“A tumble”
It’s hard to find good news amid the real estate forecasts being issued these days. While media jumped on the merest description of the market tipping in favour of buyers in the Real Estate Board of Greater Vancouver’s (REBGV) monthly statistical report last month, the latest report suggests buyers are still cautious.
July sales plunged to the lowest level since July 2000, according to this month’s report, with REBGV president Eugen Klein attributing buyer reticence to concerns about the international economic situation and the tightening of federal mortgage regulations.
While continuing to describe conditions as favouring buyers, the report noted that the benchmark price for the board’s area is $616,000 – a price that would require a household income in excess of $117,000, based on measures of affordability regularly published by RBC Economics.
In short, the benchmark property – while a composite – likely remains out of reach for many buyers.
Small surprise, then, that Central 1 Credit Union’s latest forecast suggests further weakness in housing markets in the next two years.
“A cloud of global uncertainty” will contribute to “a tumble” in Metro Vancouver home sales this year, driving down median sale prices this year by as much as 5%.
“Resale market conditions will feed into declining housing starts in the second-half of 2012 and extend into 2013,” the Central 1 report adds.
This makes for grim reading, but the report points out that, while prices are declining, the fundamental value of Lower Mainland properties is solid.
The call for median prices in Greater Vancouver is a drop of 5.6% this year (to $495,500), then increases of 2.9% and 2% in each of the next two years, respectively.
A tightening
Speaking of fundamental value, office markets in Metro Vancouver are trouncing those in the U.S., if the latest report from Avison Young is any indication.
Its recent Metro Vancouver office market report indicated an ongoing decline in downtown and suburban vacancies – to 3.3% downtown, and 6.7% regionally – and absorption in the first half of 2012 totalling 323,672 square feet, or approximately 60% of last year’s total.
Metro Vancouver’s office market remains strong “despite the global economic uncertainty that has characterized 2012 to date” – a nice counterpoint to sentiments among residential homebuyers.
While office markets in the U.S. wrestle with a national vacancy rate of 12.1%, Avison Young indicates Vancouver’s straitened conditions are setting the stage for up to 1.7 million square feet of new office construction downtown by 2017.
Yet, nationally, this is hardly significant: a strong economy means Toronto and Calgary are leading the way in office construction nationally, with 72% of the country’s downtown construction (or 7.8 million square feet) happening in the two cities.
An opportunity
Whatever the market is doing north of the line, two Fraser Valley families have been seeing success with cottage sales on Lake Whatcom east of Bellingham.
Lake Whatcom Partnership LLP, a venture of the Vandergaag and Vane families, launched the 83-unit Wildwood Lakefront Cottages development earlier this summer. The site was previously a campground and RV park, a fact that allowed its redevelopment as a cottage-style resort. (Lake Whatcom is also Bellingham’s drinking water reservoir.)
Wildwood is fully built out, allowing buyers to take advantage of the properties immediately.
The cottages were built in Lynden and transported to the site, which includes a marina, lakeside pool and hot tub, tennis courts, clubhouse and outdoor pavilion for family gatherings.
The low overhead has allowed attractive selling prices for the units, which start at $269,900 (and no HST).
This is affordable relative to other developments available in B.C., especially given its proximity to Vancouver.
To date, 17 cottages have sold on Lake Whatcom, all to Lower Mainland buyers.
