We frequently hear conversations at the outset of each year about the real estate markets in major Canadian cities. Numerous experts are consulted on their views about the year ahead, industry associations host luncheons and seminars where predictions are shared, and experts share their projections on the future outlook of the market.
One way to interpret the real estate market is to look at it like a cook-top. From mid-January of 2017 through to mid-June of 2018, the market had all its burners going. However, in the latter half of 2018, a number of burners – market areas and/or product types – quickly cooled.
Looking ahead, the majority of this cooling will continue to be felt in the single-family re-sale market in the new year, largely due to the extent prices accelerated in the past year and a half. This results in a temporary ceiling being hit, and is due to rising interest rates, tougher mortgage rules and government policy changes such as the foreign buyer tax, the empty home tax, and an increase in property taxes.
Although the new year will experience some cooling, there will be certain ‘hot spots’, areas and projects that can appeal to first-time buyers and investors who are attracted to certain price points. Appropriate pricing in Metro Vancouver will be paramount, and affordable product priced between $300,000 and $600,000 for condominiums, and townhomes priced between $500,000 and $700,000, will continue to absorb quickly.
Even though the sale of condominiums and townhomes have slowed, there are still a number of high-absorption projects on the market. And there is still insufficient supply of new multi-family product for the entry level and mid-market. This product and high-profile one-of-a-kind offerings like Westbank’s Oakridge development will continue to absorb through 2019.
With that being said, the question on everyone’s minds remains: Is 2019 a good time for buyers to buy? It depends. The answer will vary between different buyers and their needs, motivations, goals and outlooks. We have to look at the facts for this one – and that is a growing population and insufficient supply. With the current stress test not likely to be reduced, and a shortage of new homes, this could very well be a great year to get into the market for investors and end-users alike.