There were two main factors influencing things in the real estate market throughout 2017.
First, with our economy booming, population growing, continued low interest rates, and limited building opportunities, the supply-and-demand ratio has been forced a bit out of whack. Steady demand with limited supply always leads to price rises. Two years ago detached houses close to downtown saw huge increases in value. This past year – with detached houses already priced out of the market for many buyers – that demand switched to condos and more affordable houses in the suburbs, pushing those prices up.
Reinforcing the supply side shortage, there were far fewer homes listed for sale in 2017 than is usual and an extremely low number of new-and-unsold condos ready.
Second, because we are one of the world’s most desirable places (and with convenient travel to Asia), the Vancouver area attracted a lot of very wealthy offshore buyers. Although only 4.8% of the region’s homes are owned by declared non-residents that is enough to distort market pricing and demand at the high end, which has had a ripple effect all the way down the market.
Later on this month I’ll look at these two factors in detail. Sign up for my newsletter to get this information before it’s published to Market Trends.
The Market Ahead …
This is a difficult real estate market to predict. Most experts see a continued rise in prices in 2018, although perhaps slower than we’ve seen in recent years.
BCREA thinks 4 to 6%; CREA predicts flat pricing in BC; CMHC says “modest” price increase in line with inflation.
If you’d like to make your own prediction, here are some of the factors that will affect our local residential real estate market in 2018:
- Tighter mortgage rules effective Jan 1.
- Continued demand, both offshore and local; steady population growth
- Buoyant economy (but with some unknowns: softwood lumber, NAFTA)
- Limited supply of existing home resale listings; but a record number (40,000) of units under construction
- Rising mortgage rates expected
- Some sort of government intervention expected to address “affordability”
Whether buying or selling a home in 2018 – call me first for the best advice.
