A gathering of over 1,100 politicians, business leaders and professionals in the real estate trade gathered in British Columbia this past Thursday for the Urban Development Institute panel. The consensus reached at the gathering was that Vancouver will not see a real estate bubble as long as certain factors continue to keep the status quo. One is that interest rates stay at their current low levels, the other is the economy in the European Union avoids a total melt down.
Attendee Colin Bosa, who is the CEO of his Bosa Properties, noted that as long as British Columbia keeps attracting residents the real estate market in the province will be stable. Bosa noted that property demands today are similar to those seen in 2009. He did note that in 2012 the immigration numbers decreased and that currently two programs that attract immigrants are currently under review. The skilled worker and investor programs could keep those immigrant numbers up if they are still approved at the end of that review.
The Sales Are Out There
As far as the housing supply, 2012 did see more units start than in 2009, but not more than seen in a typical 15-year average. Bosa told the real estate agents in attendance that they should be selling lots of properties this year, but it would take more work than in more recent times. Those properties located near transit systems will most likely do the best.
Two areas with plenty of properties on the market are Coquitlam Centre and Southeast False Creek and may require more work for sales. Prices in these areas might also decrease. But condominium development may also have to slow down a bit in the Metro Vancouver area.
Bosa also believes that China will keep investing money in British Columbia because they like the area and they want to raise their children here. The lure of universal health care, excellent schools and safety continues to draw immigrants. The huge Asian population already here also makes those from China feel welcome. The only things that could curb the immigration from China would be a change in Canada’s immigration laws and/or a recession.
Eric Carlson representing Anthem Properties noted that British Columbia and Canada in general were spared during the last recession that began in 2009 and lasted well into 2011. Though the low interest rates here were not as necessary as in other parts of the world, their implementation stimulated the local housing markets. The hot real estate market lasted until 2012 when sales started to slow and prices to decrease.
Carlson expects that 2013 will be a strong real estate year in British Columbia, thanks to strong ties with China and the United States. Both countries are experiencing economic recovery. Carlson expects an increase in immigration, more jobs being created and a more positive outlook about the economy in general.
He expects the unemployment rate in the United States to hit 6.5 percent, while at the same time the gross domestic product in that country will be nearing three percent, both by the end of this year. That means more money to invest in real estate. Carlson notes that the real estate bubble does not exist.
As far as office space, that sector is expected to remain stable throughout 2013. A lack of new development means less availability, which keeps rental rates stable until probably 2016. While Vancouver’s rental market is healthy, New Westminster and Burnaby might have an oversupply of inventory.
Challenges facing British Columbia include the number of people retiring, as well as workers heading to Edmonton and to points farther north to take higher paying jobs. Both of these trends could eventually affect the real estate market, both in the residential and commercial sectors.