RE/MAX Select Properties

While none of us can truly predict the future, except that octopus in Germany that predicted the World Cup winners consistantly, there are certain indicators that we can look to in making forecasts for the real estate market.

 

Vancouver is in the unique position in Canada of having a limited supply of land available for development, while at the same time having an ever growing demand from international, and interprovincial immigration.

 

Post-Olympics Vancouver has seen an embarassment of riches in the tourism industry. June and July are showing that the high end hotels in Greater Vancouver are at phenominal occupancy rates. These types of high end hotels provide the city with high end tourists, many of which are willing and able to own secondary homes internationally. The exposure to all that the Vancouver life-style has to offer is a great advertising vehicle to this market. This same prospective buying group is also being enticed into the city via the new convention centre, which is bringing in industry groups from around the world for professional gatherings.

 

Household growth in Vancouver is predicted to be 32 thousand per year while housing starts lag behind at an estimated 14 - 16 thousand per year. This scarcity of demand will continue to drive the Vancouver market. There has been a market adjustment recently, but this only slows down the upward price pressure and doesn't remove it. Vancouver is not in a bubble. The price growth will still be a healthy 8 to 9 % year to year increase.

 

The cost of construction in Vancouver is higher than in other Canadian markets. This is due partly to the demands of the terrain in the Greater Vancouver area. Issues related to earthquake proofing the buildings, soil density, bedrock, and elevation all play a part in making construction in Vancouver a costly venture. Added to the mix is the hard cost of land in Vancouver. Between the physical limitations, there are also economic restrictions and political restrictions that limit the supply of usable land for development.

 

The city of Surrey is poised to become the largest city in the Greater Vancouver area within the decade. Richmond, and the Tri-Cities are also growing quickly as mass transportation in and out of Vancouver improves.

 

The biggest challenge, and one of the most important moving forward, is the supply of affordable rental units in Greater Vancouver. The influence of foreign investors is very important in the development of a sustainable rental property supply. It is estimated that 32% of Vancouver residents are renters, and that number will increase as the need to replace the Baby Boomer workers builds over the next decade.

 

What all of this means to the real estate market is that the Vancouver area has all of the fundamentals to continue to grow over the foreseeable future. Certainly there will be bumps in the trajectory, but the lack of supply, coupled with the growing demand will continue to push prices and development.

I have come to the conclusion that people just like the words, Twitter, and Tweet. Even those who have no idea about the social media revolution taking place know about Twitter. The name recognition aside, this cute little bird is actually leading the pack in the power of third party endorsements as the new way to navigate through choices and options.

 

Let's face it, if you want to hire a plumber you can look through the yellow pages and pick out the one that has the best ad, or you can google to find the best website. The third option is to ask your social media network group about their experiences in finding a good plumber. Which has the most power? For most people the endorsment from a third party will carry the greatest weight in making a choice like finding a good plumber, or finding a great real estate agent in a given neighbourhood.

 

Some pundants are annoucing the death of the search engine and the corporate website in their enthusiasm to embrace the power of social media like facebook and twitter. While it is a bit like those who predicted  the death of radio when TV came in, there is no disputing that the internet landscape has forever changed with the growing interactivity available via social media tools.

 

Within the real estate industry the changes are coming fast and furious. Today it is necessary for an agent to be well versed enough in social media to have a facebook page and a youtube account to keep in contact with their clients and contacts. Many are engaged in blogging, sharing photos, and posting tweets in an effort to remain visible and available for their clients,  Our website allows links to the agents individual websites, as well as links to twitter, linkedin, and facebook.

 

Passive use of the internet is becoming passionate use of the internet. This trend will help the cream rise to the top as people search out advise, experience, and opinions from their third party network friends.

 

 

I recently watched an interesting visualization of the median house price index for Greater Vancouver over the last 40 years. The animation places the viewer in the seat of a roller coaster as it climbs and drops relative to the housing market. Apart from being very entertaining to watch, it also clearly demonstrates how quickly the environment can change in the Greater Vancouver housing market.

