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Vancouver Housing Market Still Viable?

With interest rates on the rise and housing prices at an all time high, many investors question the continuing viability of the Vancouver housing market.  However, the Vancouver housing market continues to hold the promise of continued growth.

There are four main reasons for this assessment.  The first of these is that British Columbia is enjoying period of unprecedented growth and prosperity. This period of economic prosperity forms the bedrock upon which the Vancouver housing market can consolidate its position.

In the February 20, 2007 Budget and Fiscal Plan for 2007/08-2009/10 which was released by the Ministry of Finance , the outlook for the BC economy in general and the Real Estate Market in particular, is exceptionally bright.  In this report the The Economic Forecast Council, 2007 describes an extremely positive economic outlook for British Columbia.   “Council members anticipated strong growth in BC over the next few years relative to the other Canadian provinces, and that BC's economy would outperform Canada's through 2011”. 

The second item to consider is the influx of immigration that is expected to flood into British Columbia the years leading up to the BC Olympic Games. The Council projected that “total net migration” to British Columbia would continue to rise to unprecedented levels.  In 2007 alone, projections averaged from a “low of 35,423 people to a high of 55,000 people”. The general expectation is that this trend will continue in to increase in the coming years with the anticipation that “total net migration to average about 47,000 people in 2008, rising to over 50,000 through the 2009 to 2011 period”. This influx of residents will continue to drive up the need for housing and this demand will continue to contribute to the health of the Real Estate Market in the Greater Vancouver Area.

The third area of consideration is the inflation of the Canadian Dollar and its effects on interest rates and the Real Estate Market.  The expectation is that Bank of Canada will raise interest rates an average of “4.08 per cent” in 2007.  Over the long term the rates should hold fairly steady or even come down slightly. The “Council's forecasts for the Bank of Canada's overnight target rate averaged 4.13 per cent in 2008, falling to 4.01 per cent over the 2009 to 2011 period”.  While this rise in interest rates may appear alarming, the positive side of the coin is that market prices will be driven down slightly by the upward pressure of rising interest rates. This is good news for the average home buyer. 

The last piece of information needed to navigate in the complex Real Estate Market, is the forecast for Real Estate Market movement in British Columbia and its implications for you as a home-buyer.  The news is good, according to the bi-annual press release published by The British Columbia Real Estate Association (BCREA). In the Housing Forecast Report, Cameron Muir, BCREA Chief Economist gives us this insight, “The market has shifted away from strong sellers’ conditions and is expected to operate in a band between a strong balanced and weak sellers’ market over the forecast horizon. For first-time buyers this translates into an impeded upward trajectory in housing prices and the opportunity to enter into the Real Estate Market. Check Acqua Condos Project and Development in Richmond Sales Page

The Real Estate Market in British Columbia continues to be healthy and viable.  Real Estate values will remain stable and continue to grow at a rate of 7-10% annually.  As Cameron Muir reminds us, "Strong economic fundamentals will underpin housing demand," In addition, although inflation is on the rise, its effect will be offset by the continued growth and prosperity of British Columbia.  "Robust labour demand is forecasted to keep job growth high and unemployment low. In addition, wages and salaries, and personal disposable income are forecast to rise well above the inflation rate."  First time buyers can look forward to "a more balanced market [which] is emerging in the aftermath of less frenetic buying activity and an increase in residential listings." Check Lotus Condos Project and Development in Richmond Vancouver Sales Page

Canada – Land of Real Estate Opportunity

Many of Canada's cities have at some point been declared the 'World's most livable city', a reputation earned on the basis of five indicators—infrastructure, stability, environment, healthcare, and culture. With an enviable record like that, Canada real estate is hot property.

With flat, sandy beaches and looming, gigantic mountains, vast open plains and bustling cities, Canadian real estate is as diverse as it is immense. Vibrant South Asian and Chinese communities add ethnic and cultural diversity to this exciting country.

Rules Governing Non-Canadian Real Estate Owners

Any non-Canadian who intends to purchase real estate within Canada and assemble tenants for rent must file form NR6 prior to receiving the first months rent. This form permits the property owner to remit taxes on their net estimated rental income. Those who do not file this form must remit 25% of their monthly rental income to the government—by the 15th of the next month.

Most realtors recommend filing for this certificate as soon as you accept an offer and are finalizing the close on your property. Avoid paying the 25% government royalty—file early.

Mortgage Information for Non-Canadian Real Estate Buyers

Several financial institutions in Canada have designed lending programs to meet the special needs of non-Canadian real estate buyers. Typically, property buyers are required to make a minimum down payment of 35% of the agreed upon price.

Canada's new immigrant program permits individuals who do not have a permanent or settled status to buy property without having to make the traditional 35% down payment.

However, if you want to qualify for this exemption, you must meet or exceed the following requirements:

1. Have a minimum 2 year work visa as well as a work contract of the same duration. Executives who get transferred can also take advantage of this allowance if they earn 60K per year.
2. Furnish a bank reference letter
3. Reside in Canada at the time of purchase

Costs Involved in Buying Canadian Real Estate

If you're considering buying Canadian real estate, keep in mind the various miscellaneous costs that are associated with closing on a property.

A few basic costs include:

Taxes: Canada imposes a 7% tax on new housing, with an applicable rebate if the cost of the home is less than $450,000. Resale housing does not draw the tax unless it has undergone significant renovation. If so, it's taxed as if it was a new house.

Property Taxes: Property taxes vary depending on location. Your realtor can give you details depending on your location.

Appraisal Fee: If your loan is uninsured, the lender may ask you to complete a property appraisal. Appraisals cost anywhere between $150 and $500. Appraisers generally charge based on square footage.

Other various costs could include lawyer's fees, survey fees, property insurance and home inspection fee.

Buying real estate in Canada can be an exciting experience. The best advice is to plan ahead—both in property selection and financing.

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