Vancouver Housing Market

March 6, 2008

katsure204.jpgBullish Vancouver housing market

Pent-up demand, population growth, tight inventory levels, and the longest economic expansion since World War II collectively fueled one of the best decades on record for residential real estate in Canada. Since 2002, house prices rallied attracting even more buyers and investors into the market. House prices more than double in the major city centers in the Greater Vancouver area.

The strong price gains over the past few years have resulted in the Vancouver housing market beyond the reach of the average home buyers. Many home buyers have to be contented with buying the more affordable condos and townhouses.

Vancouver Housing Market Trend

The housing market in the US is in decline and housing experts are forecasting that it will take a few years for the U.S. housing market to stabilize. The Canadian housing market so far has not been affected by the housing problems in the U.S.
The reasons are:

a). Canadian mortgage lenders are more conservative, and lending practices in Canada are more prudent.

b). Exotic 30 year US “Option Mortgages” like the 2/28 and 3/27 that allow partial payment of mortgage interest for the first 2 or 3 years are not available to Canadian Borrowers.

c). Sub-prime mortgages only account for a small portion of mortgage origination (~5%).

Nonetheless, the housing price escalation in the lower mainland of Vancouver is fueled by the same excess liquidity in the market place worldwide. Since 2002, real estate prices have doubled in the major city and town centers of British Columbia. Vancouver City being a very livable and beautiful world class city is expensive due to the shortage of land geographically and large number of homes being bought for investment.

Currently, there is a more balanced supply-demand situation for detached houses, townhouses and condo minimums in the lower mainland of Vancouver. While demand in 2007 as compared to 2006 is projected to be lower, housing experts are expecting house prices to continue going up at a more moderate rate 2008. Click here to link to the new condo developments around metro Vancouver and Fraser Valley.

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