RE/MAX Colonial Pacific Realty

Courtesy of the Peace Arch News

By Sam CooperBlack Press
Apr 07 2006 xml:namespace prefix =" o" ns =" "urn:schemas-microsoft-com:office:office"" />

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’s real estate market may be peaking, but don’t call it a bubble, local experts say.
As Canada’s red-hot housing market enters its eighth year, the longest-running boom in more than four decades, this week a Toronto-Dominion report warned Vancouver is displaying “the greatest bubble-like qualities.”
It cited average home prices at close to half a million dollars and affordability “deteriorating to the worst level in the country.”
Yet Peter Simpson, CEO of Vancouver Home Builder’s Association, says economic fundamentals are so strong here, that real estate prices are unlikely to fall sharply anytime soon.
“If all of a sudden people are not buying homes, that will be the end of it. But I don’t think economic (bubble) conditions are in place in Vancouver,” Simpson said.
“There is a huge difference between stabilization and a bubble bursting.”
This week, Simpson’s association hosted 850 people at Surrey’s Sheraton Guildford for the largest first-time homebuyers seminar in North America, proving the insatiable appetite to buy into this market. But he acknowledged chief among concerns there was sky-high prices.
“If you own a home, you’re happy. And if you’re looking, it is frightening,” Simpson said.
“But prices will likely stabilize a little bit. The rise won’t be as sharp as last year.”
And Simpson said unlike 20 years ago when starting with a single family home was realistic, these days first-time buyers accept living in tighter quarters.
“White Rock is very expensive and taxes are high. The only way to make it more affordable is a broader mix of housing, including high- and low-rise condos and townhouses,” Simpson said.
“Most people think of the hillside single family home in White Rock, but there’s a lot of room for growth of multifamily housing on the flats. That will increase the tax base, too.”
He said projects like Bosa in Town Centre, where people live, work and play in one area, are the future of local development, despite resistance among some residents to higher density.
“You can’t have this not-in-my-backyard attitude,” Simpson said.
“We have to build up rather than out.”
And while some believe the 2010 Olympics are fueling a speculative bubble that will pop after the Games, Simpson said international exposure will only expand the world’s desire to live here.
“I don’t think people are buying homes because the Olympics will be here for two weeks,” Simpson said.
“The Games will highlight prosperity and add jobs. After the Olympics showcase the city, more people will consider moving here.”
Simon Fraser University professor and economist Lindsay Meredith said wild price escalation can’t continue indefinitely, but agrees demand to live in the Lower Mainland will shore up market excess.
“Vancouver is a heck of a popular place to put down roots,” Meredith said.
“We’ll see five million living here in no time.”
Meredith said rocketing Olympic building costs are further inflating home prices, and 50-year-low interest rates are stoking demand, with entry-level buyers and speculators grabbing loan money with no down payments. The longer this price escalation continues, the bigger the bubble risk, but Meredith predicts rising interest rates will cool Vancouver’s market later this year.
“You like to see a gentle landing, but what goes up must come down,” he said.