Vancouver Real Estate Sales Drop in January 2013 Show a Continuing Trend
(Newswire.net -- February 13, 2013) Vancouver, BC -- Real estate is usually the least volatile investment type available. However, recent shifts in the real estate markets in Vancouver have caused some eyebrows to rise in surprise that it happened, and others to rise in surprise that it didn't happen sooner. A burgeoning surge in property values over the past decade has weakened, and prices are falling.
We recently spoke to some economic experts, financial planners, and real estate brokers about the phenomenon being experienced in Vancouver.
What has caused the fall in real estate prices that we have seen over the past 8 months?
"The basic law of gravity applies to financial markets as well. Whatever goes up will eventually come back down, and this is what is happening in Vancouver. This is also known as a market correction and it has been expected for some time now."
You can see a good price point drop in Vancouver East Houses (a second tier of Vancouver, but still with higher prices than anywhere else in the Country) here: http://www.realestatevancouver2010.com/homes/vancouver-east-homes/
"Stricter rules on banks and other lending institutions isn't helping the situation either. Mortgage loans can no longer be extended beyond 25 years, and the government now only allows mortgage loan insurance on homes with a value of $1 million or less. When the mortgage boundaries get tighter, the ability to buy and sell is hampered."
Do you think that prices have bottomed out yet?
"I think we could still see another drop of around 5% before things turn around. It's just a wait and see game because so many variables are at play. Buyers seem to be waiting to see if prices will drop further, but sellers are holding out for prices to come back up. This has resulted in market stagnation while the global economic situation is still vicarious."
The interesting thing is that homes on the Westside of Vancouver are dropping further in price as they were someone affected further due to Asian speculatory investment. You can see just how different the prices are here: http://www.realestatevancouver2010.com/homes/vancouver-west-homes/
"People who would have purchased pricey homes in Vancouver before are now choosing condos, and apartment rentals. They are willing to gamble on prices dropping further."
When do you think we will see prices come back up?
"That's a very hard question to answer. The yield curve on projected interest trends is very flat, so no increase is anticipated in the near future. Interest rate trends has always been a good benchmark in forecasting market activity in the past, but that may not be true anymore because markets are behaving strangely. In the United States, the Dow broke a record by going past 14,000, yet jobless rates are still high. There is just nothing to substantiate the optimism that governments are trying to sell. When we start seeing real recovery in places such as the United States and Europe, then Canada will tend to ride along in the recovery."
"I think the old rule of supply and demand will dictate when real estate prices rise again. There just isn't the demand for the extremely pricey real estate for which Vancouver has been famous. People have other options and are willing to wait it out."
"I think the real estate markets in Vancouver have been extremely overpriced for a long time. They may not ever go back to the rates they were before. In fact, I hope they don't. It's too hard on the overall economic system."
Whether these experts have an accurate grip on the situation is yet to be seen. For the time being, all that remains to be done is to wait and see what happens.
This article was written with collaboration with Richard Morrison of Remax City Realty.
Richard Morrison Real Estate Team
208 - 789 Drake Street, Vancouver, BC, V6Z 2N7
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.