Is Vancouver's housing bubble about to burst?
Published Monday, September 26, 2011 4:18PM PDT
Veena Kalia and Miro Nikolov have been riding the real estate rollercoaster for months now, wondering if it's the right time to buy.
Like many British Columbians, the couple is wondering whether Vancouver's housing bubble is about to burst – and whether there will be a market correction.
"You're not sure if it's going to continue to go down, and whether now's a good time to jump in and do it or whether we should wait and watch the market a little bit more because we're not sure if it's on it's way down, or whether it's stabilizing," said Kalia.
Astronomical real estate prices combined with global instability have many wondering if the bubble is about to burst in Metro Vancouver.
"I guess the first question is -- is there a real estate bubble at all?" said Cameron Muir, Chief Economist of the B.C. Real Estate Association.
Muir says the average home price is being skewed, inflated by skyrocketing prices for detached homes in Richmond, West Vancouver and the West Side where prices have soared, nearly 80 per cent over five years -- 27 per cent in the past year alone.
By comparison, the average home in Greater Vancouver has gone up just five per cent this year. Overall, Vancouver real estate is weathering the global economic storms.
"We had a financial crisis, the largest we've seen since the great depression, we had an ensuing global recession, and if that isn't a trigger or a tipping point for any kind of over-inflated market to see a major correction, I don't know what is," said Muir.
Realtor Donna Leyland says high prices are forcing new buyers to be more flexible when it comes to location and more couples are choosing to raise their kids in condos.
"Now when you go to Yaletown there are all kinds of young families, and I think that's the wave of the future. I think that's where families are going to be living, not just in Yaletown, but raising children in condos as they do in New York and Europe and Asia, all around the world," said Leyland.
Kids aren't an issue for Nikolov and Kalia. Price is a factor, but their primary goal is to find a home for the long term.
"We're not investors. We'd like to live here, and we're looking for a place we'd like to stay, so I guess we're a little more immune to any corrections. It's more of a long-term investment for us," said Nikolov.
If you're sitting on the fence about buying another factor to consider is interest rates. They're expected to stay low in Canada for at least another year. And when it comes to new home sales, financial officials predict potential buyers will delay purchasing until 2013, when the HST is removed.
With a report from CTV British Columbia's Lynda Steele