Vancouver market rebounds and is ready to grow!

Vancouver BC real estate market grew for almost seven consequent years, one of the longest and fastest growths ever registered in Canada. Average home prices between years 2001-2007 almost doubled, whereas inflation in the mentioned period was less than 14%. Naturally, affordability of homes in Vancouver, especially for first time buyers, was seriously limited by this combination of factors.

When the notoriously famous problems started on the US real estate market, Vancouver real estate seemed immune and continued to grow till the beginning of 2008. Anyhow, the market slowed down as it's been affected by the pressure of affordability demand, and the market freeze persisted for a few months. Average price first stabilized and later decreased. With the outbreak of global economic crisis in the autumn 2008, Vancouver real estate sales fell to record-low numbers in January and February 2009 igniting the fear of painful and long real estate crisis, the same one we watched in the USA.

In case you are of the same opinion, observe the graphs closely and you will see that in February 2009, the sales were actually starting to rise again, not starting to go deeper down! Since that time, all real estate important indicators in Vancouver BC show positive trend. If we look at the sales statistics, we can see that the figures in June 2009 reached almost 6 times higher than the level from February and almost twice higher than the results from summer 2008. The percent increase in June 2009 was 75.6% confronted to June 2008. In December 2008, the average price drop stopped and kept at the same level till March, and since then it keeps showing steady increase. The price level of October 2008 was achieved again in June 2009.

These fact shouldn't seem so amazing, if we analyze the figures in detail. The new listings change graph will show us that the inflow of new buildings to the market came to a standstill in October 2008, after this point it started to fall.

This has an easy explanation, which lays in the obvious advantage of residential real estate, which is that people just need a house to stay. People do really need a home, while they can quite well survive without cars, hairdressers or holidays. Even though the demand may fall, it is unlikely for it to reach zero level, even for a limited period of time. Certain guidelines should be followed at the supply side. Real estate items often represent the most valuable part of your personal property. When prices are decreasing, it may be a good decision to hold your house and refuse selling it, but then this kind of attitude stimulates new housing starts. After all, both parties (selling and buying) should achieve an agreement at some point, which is the better for both the earlier this works out.

So what are the underlying factors behind Canadian market's fast recovery, regarding that the US market is still struggling with the crisis? The worst part of the US story - wave of foreclosures - was successfully avoided in Canada. Compared to the fiscal situation of institutions and individual home owners in the USA, the Canadian ones are doing much better. Canadians don't necesssarily have to be wealthier, but apparently they are more ready to cope in case of any acute financial problems. The most affected financial sector in USA was the subprime mortgages, which are much less often used in Canada. Now our economic fundamentals could be doing better of course, but they are still quite stabilized.

What future can Vancouver BC real estate market expect? We can expect solid sales and average price increase in the next few months. Anyway, after the numbers achieve their pre-burst levels, the situation should stabilize, because of the overall economic slowdown. Next year the interest rates should still be low and prices still below the recent peak, which will make homes very affordable and thus a wonderful opportunity especially for first time buyers!

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