Real Estate Market in Vancouver – The Last 12 Months

The housing market in Vancouver BC was very prosperous for almost seven years in a row. It was one of the Canadian records among market growths, and one of the longest and fastest too. Prices of houses grew to an almost double level between 2001 and 2007, whereas inflation didn’t go over 14%. Naturally, such development severely lowered affordability of housing in Vancouver, mainly for first time buyers.

After the US housing market got into problems, its Vancouver sibling still worked well for some time and managed to grow until the beginning of 2008. Anyhow, in that time the pressure of affordability demand began to influence our market and realtors noticed slowdown, which grew much stronger in next months. The average price got stable at first, but later fell. As the global economic crisis became a problem during autumn 2008, the sales of Vancouver real estate fell to extremely low values during January and February 2009, which aroused the general panic that we would face the same long and poor crisis period such as in the USA.

In case you are of the same opinion, observe the graphs closely and you will find out that in February 2009, the sales were actually starting to rise again, not starting to go deeper down! And from that moment on, all the important figures concerning the Vancouver BC housing market are showing us that things are going fine. Sales in June 2009 were nearly 6 times higher than in February and nearly double confronted to the previous summer. The percent increase in June 2009 was 75.6% in comparison to June 2008. Average price decline came to a standstill in December 2008, stayed flat till March, since then continues to increase steadily again. The prices in June 2009 got again to the same level as they were in October last year.

Is this shocking? Not so much, if you follow the numbers carefully. The new listings change graph will show us that the inflow of new properties to the market came to a standstill in October 2008, after this point it started to drop.

Residential real estate has one simple but important advantage: briefly, people cannot live without a house to stay. People do really need a shelter, while they can quite well go without cars, hairdressers or holidays. It is possible that the demand for houses drops, but it can hardly vanish completely, even if it was only for a short time. The supply side has to keep some rules. Your house often is the most valuable item of your general property. In the period when prices are declining, you can decide to keep your house and not to sell it. On the other hand this would stimulate new housing starts. After all, both parties (selling and buying) should get to an agreement at some moment, which is the better for both the earlier this works out.

So why Canadian market recovered so early, whereas US market still struggles at the bottom? Canada managed to avoid the most serious event – wave of foreclosures. Compared to the fiscal health of institutions and individual property owners in the USA, the Canadian ones are doing much better. Canadians don’t necesssarily have to be better off, but for sure they are more ready to cope in case of any acute financial trouble. Subprime mortgage sector (the most affected one in the United States) is much more limited in Canada; our economic fundamentals are not in the best situation now, but still quite stabilized.

So what future development can we predict for the Vancouver BC real estate market? For the few following months we can expect solid increase of sales and average price. However, after the numbers get to their pre-burst levels, the situation should stabilize, because of the general economic slowdown. In 2010, especially first time buyers should have a great time – we expect the interest rates to achieve record-low levels and the prices should still stay under the recent peak, so it should be quite affordable to purchase a house!