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B.C. real estate market set to stabilize in 2012
The price of the average B.C. home is set to drop ever-so-slightly in the next year as the market stays stable, according to the latest forecast from the provincial real estate association.
The British Columbia Real Estate Association's first-quarter forecast, released Friday, predicts that the average residential home will be listed at $548,500 in 2012, down 2.2 per cent from last year, while the average price of Greater Vancouver homes will drop 3.3 per cent to $754,000.
But the BCREA's chief economist Cameron Muir says that doesn't mean buyers can expect to find deals in some of the Lower Mainland's more desirable areas, like Richmond or the West Side of Vancouver.
"Prices in Vancouver are unlikely to change very much from where they are today. In fact, last year we saw prices get skewed a little higher than market prices would suggest," he told CTV News.
Last year, the average MLS listed price in Greater Vancouver rose a whopping 15.4 per cent to $779,730, blowing past the predicted numbers.
"A big proportion of sales were happening in more expensive single detached homes in more tony neighbourhoods," Muir said of the unexpected results.
The number of sales is also expected to stay fairly steady in 2012, increasing by 2.1 per cent to 76,817 over last year across the province.
The Greater Vancouver area will see a slightly bigger increase of 5.8 per cent to 32,936 sales.
"It's not going to be a very sexy year in the housing market," Muir said.
He says a number of factors are responsible for the unusually stable predictions for this year, including low interest rates and "tepid economic growth."
The Canada Mortgage and Housing Corporation is also predicting a fairly stable real estate market in 2012, although its forecast is slightly more optimistic, suggesting that home prices will rise modestly.
Vancouver Displaces Sydney as Second-Costliest Housing Market in Survey
Vancouver displaced Sydney as the least-affordable housing market after Hong Kong among large English-speaking cities, as home pricesrose faster than incomes, a study of 325 metropolitan areas worldwide showed.
Vancouver’s median home price of C$678,000 ($686,400) in the third quarter was 10.6 times its median pretax household income of C$63,800, making the city “severely unaffordable,” Demographia said in a report today. A ratio of 3 or less is considered “affordable,” according to the public-policy firm’s survey of markets in Australia, New Zealand, Ireland, the U.K., the U.S., Canada and Hong Kong.
Sydney’s ratio of median home price to income was 9.2, while Hong Kong’s was 12.6, a record for the eight-year-old survey, surpassing the previous high of 11.5 for Los Angeles in 2007. Home prices in Hong Kong, Vancouver and Sydney haven’t plunged as they have elsewhere, such as in Ireland, now the second most-affordable country, after the U.S., the study said.
“Housing affordability generally improved in the surveyed nations, though the most unaffordable markets, Hong Kong and Vancouver, became even more unaffordable,” wrote Wendell Cox, principal of Belleville, Illinois-based Demographia, and Hugh Pavletich, managing director of Pavletich Properties Ltd., a commercial developer and investment company in Christchurch, New Zealand.
Policies limiting lots available for construction drove up land prices, putting homes out of reach for middle-class buyers and younger workers in cities such as Vancouver and Sydney, the researchers said. The median price of a detached house in metropolitan Vancouver reached a record C$900,000 in April 2011, according to the Real Estate Board of Greater Vancouver.
‘Massively Deteriorating’
“The causes of massively deteriorating housing affordability are not a mystery,” Cox and Pavletich said. “They inevitably result from more restrictive land-use regulations adopted by governments with insufficient attention to economic fundamentals.”
The study focuses on the home-affordability ratio, not absolute prices. It doesn’t take into account such influences as falling interest rates, an influx of foreign buyers or the attractions of climate and coastal location.
“There’s no question if you want to live in Manhattan or in a nice, close-in suburb, it’s going to cost you more,” Cox said in a telephone interview. “Demand doesn’t drive up prices. Demand drives up prices if there are constraints in supply, and the cause here is regulation.”
Bubble Bursting
Home prices in the eight capitals of Australia’s states and territories fell 3.7 percent in 2011 through November and were on pace for the biggest annual decline in at least 12 years on concerns that Europe’s debt crisis may damp the nation’s economic growth, according to figures released Dec. 30 by RP Data, a real estate researcher.
“The bubble is bursting in Australia,” said Pavletich, who operatesPerformanceUrbanPlanning.org, a website on urban public-policy issues.
In New Zealand, Christchurch is “severely unaffordable,” with a ratio of 6.3, according to the study. The city is rebuilding after a series of earthquakes that started in 2010.
“There’s huge pressure on the government to open up land supply and get affordable new lots,” said Pavletich, who is an advocate for the effort.
From the end of World War II through the late 1980s, homes in the countries surveyed generally cost two to three times median income, according to Demographia. Today, only the U.S. is affordable by the study’s measure, with Ireland and Canada “moderately unaffordable,” at 3.3 and 3.5 times median income, respectively.
U.S. Cities
San Jose, California, and San Francisco were the least affordable among U.S. housing markets with populations of at least 1 million, according to the survey. Detroit was the most affordable market in that group, with a median multiple of 1.4 times income, according to the study. Atlanta followed with 1.9, and Phoenix with 2.2.
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