Wait until 2011, Pomeroy advises first-time buyers
John Bermingham
Province
A housing expert figures the Vancouver housing bubble will burst after the 2010 Olympics.
Steve Pomeroy said people are buying properties, hoping to flip them before the Games, which has pushed prices higher.
“In the Vancouver market, there’s going to be a correction,” the Ottawa consultant said yesterday.
Pomeroy said the Olympics will create 3,000 new housing units, which will flood the market.
“I think the bubble will burst when you see that large supply at the same time,” he said.
He said the underlying conditions for a bubble-burst are arriving — income stagnation, rising interest rates and over-supply of units.
“I would say wait — buy in 2011,” he said.
Pomeroy was among housing experts gathered in Vancouver to discuss housing affordability at the Canadian Housing and Renewal Association’s 40th annual congress.
Sharon Chisholm, the association’s executive-director, said she worries mostly about the young college graduate, saddled with student loans and working in a low-paying job.
“We’re coming up with a whole generation of people, the Y Generation, who have debt, and won’t be able to take a mortgage on a house,” she said.
Those young people go into the rental market, she said, but even rental units are declining.
Chisholm said globalization has allowed offshore investors to snap up property here.
The latest figures show that it takes 79.2 per cent of the average Metro Vancouver income to buy a 1,500-square-foot house, an 18-year-high.
Metro Vancouver‘s median income of $59,000 wouldn’t qualify for a mortgage on the average house, now $648,592.
Duncan Maclennan, professor of urban economics at the University of Ottawa, said people are investing in buy-to-let homes in Metro Vancouver, pushing prices up.
“You certainly also displace first-time buyers, because you have pushed up the price of housing,” said Maclennan.
The same thing happened in cities such as Melbourne and Auckland, where governments put in programs to create affordable housing, he said. The federal government has no such plan.
Delegates at the conference called for a federal plan on affordable housing.
“Affordability is the predominant issue,” said Bob Hawkesworth of the Federation of Canadian Municipalities.
Two days ago, after a meeting with Housing Minister Monte Solberg, provincial housing ministers stated their disappointment with Ottawa‘s inaction and called for a long-term housing strategy.
© The Vancouver Province 2008
