The 2019 real estate forecast is a return to balance

By Susan M Boyce
January 21, 2019

It’s that time again, when people pause to reflect on the year that’s drawn to a close and make predictions about the one that’s just begun. There’s little doubt that 2018 was a turbulent time for real estate. The new stress test, rising interest rates and an unprecedented shake-up in municipal governments have all contributed to keeping many buyers and sellers on the fence. But most industry watchers agree things will begin turning around in 2019, and that’s good news for everyone.

Positive Outlook

“There are a lot of positive indicators; the economy and employment remain strong, it looks like we’ve seen the end of interest rate hikes for a while, and there’s more supply available so buyers can shop around and make sure they’re buying the right product,” says Michael Ferreira, managing partner at Urban Analytics.

Brendon Ogmundson, deputy chief economist at the BC Real Estate Association (BCREA) agrees and predicts that “after having the wind knocked out of the market in 2018,” the new year will bring renewed growth and stability. “There is a lot of pent-up demand, especially from retiring Baby Boomers and the Millennial cohort who are now forming households,” he notes.

Flight to Quality

Like many others, Nic Jensen, vice-president of sales with Onni, predicts quality and cutting-edge design will figure prominently in 2019. “The market in general is extremely price sensitive, so super-efficient, smaller homes that still incorporate high-end finishing details and offer great amenities will continue attracting buyers,” he says. “It’s now socially acceptable, even desirable, to live in an intelligently laid out, 450-sq.-ft. apartment where the gym is just an elevator ride away, and you might even have a shared office space/boardroom right onsite.”

Livability and developer reputation are two considerations Karen West, Boffo Developments’ director of marketing and sales, sees as significant drivers in this increasingly quality-focused market.

“Because there is no longer the mad panic to buy immediately, buyers are becoming more astute about their due diligence, which is healthy for the market. They are taking time to visit more display suites and look at a developer’s history and past projects.”

“The industry will need to roll up its sleeves, especially in the first six months,” Ferreira says. “We’re no longer seeing new projects achieving 80 per cent absorption in the first couple of weeks. Sales staff will have to work harder. But the developments that are focused on quality and adjust their pricing to be competitive will be successful.”

Changing Political Landscape

The housing industry will definitely continue to keep a close eye on potential regulatory changes at a municipal level as 2019 unfolds. While it’s still unclear how the new shift of power will impact construction, levies and long waits for permits are two areas insiders hope may change. “Municipal charges now account for 26 per cent of the price of a new home,” Ogmundson notes. “And getting a building permit typically takes from one to two years, which has been elongating the completion time for the past decade.”

World-Class Living

“There’s a lot of serious money that never left the market,” says Trace McTavish, president of Rennie Marketing Systems. “It’s just waiting for the right time, an indication the market is ‘spooling up.’ I predict the market will show signs of serious sales activity beginning in May 2019. That gives time for municipalities with new counsel to activate their initiatives and time for developers to get organized around those initiatives.”

And he reiterates the sentiment that has kept Vancouver in the headlines for decades. “Look around. This is one of the best cities in the world and nothing is going to change that. In-migration, settling Baby Boomers with retirement dollars, stable government, clean air, fantastic school systems, gold standard banking — it all adds up to one awesome city to call home.”

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