In the last year, Vancouver housing prices have jumped sharply, up 25.7%. The average home price is now C $831,555 (U.S. $856,501) and real estate is red hot there, seemingly a no lose proposition. So if you have the money, would you be wise to invest it in Vancouver housing?
Being a 35 year real estate investor and having just returned from Vancouver on June 28th, if your intent is to get a great return on your investment, the answer is no. While prices may keep rising in the short term, these prices are unsustainable because the average person can't afford them and is being priced out of the market, a market being driven by emotion and plentiful cheap money.
If you are going to live in Vancouver and need housing, please consult with a local real estate professional but my advice would be to rent as you get to know the area well and to allow prices to hit the ceiling and come down. You will make a much better buy. But if you want to buy now, then please plan to stay in your new home for an extended time period to avoid taking a resale loss.
To avoid a real estate bust as happened in the U.S., the Canadian government could tighten credit standards and raise interest rates. And local lenders should be leery of transactions that don't have credit worthy borrowers and a big down payment, preferably in excess of 20%.
With low interest rates common among industrialized nations, individuals, banks and mutual and money market funds are actively looking for higher rates of return and Vancouver, a beautiful city with an excellent business community can be very tempting. But please be careful and do your homework. You will be glad you did.
Dick
To learn more, please see "Canada's Housing - Boom War," The Wall Street Journal, 6/25 - 6/26/11 http://online.wsj.com/article/SB10001424052702304231204576406000393198650.html
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