Summer Sun makes Vancouver Real Estate Prices Bloom
It’s not just the gardeners of Vancouver that are reaping the benefit of summer weather. As the days start to get shorter and autumn begins to bite it is time to bring in the harvest. Homeowners and real estate investors can also harvest their own gains with a massive leap in the value of their investments of 52 percent in the past month alone.
Data from the Multiple Listing Service shows the volume of properties in vancouver real estate has also seen a significant uptick during the past month. There was a year on year jump of 825 additional sales when comparing the same period of August last year. Four consecutive months of growth have now been recorded; this goes a long way to indicate that the previous 19-month dip is over.
Fears of a spectacular crash as witnessed in other worldwide metropolitan areas are been assuaged and doomsayers have almost gone silent. Of course mending the impact of a prolonged downturn is not something that can be achieved overnight and Vancouver real estate prices are a factor of many forces. Academic experts such as professor Tsur Somerville, University of British Columbia’s Sauder School of Business, do not foresee a return to the boom and bust cycle of previous times. He does not expect “raging growth” and warns of future increases in mortgage interest rates.
Smart investors are taking advantage of these predicted rises in interest by fixing vancouver mortgage broker rates now while value is still available in the market. Greater Vancouver real estate prices are some of the most expensive in Canada. They also act as a windsock when it comes to predicting future trends. As a leading indicator it is helpful to study them as guide to any forthcoming market direction changes.
Sales volume over a 10-year period is still below average leading some commenters to point out that value is untapped in the market. Brave investors may wish to release this value by making a move before a rush starts. However Professor Tsur cautions, “trying to time the market is really hard”. Another expert commentator is Sandra Wyant, president of the Real Estate Board of Greater Vancouver. Wyant went on record to state that any increased sales volume may not directly translate into an increase in home prices.
Naturally market prices are a factor of both past data (recorded sale prices) and also market perception (the anticipation of future market movements). Experts are wary of hyping the market given that economic events during the past 3 years are fresh in the memory of many. Market confidence took a huge knock and as the adage goes “once bitten, twice shy”.
Within the market the strongest sales growth was recorded by detached properties in vancouver. The average property in this category was priced at $923,000 and the year on year sales volume up by 69 percent. Although posting a lower rise the figures for apartments were still impressive at a 40 percent increase and a price of $366,100. Data is again taken from the MLS home index system.
Vancouver is certainly a desirable location to buy property and now holds the dubious honor of recording the most expensive apartment sale in Canada. In these austere times many will balk at the $39 million asking price for oceanfront property in the Fairmont Pacific Rim hotel. Luckily the extremes of the home market do not reflect the reality for the majority of purchasers. Despite this record breaking sale asset management expert Stephen Groff, Cambridge Global Asset Management, says he is “not bullish” on Vancouver nor the Canadian market in general. Behind the current sales run are foreign investors who are not subject to local economic conditions and also foresighted Canadians seeking to benefit before a potential interest rate hike.
The Finance minister, Jim Flaherty, responded to questions on house prices by saying the market behavior was as expected and he was “comfortable”. He also promised that the government saw no need to intervene in the housing market and that natural economic forces will be sufficient control.
Forecasts by Bloomberg suggest that despite slowing economic growth driven by exports the Canadian market can expect to post 2.3 percent overall economic growth in 2014. However unemployment rates are likely to remain steady at around 7 percent. We are not out of the storm yet.
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