Now in midst of second wave of consumer demand
Ashley Ford
Province
Don’t look for any bubble burst in the Lower Mainland’s vibrant housing market, a senior Canada Mortgage and Housing Corp. official said here yesterday.
That is because a “bubble market” currently simply doesn’t exist, Cameron Muir, senior marketing analyst told the CMHC Annual Housing Outlook Conference.
“In fact,” he said in a later interview, “the numbers clearly show that speculators are not entering the market in any significant numbers. When you look at the figures on the numbers buying and selling a home within a year, we see that even in this market the speculation level is less than the average over the last quarter century.”
Muir conceded more speculators may be entering the market but not in significant numbers. “In 1981 speculation was about 50 per cent of the market. Then there was a mini-bubble market in 1989, when 30 per cent of the market was speculative.
“In the mid-90s, it fell further to 20 per cent and year-to-date it is just 12 per cent. The 25-year average is 14 per cent. At present there is just no evidence of large-scale speculation and speculators are certainly not driving the market.”
A major reason is that prices have been rising steadily for years and, to get any major advantage, speculators would have had to have been in on the market early on.
Higher prices are also likely a further deterrent.
Despite the fact that houses have increased in value, prices have only crept above where they were a decade ago with mortgage rates half of what they were, Muir said.
The argument can be made that housing is more affordable than it was a decade ago.
He said good job growth, a solid economy and growing wages translate into a continuing strong market.
“We are now in the midst of a second wave of consumer demand,” Muir said.
Carol Frketich, CMHC regional economist, said home prices will again head higher next year but at a more modest 6.1-per-cent rate than this year’s 14.1 per cent.
Housing starts in B.C. will peak this year at around 33,600, falling to 31,600 next year.
For the seventh consecutive month, real-estate sales across the Fraser Valley exceeded last year’s sales and broke records last set 13 years ago.
Meanwhile, latest resale numbers show no slacking in the market.
The Fraser Valley Real Estate Board said 1,778 sales processed on the Multiple Listing Service in October compared with 1,202 in 2004, an increase of 48 per cent.
Last month’s sales were three per cent higher than September’s 1,726 sales.
The only two comparable Octobers in Fraser Valley‘s history of recording statistics are in 1992 and 1989, with 1,924 sales and 2,195 sales, respectively.
The Real Estate Board of Greater Vancouver reported sales of detached, attached and apartment properties increased by 13.4 per cent to 3,099 units last month compared to 2,734 sales in October a year ago.
“In the last 25 years, October sales numbers have reached over 3,000 only three times,” says board president Georges Pahud.
© The Vancouver Province 2005
