Is There A Real Estate Bubble In Vancouver?

 

 

 

The Media Has Talked About It For Months

Is There A Vancouver Real Estate Bubble?

What Are The Economic Factors Behind It?

Why Have The Prices Gone Up So Much?

 

There are a number of factors that speak to where the Vancouver Real Estate Market is going.  Some say it’s overpriced, some say it’s unsustainable, some say there’s a bubble.  

Here are a few key points I’d like to point out:

  • Late 2014/Early 2015, Government CANCELLED the Immigration Investment Program which basically allowed foreigners to come to Canada, give the government $800,000 as an interest free loan, wait a few years, and then they’d get their Permanent Residency status along with the money back
    • The RESULT:  initial panic by those NOT in the real estate industry, but many experts in the real estate industry said that this wasn’t going to affect the market a whole lot as it targeted the extremely wealthy foreigners and that it may slow down the market for the extremely high end homes in the $5M plus range.  Currency was still good, in the end, it didn’t affect the market.
  • My Understanding of the China Market:  when China’s economy is doing well, people go abroad and buy real estate property in Canada, US and Australia, when China’s economy IS NOT doing well, they do the same thing.  The reason is because when their economy is not doing well, people are not confident in the government and their money and so they take it out of the country to invest elsewhere.  
  • Before, when the Canadian dollar and the US dollar was on par, Vancouver real estate prices were still cheap compared to real estate in China.  Now, that the Canadian dollar is 30% cheaper than the US dollar, it’s like a shopping spree for the people in China, not to mention the Americans, and all the other foreign buyers because their currency is likely tied to the US dollar.  
  • The competition is not just against the mainland Chinese, buyers are competing against locals who once were poor but all of a sudden their properties skyrocketed and now the owners have money to give to their children to buy properties.  Builders are also competing because the market is so hot.  Then, buyers are also forgetting that many wealthy Chinese who are buying are not foreigners.  They had immigrated to Vancouver in the ’90s and early 2000s.  
  • Interest rates are at a historical low point and Canada is likely going to only increase rates if the US increases their rates and they don’t have plans to increase the rates in the near future
  • On top of that, look at the supply and demand issue, there simply is not enough supply to cover the demand that’s out there.  Why wonder the prices keep going up.

 

 

 

So, based on these few key points, it’s pretty clear where the market is heading in the next little while.

 

If you want more information on how to prepare, feel free to email or call me.

 

 

 

 

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