclusion as the realtor.
“We’ve also seen factors of instability creating downward pressure on bond yield as a lot of investors know there’s so much hesitance to be in the [stock] market,” Yu told the Straight by phone. “What we expect to see, in the short term at least, is that mortgage rates [will] tend to come down further than they already are, and they are already at low levels.”
Yu also predicted a softening of housing prices, though this may not exceed five percent. But he doesn’t foresee a housing crash. “Sellers generally, if the market becomes weaker, they don’t list their properties,” the economist said.
However, Yu pointed out consumer confidence could take a hit in the face of an unstable world economy. With personal investments declining in value, people could pull back on spending on large items like new houses.
The B.C. Real Estate Association has reported that home sales in the province fell four percent from June to July this year. However, the organization is banking on mortgage rates slipping further as a government measure to mitigate the impact of uncertainties in the world economy, giving home buyers more purchasing power.
The housing market in the province isn’t immune to economic vagaries, the last of which was the recession of 2008 and 2009. According to BCREA data, total sales dropped 31 percent from 2007 to 2008, to $31.3 billion. The number of houses sold declined by 33 percent to 68,923 units, the lowest since 2000.
Weak sales continued into early 2009. Residential unit sales decreased by 57 percent in January of that year compared to the same month in 2008, with only 2,115 homes sold. But the pace picked up in February 2009. Tracking by Statistics Canada indicated that the economy began to stabilize in mid 2009.
While interest rates are expected to remain low, the federal government will be keeping a close eye on household debt levels. As the central bank’s Carney recalled in his opening statement to the House finance committee on August 19, the government has tightened mortgage rules since 2008 to “support the long-term stability of the Canadian housing market”.
“In an environment of exceptionally low interest rates, we must be careful not to repeat the mistakes of others who now face the challenges of simultaneously lowering unsustainable public and private debt burdens,” Carney stated.
Carney noted that Canadians are “now as indebted as the Americans and the British”.
The volatile global economy isn’t much of a concern to Simon Fraser University’s Andrey Pavlov. According to the associate professor of business, who specializes in real-estate finance, many people are expected to consider parking their money in properties as a safe investment.
“There’s no other place to put your money,” Pavlov told the Straight in a phone interview. “All other investments are suffering a lot.”
What worries Pavlov about the real-estate market in Metro Vancouver is the high prices relative to rent. According to the SFU academic, that could affect the potential for further price increases down the line.
“It doesn’t mean that prices would go down, but future growth of prices from here is hard to see because any investor wants to look at the rent they can collect if they rent their property,” he said. “And that rent is just not very high right now in B.C.”
This statement is contrary to all market slowdowns since 1973. During any form of market, the number of sellers who have the option of not selling are quite limited. ie: the market goes on and in fact in these down market situations the number of listings always increases.
Condos I could care less about - if off-shore investors want to buy boxes of Canadian air, we'll sell it to them!
Here we have a headline that does not reflect the full contents of the article, and certainly doesn't reflect the fact that this bubble (and it is a bubble - driven purely in recent years by emergency low interest rates and media-fueled, unsustainable mania) is deflating. The Okanagan, where prices are off 25% or more and still nobody is buying, the Fraser Valley, where sales are at a standstill, Vancouver Island, Squamish/Whistler - in all these regions, people who bought in recent years are now trying to get out at a LOSS.
Consumers in this province are broke, done in by across-the-board cost of living hikes and yes, the impossible price of real estate. And there are no hordes of filthy rich Chinese coming to save us. BC had a population OUTFLOW last year. Why, even mighty Richmond, ground zero for the purported Asian invasion, has fallen off by 10% or more in the past few months.
But here we have the deceptive opinion of a realtor, a guy with a vested interest in telling everyone who listens that you'd better, "Buy now or be priced out forever." According to him, "we feel positive about the real estate market." Hmm...precisely what realtors were saying as the US began to unravel in 2005, and precisely what realtors ALWAYS say. How the hell is this news? How the hell does this opinion form the basis for your headline? What a steaming load of bullcrap.
Right now, buying within Greater Vancouver is lunacy because it is home to some of the most expensive real estate in the world. There's ample proof out there that Vancouverites in particular spend 75%-plus of their income on housing - a ridiculous figure that's made possible only because people are going further and further into debt. (And don't forget - Canadians on average owe in excess of $1.50 for every $1.00 of disposable income they have.)
Yet buying real estate OUTSIDE of Vancouver is similarly idiotic simply because prices are dropping and listings are on the upswing virtually everywhere. So...how the hell does your headline make any sense? How does the BC real estate market look "good?" How?
And this Pavlov guy tells us, "There's no other place to put your money?" No other place? Seriously? Tell that to anyone who bought in the Okanagan or Chilliwack and has watched values drop ever since. Has he ever heard of RENTING at a MUCH lower cost than buying, and investing the difference in low-risk vehicles? No purchase sales tax, no annual property tax, no realtor commissions, no repair and renovation bills, no city utility bills, no monthly maintenance fees, no depreciation, etc. etc. Honestly, who's paying this guy to spew such utter nonsense?
While this article does touch upon reality within its text, it gives far too much credence to Escueta, who is nothing more than a salesman, and Pavlov, a real estate finance "specialist." The icing on the cake? The headline, of course. This is what everyone will see, regardless of whether they read the piece or not. And it is made from the opinion of a realtor, a salesman - it is NOT news. It is the very essence of deception.
I remember when the Straight told it like it is.
Now look at you guys. You should be encouraging alternatives to million dollar mortgages so young families can live decent lives. You can rent for a fraction of the cost of owning, or you can live in a co-op.
Can you imagine how your founders would have reacted if, decades later, the Georgia Straight was quoting real estate agents cheerleading the market? This is no different than the Vancouver Sun.
Please find your critical voice again.
And amen to Child of Hippies as well.
I'm seeing a large number of FOR SALE signs going up right now, and my guess is that smart owners realizing that this is indeed the peak, and selling now before all the investors/flippers start unloading properties in panic.
Your paper has been reduced to a weekly Metro, or 24-hr tabloid-ish, junk that is filled with mainstream adds. You have lost your journalistic integrity and often the articles cater to minority interests with an occasional one-off articles that contains something of material. Don't take this as an ad hominem attack, this article is a sample of what your paper has published recently, and it proves my point!
Your editorial hasn't been paying any attention to the main issues that Vacouverites are grappling with (e.g., real estate). Real estate bubble, and generally asset bubbles, in global economy must have underlying political causes at all levels of government, and obviously our government is not addressing this issue. Your paper, instead of being straight about these issues, is playing the same cat-and-mouse game that the politicians are playing to dance around the elephant in the room.
May be you should redeem yourself. Fire your reporter Carlito Pablo who has disgraced you with his phony second-hand expert views, and for not checking his references (he must be sleeping under a rock). Get one of your reporters who has any clout left to write a cover story about real estate and issue an apology for your disgraced (and fired by then) reporter.
When you're finished that, how about finding out how much of Vancouver's condominium real estate is owned by absentee non-Canadians? Or would that be a job for a REAL newspaper in Vancouver? If that's the case, no wonder it's not being looked into.