It seems like we are back to the same old, same old for real estate in Vancouver.
After the recent sell-off and collapse in market prices, Vancouver real estate is still on fire and we can expect another sell-out next month.
Here are five reasons why we can’t expect a repeat of last year’s debacle.1.
The realty market is not ready to accept the idea of a real estate crash.
In a recent article for the Globe and Mail, David Krumholz, a senior economist at the B.C. Real Estate Association, noted that the real estate sector has a lot of work to do to become more prepared for a housing crash.
“The real estate industry is still in its infancy and the reality is that real estate markets are still maturing,” he wrote.
“For the next few months, real estate will be the main focus for investors and lenders in the Vancouver realtors association.
It will be a very difficult time to come up with any kind of market fundamentals and to see the value of a property go up.”2.
The Vancouver realtor community is not prepared to invest in new developments.
In the Globe article, Krumhorz noted that “the Vancouver real market is experiencing a major correction.
In April, the market was in free fall, falling 30 per cent in two months.
Now, the current price index for detached houses is around 17 per cent.
If the market keeps sliding, it could be a disaster for the Vancouver market.”3.
It’s not as though people are going to be willing to give up their homes for a new one.
There are currently about 4,000 empty houses in the city.
“We have a lot more homes for sale,” Krumhold said.
“There are probably over 700 empty homes in the downtown area alone, and the same number are under contract for sale in other parts of the city.”4.
There aren’t many new developments in the works.
Vancouver’s real estate bubble burst in 2014 when the province of British Columbia and the city of Vancouver launched a housing boom that has been in free-fall ever since.
There have been several attempts to bring in new developers to the city, but these efforts have not been successful.
The city is now trying to get more of its new developers on board with building more apartments, but that may not work as well as it hoped.5.
There isn’t enough money for developers to invest.
According to the realtor association, the Vancouver Real Estate Board is currently in debt of more than $1 billion.
In addition to the $700 million loan that was issued by the province, the province also recently made a $1.3 billion investment in a private equity fund that could invest up to $1 million in the market, but there is still a lot left to be invested.