[:en]Your journey towards being a great realtor doesn’t end after passing the UBC real estate exam in Vancouver. On the contrary, that journey will have only begun – and it’s looking like it could be a very interesting journey, given the current Vancouver real estate market.
The word “bubble” is now being openly used to describe the local market, particularly by those who are noting similarities between Canada’s current real estate situation and what was happening in the United States a decade ago. Many are concerned that, just like in the States, this will lead to the bubble popping and causing a market-wide depression.
Is the Vancouver bubble headed for a massive pop? Or will it stabilize without drama?
Looking at The Vancouver Real Estate Bubble In 2018
What truly has analysts concerned is this: By the end of last year, overall home sales in Vancouver dropped to their lowest level in over five years – and yet prices continued to rise. There is massive demand for Vancouver property, and it’s driving prices up and up.
On top of that, a lot of the property is owned by foreign investors – quite possibly 5% or more, according to some government estimates. The concern is that they are pricing local buyers out of the market, particularly when it’s believed that many of these foreign buyers may be deliberately overpaying as a way of moving money out of their home country. Controversial measures implemented last year which added a large tariff on foreign purchasing have done relatively little to stem this growth.
Then, there are recent Federal-level changes to home mortgages, which have added barriers to entry for many buyers. This will have the effect of chasing off some who are unable to pay cash for their purchases.
The bubble is growing larger, but will it truly pop? In part, that depends on the richest investors. At some point, prices will become so high that they no longer consider Vancouver to be a safe place to park their capital. Then they’ll stop buying, and prices will tumble. Some correction is inevitable, but the real question is whether enough buyers will be positioned to halt a potential price freefall once the correction begins.
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