What is Going on With Vancouver’s High Home Prices?
Where is the Vancouver housing market headed for 2020 and 2021? Some are calling this latest jump in prices a recovery of some sort. Yet, it seems rather sudden. Is this bubble sure to burst?
It was only 10 months ago that Vancouver home sales dropped to an 18 year low. Last month sales rose 45% above last October’s totals. Somebody wants Vancouver real estate badly.
Have home prices fallen and touched a key price point where homebuyers are deciding to pounce? Or is more Hong Kong money flooding in, in response to China’s oppressive actions? Is the rise due to increased money laundering?
Let’s list the possible causes:
- improving BC economy
- decreasing houses for sale
- international money laundering
- co-ownership trend
- persistent low mortgage rate forecast
- wealthy speculators
- price point is perfect now and they are buying
- Hong Kong residents funneling money out to a safe haven
- Hong Kong residents who have Canadian passports are coming back to Canada
Is Hong Kong the Source?
Rumor has it that more Hong Kong buyers are looking for homes in Vancouver. It’s thought that the country’s controversial extradition law proposed by Hong Kong’s pro-Beijing government is scaring Hong Kong citizens. Typically, these buyers are wealthy and buy very expensive large homes.
Hong Kong is in the midst of serious recession. As Hong Kong becomes more under the control of the Chinese, residents are aware that time is running out for them. And the proposed extradition law might be a warning to some of them. This conflict is affecting the US decisions to trade with China. If the US trade deal is thwarted, Hong Kong might collapse as the gateway to Asia. Too many worries for citizens.
Hong Kong’s GDP slumped badly in the summer (-3.2%) and the mounting violence might mean it will fall much more. That’s conducive to eager home selling. Sales of homes in Hong Kong has slumped 78% according to Midland Realty International Ltd, yet oddly, prices have not declined. The experts believe Hong Kong’s real estate market won’t collapse.
And is the huge frustrated demand for single detached houses pouring forth into the Vancouver condo market? Will you be buying soon as you see economic conditions favor higher home values? Will you be selling amidst the frenzy?
As reported in the Vancouver condo report, new construction completions are down. Last month, the drop was steep. Is this the only stat needed to get speculators and homebuyers calling a Realtor?
Will Vancouver’s Real Estate Prices Drop?
The Hong Kong and Chinese demand are a separate issue, because prices have been rising for 10 years. Will the Asian inflows keep the market inflated for years, or will it collapse after the extradition protests end? Do Hong Kong residents trust China? Will the US America First agenda stop Asian goods flows (and through Vancouver ports)?
Will a Democrat win in 2020 create a recession and housing market collapse? Will the current low new housing construction numbers inflate home prices further?
For those who don’t live in Vancouver, the demand for Vancouver real estate is hard to comprehend. And for some, the attempts to quash that demand are puzzling. From land restrictions, to mortgage stress tests, big taxes on foreigners, and money laundering crackdowns, each seems to fail in the face of continuous demand for property in the city.
I mean, Vancouver homes prices and Toronto home prices keep poking higher, and this is during slower times. If anything should open the floodgates economically with International trade, it will be a painful time ahead for renters and home buyers.
One perplexing issue is where the money is coming to cause the recent growth in sales? Asia, Alberta, Ontario, the Middle east? Is it specific billionaires?
Big Demand for Luxury Homes
According to Jamie Hooper, 30 properties were sold at above $30 million which hasn’t happened in quite a while. Perhaps new money is entering the BC housing market. Immigration is up and more millennials are ready to buy. Rentals are non-existent so the pressure to buy to own is on. Typically, rich Asians buy the big, luxury condos and homes.
The point is that demand for homes and rentals in Vancouver is intense. The province’s economy is good, and the population is growing. People are realizing how amazing Vancouver is. Tourism builds that awareness, and big money makes it that much more attractive and livable. It’s more than nature lovers who are descending on the city. It could also be workers from Alberta needing a job.
And with the US shunning international students, more of those wealthy families with post secondary children are turning to Vancouver. The bonus for them is it’s cheaper. It’s a demand for Vancouver student housing that just won’t stop.
BC’s Economy Has Endurance
And BC’s economy is doing well. When the US tariffs slowed business from China, it didn’t slow them as much as experts expected. Imports have continued and BC keeps on doing well.
Where is the Vancouver Housing Market Headed?
What do the Recents stats say about where the Vancouver housing market is headed? Here’s Richard Robbins building a great context to understand what’s happening now, and where we’re headed?
What are your Thoughts on your area of the Vancouver Real Estate Market?
When will Vancouver home prices fall? Where can you buy or rent affordably in the Greater Vancouver area?
Vancouver’s one of the most difficult markets to study and forecast. So much political interference in the natural market of supply and demand. Such incredible diversity of real estate. And of course, with scarcity and uniqueness comes very high prices.
Share your views on this wacky, up and down, political loaded, high growth real estate market. Please leave your thoughts in the comment box below. Let outsiders know more about real estate here.