Vancouver housing bubble: Will it burst or deflate?
By ebizniz on July 26, 2007 - 9:28pm
A blog posting by Vancouver Home Mortgage :
With the Bank of Canada raising interest rates and Canadian Banks offering more attractive saving rates to consumers, investors will be tempted to move their real estate investments to safer savings account and GIC investments.
The Bank of Nova Scotia is advertising a 4.85%* on a 24-month GIC. The offer is only available until August 04. There are minimum deposit of $1,000 required and the GIC is non-redeemable.
ICICI Bank offers a more flexible deal, offering 4.5% on C$ deposits and 5.0% on US$ deposits on the bank’s HiSAVE Savings Account. There is no minimum deposit required and interest is calculated the daily balance and paid monthly!
The Canadian housing market is faced with:
* Rising Interest Rates
* Severe affordability problem
* Rising dollar impacting the manufacturing and resource sectors
* Softening in oil and gas prices
* Increasing new and resale home inventory
* Distinct possibility of US recession
These are negative forces that could topple the unrealistic real estate markets in Greater Vancouver, Fraser Valley of BC, Calgary and Edmonton.
What are your thoughts?
Housing prices in the lower mainland are too high right now and it is impacting people's quality of life (many of them just cannot afford to live here any more).
So, would it be a good thing if there is a crash? Well, I can't say that, but it would solve a few problems.
It may take a while before cooler heads prevail that we may be at the top of the market. Housing is just a shelter for people. Renting is always an option for most people. The problem with the housing market now is people are caught up with the market sentiments.
House prices are determined by economic fundamentals of supply and demand. In a rising market, supply is always lagging behind demand causing price escalation. For now, the equation on supply-demand is in favour of home sellers.
But, when more people are "fearful" of a price collapse, the supply-demand equation will change quickly. Demand will dry up and buyers will turn to sellers. The down cycle will gain momentum and accelerate the correction in house prices.
As for now, there are no clear signs of any pull back in demand for housing. With such lofty price level, there are less qualified buyers now to support further price gain. No one knows when the Vancouver housing market will turn south.
I love Vancouver...I don't live there but would do so if the opportunity arises.
That said, I'm no fool. Vancouver is absolutely no different than any other place on earth, contrary to what some people over there arrogantly believe. I have friends who think Vancouver is different, Canada doesn't follow in the US's footsteps...etc on and on.
Debt is debt, pain is pain, lack of affordability is the same everywhere. If Vancouverites are dumb enough to pay 70% of their incomes to housing, they deserve what they get. It's basic mathematics and economics.
You guys are a fews behind us economically (i.e. the monemtum of things). If US economy affects other countries half way around the world, it's extremely pompous of some Vancouverites to think Canada's economy is detached from US economy when we are so close. Absurd.
Either there are lots of fraudelent folks up there in Van or people are really stuck in alot of debt....what's the reality of the two choices?
Interesting to look at the above postings in retrospect.
On March 28, 2008, house listings in the REGBV (the greater Vancouver area) broke through 13000. That represents a 45% increase in just 3 months!
We are in freefall now.
Yep, you're right. The holiday is over, folks. And I for one, couldn't be happier... listings waaaay up, and sales waaay down.
Be happy that Vancouver hasn't turned as sour as Florida, where things are so bad one woman, Deven Trabosh, had to resort to selling herself along with her house. When you've got to resort to veiled prostitution to move homes, you know things are bad. Unfortunately for Canadians, the US market problems may very well spill over. On a local level, though, Seattle has been holding up better than much of the general US, and so regarding how America might affect Canada, maybe the Seattle strength bodes well for Vancouver.
not like us,but housing bubble is bursting everywhere in canada.Joblosses, foreclosure, mills shutting down and all kind of bad news we can hear everyday.now news reporters are blaiming the world recessason for,canada's recessason.I dont know who is to blaim,all i know that housinn market in canada is gone down the drain.
Canada is the USA's largest trading partner. The US is going deeper and deeper into recession by the day. They don't by our products,we don't have jobs.Not to mention less retiring Americans are buying homes in Canada due to cheaper housing in the States now.
real estate agents in lowermainland are not accepting,but we know housing market is going down.And downfall is going to be 45% prise drop,and that is needed for a healthy economy overall.money has to come out from real estate and invested in everywhere.So we can save our economy.Right now all of our money is blocked into real estate only.
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