A lot of friends and referral partners have been calling or emailing me and asking what my experience has been with the slowdown in the market.
I honestly don’t think this is something long lasting or a sign of a major meltdown. We have some fundamentally solid variables here that are irrefutable. Land is a commodity here and a diminishing resource.
We have mountains on one side and the ocean on the other and have basically run out of places to build, which is why we go up for density. While sales for detached homes have fallen sharply since the announcement of the 15% tax on foreign buyers, demand and prices haven’t, and with respect to the condo and townhouse markets, they are still in tact an sales are still happening in this market.
I think one major shift that we will see is that people’s definitions of a dwelling will start to move away from single family detached homes and like most major cities, will start to sway in favour of smaller, urban spaces. We’re a city that is rapidly growing up and just like you wouldn’t go to London and expect to be able to buy a detached house, Vancouver is starting to have the same appeal globally.
This isn’t new to other parts of the world, and neither is a slow down or a correction. We are certainly due for a correction of some kind and in my business, I started to notice the market cooling off prior to the foreign tax announcement, so I hesitate to pin this solely on that.
Don’t get me wrong, the new tax has definitely been the largest factor in the slow down since it’s announcement at the beginning of the month, but it’s too soon to point in one direction with only a few months of data supporting a decline.
I think if the next few months also show big declines not just in the number of sales, but also in reduction of prices, then we can start saying this is a true correction.
Also keep in mind that prices have been largely inflated for years, so even with a small correction of 10-15%, most home owners still sit on a lot of equity. If we have a massive 1980’s style correction, then we are in trouble, but way too soon to say.
Another MAJOR factor now, especially in the supply department, is people holding off to see what happens next.
At the end of the day though, demand is still very high and supply is still very low.
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