Quote:
Originally Posted by lowside67
(Post 8051660)
I wish I had a crystal ball... there are so many relevant factors at play.
On the one hand, there are so many units going up that it seems hard to believe that there is the demand to absorb them all. Yet on the other hand, sales for most developments have been brisk, and some such as Wall Centre and a few of the Pinnacle buildings have 100% sold out. At this point there definitely is some stagnating, most of the buildings such as Opsal, Meccanica, etc are around 50% sold after some time on the market. Opsal, for example, is the only high rise in the area, but it has been for sale for 3 YEARS! They actually shut down the sales center and re-opened after re-branding the project... to give you an idea of what a fail it was.
On the flip side, prices for new construction in the area have appreciated about 15% over 2010 levels... there are about 2 dozen assignments for sale at the Wall Center which is underway now and will be complete in early 2013, about a year ahead of most of the other projects. Many of these assignments are as much as 20% over the price of the original sale and are still competitive with the market. If you were there early in the presale for Wall, you could have bought a 16th floor penthouse unit 950sqft 2BR with a huge wrap-around terrace for around $600k - they sold several of them. Now, that same unit is $729k. On the flip side, you'd still have to pay north of $800k in the actual Olympic Village and few other buildings in the SEFC area will be as well well located as Wall is.
Personally, I've decided that speculating 2 years out is more risk than I am willing to accept at this point. I am looking at assignments as they come up in Wall as the time frame is much shorter - the interest rates are a real factor in this decision too. I can qualify for 2.9% fixed on 5 years and they will honour this rate for 6 months from my approval date, but if I want an 18 month spot on a 5-year fixed rate, it's at 4.5%! This, combined with the taxes to be paid, make it a much less attractive bet for me.
Mark
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Thanks for the input and all the facts.
In my opinion it all comes down to the buyers and sellers.
The seller's point of view is that the only way the Vancouver Real Estate Market goes is up. Their expectation is to buy at the lower presale price, hold as an investment and sell at a higher price sometime later. The majority of seller's feels this way given how the Vancouver RE market has been the last 7-8 years (no where to go but up). It's innate and built in to them.
The buyers are the ones that have either missed out the time to buy cheap or at this point of stage are in need of a home (whether they were recently renting or moved into Vancouver). Yes, the prices is high but let's not forget all the cheap money available. What I mean is interest rate is at a historical low at 3-4%. In 1980's interest rate hoovered at around 12-20% (try to pay this off!!!!! - truly predatory
With that said we are at at point of inflection between sellers and buyers and it's a matter of time when one side gives way and then we'll see the outcome of the overall RE market
Few factors to consider:
1. Income - Its a true fact that the typical Income in Vancouver does not support the levels of the price/income ratio. Yes the more expensive properties are purchased by overseas investors but lets not forget that whoever sold was able to profit and move-on. It's a cycle that gets rinsed and repeated
2. Mortgage Rules and Interest Rate - Let's face it, money was very cheap to borrow the last 7-10 years (which imo resulted in the hot RE market). However the rules have changed with shorter amortization periods and it's a matter of time if and when the interest rate will increase.
3. Debt levels - Sorry but us Canadians have it hard. Way to much consumer and personal debt. This has a big affect for the people who are carrying a huge mortgage (few points increase) and you're left to figure out how you're gonna pay for it.
My outlook:
1. Stagnate if all things stay the same for the next 2-3 years.
2. - 10% across the board if Mortgage rules further tighten and slight increase of interest rate
3. Up to - 25% decrease if Canadian Housing market implodes ala the US Housing Market ala 2007/2008. It will take a lot for that to happen as the CMHC and other mortgage insurers would have to default. Then the Banks would also cry for money.
