My favorite quote so far in regards to the Vancouver real estate market: "you never know who is swimming naked until the tide goes out".
Yes, Vancouver is clearly in a Bubble market right now! If Vancouver real estate continues at this rate of growth in 2040 the average house in Vancouver will cost $20,000,000.00 (that number should be $6M). People are hardwired not to want to miss out. Everywhere you look you hear stories of people making ridiculous amounts of money flipping real estate in Vancouver. We just had our standard Contract of Purchase and Sale in BC rewritten thanks to underhanded flipping. This is another sign of a bubble. In bubbles you see irregularities and usually some form of fraudulent activity.
When an asset becomes too expensive for the average person, you have a problem. Sales volume is the highest right before a bubble bursts. Right now people in Vancouver are in a panic to get into the market. Let's say over the next 5 years, 50,000 people per year will be ready to buy homes in Vancouver due to moving, new jobs, growing family, etc. Because of the panic to get into the market right now, those 250,000 people who would buy over the next 5 years are all buying this year because they do not want to miss out. Once all those people buy, who is going to be left to buy for the next 4 years?
There are tons of decent houses being torn down in Vancouver to build mansions. The majority of baby boomers are retiring now and want to downsize. Gen X do not want to be house poor, they prefer small and affordable. There is not a future market for the massive mansions that are being built. If developers were smart they would design these mega mansions in a way that they can be converted to condos in the future.
Anything that is overly popular typically means it is overvalued. A perfect example is the Chewbacca mark. Those things are selling for over $100 right now on Ebay. It's not Halloween. Seriously what are you going to do, as a mature adult, with a Chewbacca face mask?!?!
People get caught up in the hype and the urge not to miss out. I was on interface express last week thinking I might pick up something in Vancouver, then I remembered I'm not an idiot and know to wait for the crash before I buy.
Lake Okanagan Realty Ltd.
Tel: (250) 870-2792
Fax: 9778) 484-5252