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Other Resources
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Vancouver Presale Condos &
Real Estate
When a property market is hot, there are always
signs of slowdowns and possible flattening out or dips in the
real estate market. The Vancouver condominium property market
is going through such fluctuation at the moment.
In many ways, what you see in the American property market should
not happen to any major city or town in Canada. However, with
any investment, regardless of whether you are investing in stocks,
RSPs, mutual funds, or property, nothing is fault proof. The Vancouver
real estate presales market is still holding strong, although
many of the industry forecasts of a slowdown have occurred already,
especially in markets where there has been to much inventory released
during the past few years. Such places in Greater Vancouver such
as Surrey and Burnaby are seeing a vast slow down in pre-sales
condominium sales as well as pre-construction condo towers as
the demand for these types of residences are decreasing. With
many first time home buyers in Vancouver already owning and waiting
for their presales condominium homes to be completed within the
next two or three years, many real estate investors in Vancouver
are staying away from the once very hot pre-construction condo
market.
Why the slowdown?
With any market, regardless of the population size, the location
and the economic fundamentals, real estate moves in cycles. At
the moment, Vancouver and the Lower Mainland has enjoyed a real
estate investment boom for almost six or seven years with very
large increases of over twenty per cent per annum for four of
those years. Such a growth has to be balanced or offset by income
levels. Unfortuantely, the statistics show that in the presales
Vancouver property market, although real estate has increased
more than two-fold over the past three years, income levels have
stagnated and even decreased in many industry sectors. This is
not a good sign for any property market as affordability is alarmingly
high and the latest stats compiled by world organizations on housing
affordability in major cities have Vancouver ranked eleventh in
the most costliest and unaffordable places to live. Yes, Vancouver
is ranked in the top three cities of the world to live in, but
it is increasingly difficult for any investor or home buyer to
get into the property market as the prices have soared well beyond
the limits of someone’s income level. The result can be
devastating as presales and Vancouver construction property prices
may plummet to all time lows within a few years but industry analysts
have talked about how Vancouver may buck the trend.
Vancouver is an international city
Althought the presales Vancouver real estate market has stumbled
in 2007 and will continue to do so for the next few years until
the 2010 Winter Olympics, many of the property developments in
all of the Lower Mainland should be sold out completely before
the completion and move-in dates of such projects. This goes to
show that even with affordability being such a big issue in the
pre-construction Vancouver and presales condominium market in
this area, there is always an increasing international presence
in this city. With many investors and home buyers from Asia seeking
luxurious condo residences in the most beautiful city in the world,
the presales condominium market in Vancouver should remain stable
at least for now, or until the Asia market economies slow down.
The international investment coming into Vancouver is one of the
major factors in the stability of the market and also one of the
main causes for the upwards trend in property prices too. It’s
kind of like a double edged sword, but in many cases, Vancouverites
who currently own real estate or presales condos in the city do
not complain too much as the reverse will be a sudden drop in
their land and property values, many of whom have leveraged for
other types of investments.
The Vancouver presales and real estate future
The twenty per cent or more capital gains in equity appreciation
per year are not coming back anytime soon to the pre-sales Vancouver
property market and the pre-construction projects have slowed
down except in growing cities like Surrey, Port Coquitlam, Coquitlam,
Richmond and Langley. However, the expected increase for 2007
by industry analysts and the major banks of Canada have pegged
Vancouver’s real estate growth at 7.5% this year followed
by five years between four or five per cent per annum. Of course,
when you are talking about the presales Vancouver property prices
and appreciation, this is compounded every year, which makes for
a big increase every year still. However, as you can see, the
presales and pre-construction Greater Vancouver property market
has slowed down and will continue on this trend for some time.
It has turned into more of a buyer’s market now, rather
than a seller’s and you can definitely find some great deals
both in the Vancouver presales market as well as the developed
inventory on MLS or Comfree. Certain trends to watch out for include
the interest rate decrease expectations this year which will influence
and lower the mortgage rates on all real estate properties in
Vancouver in addition to the increase in financing without CMHC
insurance by all major banks which will change from 75% financing
to 80% this year. This will allow for more first time homebuyers
to get into either the pre-construction and presales Vancouver
real estate market or to upgrade from their current residence.
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