While more than 2,000 people participated in the annual Polar Bear Swim at English Bay on New Year's Day, it's the predicted icy dip in property values that may have Vancouverites running into the ocean.
- 2012 Vancouver Polar Bear Swim: Photo credit: John Lehmann/The Globe and Mail
As reported by News 1130:
According to economists at the TD bank, "a larger-than-average price and sales correction looks to be in store" for the housing market in Vancouver. It forecasts a sales drop of 15% and a home-price decrease of 12% over the 2012-2013 period."
The outlook says "since the summer some of the steam in prices and sales has escaped" the Vancouver market, leaving this area "in a better position than...six months ago."
The TD points out that in November the seasonally adjusted average home price was $756,000, the lowest to date in 2011. It also says sales growth has "come down from double-digit highs to a fairly flat, even slightly negative, year-over-year reading."
The outlook says also says "A slower Chinese economic growth profile suggests that investors could pull back their real estate acquisitions." But it adds that any decrease in condo demand should be cushioned by "the large share of new immigrants who choose to settle in Vancouver."
Well, that's interesting. The Vancouver Sun is predicting, "Modest growth in area real estate prices for 2012: CMHC."
Based on estimates of 35,000 to 40,000 new immigrants moving into the Vancouver area annually for the next 20+ years (I've also read estimates of up to 50,000), it's clear that immigration, investment from mainland China and low interest rates are contributing to robust real estate prices in Vancouver. Should any of these drivers be affected negatively, I believe we would see prices soften. If current conditions persist, barring a European economic meltdown, I see no immediate reason for a large, correction downward.
All of the above reinforces my position that long-term, Vancouver is a great place to be invested but there's too much risk for short-term "flippers" at the moment and I revert back to what I keep saying: If you're a seller, sell. If you're a buyer, buy. If you're neither, stay out of the market.
For more information contact Shaun Kimmins.