Vancouver Real Estate prices to drop in 2013
VANCOUVER — Vancouver's house prices could fall a further five per cent before 2013 is over, a panel of real estate experts said Tuesday.
The BMO panel, led by Sal Guatieri, senior economist, BMO Capital Markets, said tougher mortgage rules and the suspension of the federal immigrant investor program could be factors in the slowdown in Vancouver.
"Nowhere is the housing market weaker than in British Columbia, where resales are down 17 per cent year to November and are well below the past decade norm," Guatieri said. "Vancouver's resales have plunged 31 per cent in the year to December and benchmark prices are down just over three per cent since the spring."
He said the mortgage changes, limiting the life of a mortgage to 25 years from 30 and prohibiting mortgage insurance on homes more expensive than $1 million, will hit pricier markets the hardest. With housing prices estimated at 10-times family incomes, Guatieri said, "that puts Vancouver in the upper echelon of over-valued housing markets, not just in Canada, but across the world."
He said many would-be house buyers are opting to buy condos, rent or move to other cities because of the high prices.
"What has supported Vancouver's housing market, at least in the past five years, is not income, it's wealth. A lot of that is foreign wealth, although we can't quantify that.
Many buyers don't even need a mortgage because they have the cash and they can buy a house outright," Guatieri said.
"But that supply of people is diminishing, especially as prices have continued to go up.
Unless people continue to flood into Vancouver — foreign residents with a lot of money — that market looks very ripe for a meaningful correction -- not a material one -- of at least five per cent or so for the next year."
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