After months of a white-hot marketplace where bidding wars were, once again, the de facto standard, Metro Vancouver real estate is finally beginning to experience a slight deceleration.

In this issue of New Home + Condo Guide, we chat with Howard Lok, senior vice-president of sales at SHAPE, about his thoughts on navigating the current transition in Metro Vancouver’s real estate landscape.

New Home + Condo Guide: Is buying during the current market downturn a savvy investment?

Howard Lok: I believe there’s never a right or wrong time to buy real estate. Real estate has always moved in cycles. The variables may change, but historically, the market always rebounds and finds a new equilibrium at a higher level. Increasing demand and growth will continue to drive this.

What matters in any market is that, as a buyer, you gather a depth and breadth of information so you can compare benefits and risks. Considerations like your financial capabilities, lifestyle, where you are in your career, and whether you’re growing a family or downsizing all need to be factored in.

Once you’ve gathered this information, look at what the worst-case scenario would be if you make the purchase. If that potential outcome is acceptable within your parameters, it gives you a green light to proceed.

There’s also the value of time, which is probably the most underrated component of the process, even though it can have a huge impact. For example, if you choose a home where you can walk to the grocery store, dry cleaner and other services, you could get rid of the second car or, potentially, have no car at all.
Assuming you have a car loan payment, by the time you add in gas, insurance and maintenance, you’re probably going to be saving as much as $1,100 a month, which translates into approximately $200,000 more purchasing power on a mortgage by simply adjusting your lifestyle. And if you want to live in an urban centre, that $200,000 could translate into the difference between purchasing a home in your first or second choice of locations versus your third or fourth choice.

NH+CG: Housing starts have remained relatively consistent for some time now. So why is there still a crisis in availability?

HL: Consistent is a relative term in how accurately a market can predict normalized demand. Given real estate’s cyclical nature, the market doesn’t always perform normally, and, in these scenarios, it could over- or under-build. In unpredictable times, economists typically look at homes per capita—the ratio of homes available when compared to a geographic area’s population.

If population increases continue moving upward and stats don’t increase at the same rate, which is what’s been happening for a number of years, supply will fall behind. That in turn can drives prices up and force people to rent or live with mum and dad for longer than they might have planned on.

NH+CG: What about inflation?

HL: There’s a psychological reaction that inflation is always a negative. In fact, that’s only true when it’s too aggressive. Think of the flip-side. In a negative economy, wages aren’t growing and if the value of your home goes down, you could end up owing more than the property is worth. Inflation is actually necessary for growth, but the goal is to keep that growth balanced and gradual.

NH+CG: Many people, especially first-time buyers, still suffer from FOMO—fear of missing out. Any thoughts on mitigating this?

HL: Presales are a great way to get into the market now, for many reasons.
A large portion of Vancouver’s housing stock is aging, so there is a flock toward new product that offers more energy efficiencies, conveniences and finishings. For example, even a decade ago, most developers wouldn’t think about including air conditioning because of the cost. Now with climate change, we’re getting Las Vegas heat right here. Last summer during the heat dome, I remember seeing that it was 40 degrees in Vegas and 41 in downtown Vancouver.

Financially, you can lock the price and sometimes the mortgage at today’s rates. That’s important because all indicators point to both continuing to rise. You’ve also got two or more years to continue saving. We had many people at the city of Lougheed who locked a two percent mortgage a couple of years ago and will still have that rate when the building’s complete in 2023, when mortgages are predicted to be as high as six percent. Those buyers are going to be golden.

NH+CG: Any final words?

HL: We live in an amazing country and Metro Vancouver as a region will continue to attract people. If buyers think and seek advice from experts, they’re putting themselves on the road to success. As we often say in the office, “amazing takes time.”

Visit shape.ca for information about SHAPE’s many mixed-use, on-transit, master-planned communities.