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Vancouver BC real estate market grew for almost seven consecutive years, one of the longest and fastest growths ever registered in Canada. Average property prices between years 2001-2007 almost doubled, whereas inflation in the same period was less than 14%. Of course, such development seriously limited affordability of housing in Vancouver, mainly for first time buyers.

The Vancouver real estate market kept its growth as far as till the beginning of 2008, while the many times analyzed trouble of the US market started already some time before. However, the market slowed down as it’s been influenced by the pressure of affordability demand, and the market freeze continued for a few months. The average price got stable at first, but later decreased. As the global economic crisis became a problem during autumn 2008, the sales of Vancouver real estate decreased to extremely low values during January and February 2009, which inspired the general panic that we would face the same long and poor crisis period such as in the USA.

If you believe the same, look at the graphs around – February 2009 was the month of rebound, not the start of stagnation! Since then, all real estate crucial indicators in Vancouver BC show positive trend. Sales in June 2009 were almost 6 times higher than in February and almost double confronted to the previous summer. The percent change in June 2009 was 75.6% compared to June 2008. Average price decline came to a standstill in December 2008, remained flat till March, since then continues to grow steadily again. June prices already arrived to the level of October 2008.

Is this surprising? Not so much, if you look at the numbers carefully. Let’s examine the graph of new listings change. New houses kept flowing to the market till October 2008, then the general inflow started to decrease.

This has an easy explanation, which lays in the obvious advantage of residential real estate, which is that people just need a place to stay. People do really need a home, while they can pretty well go without cars, hairdressers or holidays. It is possible that the demand for homes falls, but it can hardly fade away completely, even if it was only for a short time. There are some ruless that the supply side should follow. Real estate items in many cases represent the most expensive part of your personal property. In the period when prices are declining, you can decide to keep your house and not to sell it. On the other hand this would stimulate new housing starts. Eventually, an agreement has to be reached at some moment both for sellers and buyers, and the sooner the better.

So what are the reasons for the Canadian market recovering so early, whereas the US one is still going through the crisis? The reason lays in the fact that in Canada, we had no wave of foreclosures, which was the most critical event. The Canadian institutions and individual property owners are in better financial condition than the ones in the US. Canadians don’t necesssarily have to be richer, but apparently they are more ready to cope in case of any acute financial problems. Subprime mortgage sector (the most affected one in the United States) is much more limited in Canada; our economic fundamentals are not in the best situation now, but still quite stabilized.

So what next development can we forecast for the real estate market in Vancouver? Sales and average prices are likely to grow steadily during the few oncoming months. However, after the numbers reach their pre-burst levels, the situation should stabilize, because of the general economic slowdown. Next year will be great especially for first time buyers – with record-low interest rates and prices still below the recent peak, homes won’t be so affordable forever!