 

Following market trends is only accurate in the past tense. One cannot truly understand the direction the market will take until the change is in motion. Presently in Vancouver there seems to be a shift occurring. Reviewing the MLS statistics, and the RE/MAX numbers it appears that the listing inventory is rising faster than the housing demand. Listings are up, but sales seem to be slowing down. This is happening despite the fact that the charter banks have warned that they will be raising their interest rates by summer.

 

The fear that house prices have risen beyond what the market will bear may be slowing down the buying frenzy of the last few years. The price of a condo in Vancouver is reaching the unaffordability level for the average citizen. The price of properties in this wonderful city have reached a level more than ten times the average wage of a Vancouverite. Those who caught the roller coaster at the bottom of the climb have done very well over the last 7 years in this market.

 

Once the HST effect has flowed through the local economy, the question of affordability will come into a clearer focus. Vancouver has always been higher priced than its neigbouring provinces because of it's desirability as a location. The recent olympics have proven to be a magnet for some international tech companies as well as those well-heeled enough to own properties internationally.

 

The desire to own property on Canada's west coast might be slamming against the reality that those without a seat on the roller coaster could be in for a long wait to buy a ticket.

Albert Einstein died in 1955, having seen his concepts create a new world of understanding during his life. His passing was at a time when the cold war between the Soviets and the Americans was at a point of escalating. Much of the worry of that year, and the decades that followed were with the growing number of nuclear weapons that both super powers were amassing. The creation of the weapon that could effectively wipe out much of life on our planet was due in part to the theories that Einstein had developed.

 

Albert Einstein was not only a radical thinker, but he also was an amazingly creative communicator. Although his ideas are beyond the understanding of most of us, he was able to demonstrate his ideas using common speak. His description of the speed of light was done by referencing a moving train, while his explanation of gravity and time was done by the mental picture of an elevator.

 

The context of communication is so very critical. When looking at something as simple as market trend data in Vancouver, the numbers can be skewed to reflect the researcher's bias, or to amplify opposing opinions. Our age is quickly moving forward in the means that we communicate ideas and opinions. Today Twitter is evolving weekly to address the quick fix communication needs of social media. To some the world view has transformed into a series of games...spurred on by a generation that has grown up with video games and virtual reality. Looking for a home in Kerrisdale becomes an extention of gaming and social media in method and mindset.

 

The language of the landscape is changing, and as Einstein once said, "We can't solve problems by using the same thinking we used when we created them".  The notion of communicating value and service is becoming increasingly difficult in a culture and marketplace where information can be accessed quickly and effectively. The answer to meeting the communication demands in the real estate marketplace is not to continue to use the same thinking of even two years ago. REALTORS(r) must find new ways to communicate service and value to the new consumer.

 

The context of the information is important, and although information is freely and readily available, it must be interpreted properly and effectively in order to best serve the constituents. As Albert observed, "Sometimes one pays the most for the things one gets for nothing."

 

The hidden costs are often greater than the sticker price. This is why having effective communication is so critical. Understanding the information is more important than having access to the information,

 

Nothing reflects the need to communicate properly in the right context than Albert Einstein's last words. Before he passed away, he felt the need to share some final thoughts. The only person in the room was the attending nurse. She heard the final words of the greatest thinker in history. Unfortunately, he spoke them in German, a language the nurse did not understand.

For some inexplicable reason, the Competition Bureau has been on a witch hunt against the Canadian Real Estate Association for some time now. It may be that someone thought that this highly effective and progressive industry was an easy target. Certainly with the right spin, and with the media on side, it is easy to create an unsympathetic picture based on old charicatures of REALTORS(r).

 

 It is unfortunate that they are attacking one of the truest free market sectors in the Canadian economy. The Real Estate Industry is one of the most competitive industries in North America. Each Brokerage competes aggressively with it's rivals because remuneration is based on performance. Even within an office, the agents compete against each other for Listings and Buyers. Despite this,  the Competition Bureau is smearing CREA and it's almost 100,000 members. The media has been allowed to create untrue pictures of what the issues are surrounding the Competition Bureau's concerns.

