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Vancouver’s Condo Market is Booming
The condo market in Vancouver is a very hot topic at the moment, and for good reason: high demand. Buyers are clamoring for condos in Vancouver’s hot neighborhoods and this enthusiasm for new construction has been soaring throughout the last decade—especially in the last year.
We can thank a strong economy and Canada’s increasing population of people looking to live in the middle of the action. Another large factor is sheer overall population growth in Canada as a nation. Statistics Canada estimates the country’s population has grown at an annual pace of more than 1.3% over the past year, which suggests a quicker pace of population growth than any time since the early 1990s.
Canada’s real estate developers have taken note of this and have built the most homes in more than a decade. Couple this growing population with increased demand, and you’ve got a recipe for a thriving real estate market because developers are hard-pressed to meet the demand. This housing boom has surprised many analysts who were predicting that the real estate industry might pull the economy down during 2017. That didn’t happen. In fact, both builders and buyers are seemingly more motivated than ever to get in on the action. Canada’s job market has been strong (employers created more than 400,000 jobs in 2017) and that’s kept the economy performing better than most expected.
Total housing construction in Vancouver increased in December 2017 compared to November, and December posted one of the highest levels of monthly multi-family starts for the entire year. Popular belief maintains that condo starts were elevated in Vancouver because of low inventories in the marketplace which continues to encourage developers to build new condo units to increase available inventory. You can find much more information from the Canada Mortgage and Housing Corp (CMHC) which keeps records from as far back as 1955.
Vancouver is one of Canada’s two most expensive markets (Toronto is the other), and when taking into consideration the limited land there is in Vancouver on which to build, demand only increases. High demand and low inventory will always increase prices, and the latest data (January 2018) from the Canadian Real Estate Association indicates that national home prices are up 9.3% over the past year.
How long this boom might last is anybody’s guess, but everyone is watching closing. Since lenders are planning to tighten their purse strings in 2018 with stricter mortgage qualifications for borrowers, the market could react. Most telling, however, may be how the market responds this year since the Bank of Canada has just increased its interest rates again—to the highest rate in almost a decade. Whether this scares buyers off or limits what developers are willing to take on has yet to be seen, but you can be sure everyone will be paying close to attention.
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