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After 5 years of surge in housing demand and price gains, experts are projecting a more moderate housing market for 2008. The following article was published on Tuesday, February 12, 2008 by Alia McMullen, Financial Post.
Housing affordability is likely to improve this year as house-price growth eases and falling interest rates make mortgages cheaper, economists say.
Michael Gregory, senior economist at BMO Capital Markets, said housing affordability was becoming an increasingly important issue in some Canadian cities, with house prices jumping at "unsustainable" levels amid a surge in population-driven demand, a strong jobs market and relatively low mortgage costs.
Rishi Sondhi, economist at RBC Capital Markets, said housing should become more affordable as house-price gains ease and interest rates fall, with the Bank of Canada expected to cut interest rates again in March following a 25-basis-point cut to 4% in January.
Greater Vancouver has the highest high prices in Canada, and the less affordable. One of the biggest culprits to the problem is "lack of land" for housing! This is an irony as Canada has plenty of land, but artificially "frozen" and not available to be used for housing. There are many housing critics arguing for the "freeing up" of more land for housing developments and better-planned high-density developments along the transit lines. Consumers are paying for the "Agricultural Land Reserve" policy (obsolete? or urgently needed to be revamp?) freezing land parcels that are presently designated as "agricultural land".
To many critics this is a mis-allocation of valuable resources resulting in artificially high land costs. The failure of the Governments to take bold action and lack of leadership to solve the housing affordability problem will exert economic toll on the future growth of Greater Vancouver.
You are welcomed to post your thoughts and comments on how the housing affortability problem can be solved.
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James Wong Richmond BC Realtor > Richmond Remax Realtor> Remax Westcoast > Richmond homes for sale, Richmond BC townhouses, Richmond BC condos > Vancouver mortgage broker > Richmond mortgage broker.
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We do need more affordable homes. Is the Canadian market suffering any sort of credit crunch as we are here in the states? It is great that homes are becoming more affordable but loans are so tight!
The pace of home loan lending is still considered healthy and relatively un-affected by the credit crunch in Canada. More affordable and lower priced housing units are consisted of multi-family units like Condos and townhomes. Presently as much as 60% of home sales in British Columbia, Canada are accounted for by condos and townhouses. Many home owners now have to resort to 40-year amortization to qualify for the loans they needed.
The danger in a housing market collapse in Greater Vancouver can result in a price correction to the support levels which are at 30% - 35% lower than current prices as can be seen on the price graph here.
Housing affordability in Greater Vancouver has deteriorated according the latest RBC Economics report, and high-lighted by a Vancouver Sun Newspaper article on March 14, 2008. A good source for information on the Canadian housing market activities and pricing gain/loss in the months ahead can be viewed by following Brian Ripley's Real Estate Charts.