 

Meanwhile, the Bureau does not acknowledge the important changes that CREA has made to address those concerns. Changes that the Bureau itself had recommended.

 

To demonstrate what is really happening click here to read some recent correspondance between CREA and the Competition Bureau...

 

 

The Canadian Real estate Association (CREA)  posted recent statistics showing the change between January and February of this year. A total of 42,799 homes were traded last month, down 1.5% from January, as a gains in Toronto were offset by a decline in units sold in Vancouver.

 

The Winter Olympics were cited as a possible factor in lower sales in the province last month. Unit sales were down 13.3 %. Compared to Ontario's growth of 3.3% during the same period.

 

Continuing low interest rates could further prompt home resales this spring ahead of new mortgage rules set to take effect in April. The introduction of the harmonized sales tax will also add to the buying mood of the consumer this spring, as buyers seek to purchase before the tax change takes effect.

 

The average Canadian house price in February rose by 18.2 % from last year.

 

Currently the most affordable Canadian city for housing is Thunder Bay, Ontario with a February average house price of $142,280, up 23.6 % from a year ago.

 

The most unaffordable Canadian city for housing continues to be Vancouver, BC with a February average house price of $658,984. That is also an increase in price from a year ago of 22.4%

 

Most experts agree that the Canadian housing market will be moving to a more balanced market in the fall, while the spring will continue to heat up to answer demand.

The indications all point to a very active market for this fall in Vancouver. Following the excitement and energy of a successful hosting of the 2010 Olympic games, Vancouver is poised to experience a gold medal spring in terms of the real estate market in the lower mainland.

 

Several factors point to continued growth in development, sales activity, and price. Firstly, the market fundamental of supply and demand has never been stronger on the demand side. Vancouver is desirable as a world class city with it's amazing urban amenities. The city is in a natural setting that is second to none in the world. It is nestled between mountains and sea. The incredible landscape also provides for a mild temperature, something unusual for a Canadian city. The forests are lush, with moss and ferns under the canopy of giant spruce and cedar trees. Vancouver is a mountain metropolis surrounded by a rainforest. Following the exposure the area received during the games, inquiries from around the globe have increased, signalling continued demand for Vancouver real estate.

 

The price of land will continue to climb as long as there is more demand than available supply. Despite the fact that Vancouver is already categorized as "severely unaffordable" in comparision studies between average wage and average house price, the allure of living in this amazing city continues to drive the market.

 

In order to continue to keep up with the demand, developers seek out new locations for high density housing. Projects are fanning further and further away from the core of Greater Vancouver, ahead of mass transit infrastructure projects. This activity on the development side brings employment and opportunity, which continues to feed the demand for housing.

 

Sales activity remains strong as baby boomers seek to use the sale of their homes to leverage their retirement plans. Many long time Vancouverites are benefiting from the surge in prices and demand for property in Great Vancouver. This demand has created many new millionaires, who can now consider selling and retiring by downsizing and cashing in on their new found equity.

 

 

There has been a lot of speculation regarding what impact the Olympics will have on the Greater Vancouver real estate market. Opinions vary regarding the effects during, and post-games, but we are now witnessing what is unfolding 2 weeks prior to the event.

 

All indications thus far are that the has been no negative impact on the current market. Information that our associates in our Arbutus St office are communicating is a strong and sturdy market thus far this year. Numbers appear to be up, and we are hearing tales of multiple offers, and robust numbers of Buyers actively looking for properties.

 

The general consensus seems to be that we should expect a slow down in market activity during the games. There will be problematic issues with accessing certain routes, managing showings, and dealing with the distraction of large numbers of visitors and activities in the area during the Olympics. Adjustments need to be made and managed to facilitate the daunting task of entertaining the world.

 

Vancouver west side REALTORS(r) will most likely enjoy a surge of activity once the Olympics are over. There will be an increase in the pent-up demand that already exists in the market. Other factors that will impact on the post-games market include new interest from the global real estate investor; and the rush to enter the real estate market prior to the introduction of the Harmonized Sales Tax in July of 2010.