“Ward McAllister, president of Ledingham McAllister Properties, and fellow panelists Eugene Klein, president-elect of the Real Estate Board of Greater Vancouver, and real estate consultant Richard Wozny, of Site Economics Ltd. were at the board of trade to debate whether or not Vancouver real estate is in the midst of a bubble. They all agreed it is not. …
“Buyers, especially the under-25 mark, are sitting on the sidelines,” said Klein. …
The HST effect was the only real damper on Metro Vancouver real estate, which the three panelists and moderator David Podmore, CEO of Concert Properties Ltd., all said (was) not a bubble. Podmore wore a button to the conference with the slash symbol for “no” imprinted over the word bubble.
“I am very optimistic about where we are heading,” he said, noting that his company largely pulled out of Metro Vancouver Real Estate in 2007, but went back in 2009.
He cited two reasons for the region’s strong real estate market: immigration and the fact that real estate is being viewed as a hedge against the uncertainty that has hit global finance.
Klein said international interest in Vancouver is attracting foreign buyers. He said buyers are coming here to live, with only three per cent characterized as foreign investors. He said supply is now out-stripping demand, but it has no affected prices. Prices have increases dramatically in some area over the last 12 months; in Richmond by $200,000, in West Vancouver by $275,000 and Vancouver’s West Side by $400,000.
“Demand for high-end properties have helped drive our demand for most of the year,” he said.
Wozny said Metro Vancouver’s real estate prices are “very high by any measure.”
“It must be something political or social because it certainly has nothing to do with economics.” he said.
He forecast low interest rates for the foreseeable future, which will translate into continuing sales.
“There is no bubble in Vancouver,” he said.
McAllister had advice for prospective homeowners in their 20s who are questioning whether they should wait for prices to come down. Don’t wait, he said; borrow from mom and dad.
And he warned against selling hoping to get back into the market later.
“Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life.”
– from ‘New housing sales stall over transition out of HST’, Gordon Hamilton, Vancouver Sun, 21 Oct 2011
[hat-tip Patiently Waiting at vancouvercondo.info]
Well now, ain’t that.. cosy?
Quite the ‘debate’.
Metaphors almost fail us… kinda like getting Palmer, Nicholas, Woods and Player to debate the subject “Golf, the Best Game?”; or four vultures to debate the merits of carrion.
1. Interesting terminology, “the under-25 ‘mark’ “. (Ever seen ‘The Sting’?)
2. They are seeking buyers at the margins: persuading those in their 20’s to borrow downpayments.
3. Their analysis is arguably even more nebulous than the usual “limitless demand” position: Even though prices are very high and not supported by “economics”, low interest rates and “something political or social” will “translate into continuing sales”. “Immigration and the fact that real estate is being viewed as a hedge against the uncertainty that has hit global finance” will continue to buoy the market. This really is little more than wishful thinking. Consider what may happen to this market if just a 15% drop in prices (and a 10% drop in the loonie) lead investors to question its “safe haven” status.
4. “Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life.” – Classic bubble quote. Whenever people start expressing opinions that markets will never change, take note.
5. With reference to our discussion earlier regarding the media and the RE industry, witness the Sun running this as ‘news’.