Why Sales Are Down But Prices Are Steady

The real estate bubble has not deflated, as some predicted, after the B.C. government applied the 15-percent tax on foreign buyers in Metro Vancouver. The number of sales may be down, but prices are stuck at an all-time high with condo values actually increasing. It seems that buyers are in a wait-and-see mode, and according to a recent study, Metro Vancouver is the third hottest market in the English-speaking world. The real estate market has become such a contentious issue for the provincial government as businesses and owners find them squeezed by rising property taxes and land is becoming increasingly scarce.

A year ago, developers and municipal leaders clamoured for senior levels of government to spearhead planning measures to free up land for development to help supply the increasing demand for homes. The province responded by putting an extra $1 million towards strengthening the Agricultural Land Commission and by moving to reduce the effect of foreign buyers on home prices. It is debatable if either strategy is working.

With the lack of homes, potential owners are increasingly looking at presales almost in desperation as nothing else is available. These presale homes, which sometimes aren’t completed for years, force home buyers to make different life choices than they would otherwise, such as renting for longer and carrying extra debt they wouldn’t normally have considered.  With real estate housing prices increasing, it’s becoming even more difficult to get into the market, but not impossible. Today, if you are patient and knowledgable, you can probably get a great deal on a home because it’s been on the market longer than usual.

When the Liberal government imposing the 15 percent tax on foreign buyers in reaction to disgruntled Vancouverites, 90 percent approved of the tax. Now, however, with the tax in full effect, people aren’t so sure about it. The government has made some changes, relaxing the tax and possibly removing it all together. Whatever happens, the tax represented a shift in policy for Christy Clark who, until recently, had been actively wooing foreign investors.

Although housing prices seems to be all anybody talks about in Vancouver, the real estate boom isn’t something new. In fact Vancouver has been a hot market since the 70s. Vancouverites have seen a steady increase in population and prices for the last 40 years—but it also means a steady return of investment. Even the stunning rebound in sales that followed the 2008 financial crisis showed how resilient Vancouver is in the face of global uncertainty.  Whether the 15 foreign buyers tax is here to stay or go, one thing is certain: the Vancouver Real Estate market is a solid investment.

At Chris Lotoski Personal Real Estate Corp, we ensure all your questions and concerns are answered. Give us a call at 604-805-1804