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14.8% Drop in Vancouver House Prices Predicted
On July 13, TD Economics issued a report predicting a 10.2% decrease in the housing market over the next two years.
The economists specifically focused on Vancouver and Toronto saying that they will experience an even larger decrease ...with a whopping drop of 14.8 % for Vancovuer.
Among the twelve major markets profiled in this report, Vancouver and Toronto look poised for larger-than-average declines over the next few years, reflecting in part their exposure to the condominium segment, which appears particularly ripe for a correction.
The rationale for this prediction is ...
A combination of more subdued job and household income growth, rising interest rates, the recent tightening in borrowing rules for insured mortgages and fewer first time home buyers are expected to be the chief culprits behind the slowdown. With most of these drivers expected to remain supportive to housing demand in the very near term, we anticipate that the brunt of this adjustment will take place in 2012 and into 2013.
A section of the report focused specifically on Vancouver with the title reading:
VANCOUVER - THE HOUSING MARKET THAT HAS ALL EYES WATCHING
With Vancouver consistently making all the Top 10 best city lists, it is little wonder that our housing prices are amongst the highest in Canada.
The TD predictions focus on the higher than average housing prices, condos and foreign investment factors that have driven the prices up.
Vancouver has been the poster child for those individuals worried about a real estate bubble here in Canada. We expect that Vancouver will post modest economic growth accompanied by subdued job and income gains. Interest rate hikes will be felt in Vancouver likely more than other places due to the fact that household debt levels are the highest across the country.
With this economic climate, we foresee a 25.4% peak to- trough decline in sales and 14.8% in prices over 2012-13, by far the worst fate of any urban centre. Still, the path to correction will likely transpire over seven to eight quarters. What's more, just as some of the recent increase has reflected a shift in the composition in sales towards higher priced homes, normalization in the sales mix going forward will disproportionately weigh on average prices. At the expected trough in 2013, the average resale price is expected to sit at $675,000 - nearly double the national number and that of most other urban centres.
Another interesting tidbit about Vancouver?
Apparently our debt levels are the highest in the country.
... household debt levels in Vancouver are gauged to be the worst in the country. While the number of mortgages more than ninety days in arrears was 0.5% in May, the share has been consistently trending up since early 2008.
If you want to know how the current forecasts affect YOUR mortgage or mortgage choices, give us a call:
604-736-1855.
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Mike also took a great mini-vacation with his beautiful wife Lisa. Nine years ago Mike and Lisa attended a Peter Gabriel concert on one of their first dates. According to Mike, they fell in love that night and the rest is history. Apparently Peter Gabriel hasn't returned to Vancouver since then so Mike took Lisa to Toronto to see Peter Gabriel and celebrate their 6th anniversary. Here is a pic of Mike with Peter Gabriel hovering over him. Jeez Mike, you couldn't have sprung for better seats?!