More of the same
The annual round of year-ahead forecast presentations underscore that B.C. and Vancouver are generally doing well in a world where staring down default and market risk is a fact of life in many nations.
But as the province comes off the heady rebound that followed the collapse of 2008, local real estate markets are on edge. A sharp correction, a dramatic rebound, and, now, competition is intensifying as marketers seek buyers for residential projects and commercial investors seek investment properties.
The residential market was good in 2011. The latest sales summary from the Real Estate Board of Greater Vancouver indicates that benchmark price for resale properties in the region is $622,955, or approximately $45,000 above where it was a year ago.
Moreover, prices have been relatively stable for much of this year, and Mark Belling of Fifth Avenue Real Estate Marketing Ltd. told the recent Canada Mortgage and Housing Corp. (CMHC) outlook conference that he expects 2012 to be similar.
?It?s more of the same that we?ve experienced this year, in a very, very hotly competitive marketplace,? Belling said.
There are 279 active residential projects being marketed, not to mention standing inventory, a fact that has developers paring back intentions for 2012.
Three months ago, after the U.S. flirted with default, the CMHC forecast housing starts in the province at 29,000 units in 2012, up from 26,400 this year. During the outlook conference on November 16, the expectations were revised downward to 28,500 units in 2012 but upward to 26,600 starts this year.
Housing starts in Metro Vancouver will account for most of the province?s starts, with 18,000 forecast for 2012 (up from 17,000 this year).
?Considerable headwinds?
A third of the presentation Helmut Pastrick, chief economist at Central 1 Credit Union, delivered to the commercial real estate association NAIOP on November 17 focused on unpacking the financial crisis playing out in Europe.
This highlighted two things: the economic circumstances of B.C., in themselves, are fundamentally sound, but the province faces ?considerable headwinds? (a phrase Pastrick used at least twice) from external economic factors, whether from Europe, the U.S. or China; GDP growth in B.C. will be 2.2% in 2012, a good thing and something for which we can be grateful – but against a backdrop of events that cast a pall over the outlook. Some wondered if it was really such good news being delivered.
?Obviously, Europe is the main risk, but I think B.C. and the Metro-area economy will perform at a kind of middling pace,? Pastrick told them.
?I don?t expect a recession to play out in the U.S. or the global economy.?
Of course, Pastrick acknowledged that the recession of 2008 had taken many unawares, too, but he made sure to note that even if the short term doesn?t deliver dramatic gains, the future is bright: ?The long-term trend is up,? he said, referring to real estate markets. ?
