CMHC and Road to 2010.
In the past two weeks I have attended two key events in the Vancouver area that have shed considerable light on the likely future of real estate prices in the Lower Mainland over the next year and beyond.
The Canadian Mortgage and Housing Corporation (CMHC) gave its annual outlook for the real estate market ( and yesterday was the Board of Trade's "Road to 2010 - BC's Economic Outlook in the lead-up to the 2010 Olympic games" featuring an economist/senior VP for Royal Bank (RBC).
It has been difficult to answer the questions about a possible "real estate bubble"...now I have the ammunition to put that myth to bed. The first event clearly demonstrated that all sectors of the economy are doing well. Ironically the real estate sector is NOT the strongest by any means. This translates to a forecast of a 10% PRICE INCREASE for the Lower Mainland in 2008.
Even though it is less than these past few years, it still means that if you purchase a property for $500,000, you will see appreciation of more than many people's annual salaries!
Further if you buy with 10% down, then you are seeing a 100% return on the investment in one year (providing you don't "cash out" right away).
The 2nd event speaker, Mr. Craig Wright sees us nearing the end of the big upward movement in real estate prices (after 2008) but he did not forecast any decline in prices down the road.
The largest difficulty he foresaw was the lack of affordability (even though there is so little for sale) due to the run-up in prices over the last number of years. I believe that "getting a good deal" and having a rental suite for income are among the ways that we can still get much of what we want in the real estate market.
He was emphatic and quite full of statistics to back his contention that the current "sub-prime" crisis while regrettable, will continue to be a regional U.S. phenomenon primarily hitting Florida, California and Arizona where the most speculative activity occurred. He also sees the U.S. market picking up again in about 1.5 to 2 years.
He indicated that the Canadian dollar has probably "topped out" and probably has a value closer to 92.5 cents American which should arrive by the end of next year.*
As always if you have any questions about this information, please do not hesitate to call me or send me an email.
Best wishes,
Peter
*If you want U.S. vacation property, save your pennies this year and I can arrange for a U.S. realtor to start sending you pretty pictures now in advance of your trip next year!