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Expect Vancouver's red hot housing market to cool this year

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DH Vancouver Staff Feb 11, 2016 2:48 pm

Vancouver’s housing market is the hottest in the country, but an economist from TD Bank say it’s set to cooldown in 2016.

TD economist Diana Petramala says in a report that the intensity of Vancouver and Toronto’s housing markets may have left them particularly vulnerable to even a slight change in borrowing rates and regulatory rule changes.

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Toronto’s average home price grew 14% year-over-year in January, while Vancouver’s grew a whopping 20%.

The change in borrowing rates comes as the United States’ Federal Reserve continues to raise interest rates as part of their gradual, multi-year tightening cycle.

Vancouver’s housing market is the most volatile, according to Petramala, and it’s not unusual for us to experience “some payback following banner years.”

If you’re expecting a total housing crash, though, think again.

“Toronto and Vancouver are likely benefiting from foreign investment inflows, which are expected to remain strong (or strengthen further) in light of a depressed Canadian currency (which makes housing cheaper in many better performing foreign currencies),” explains Petramala.

Another factor preventing a total housing crash is the upswing of cross-province movers. As the economy worsens in certain provinces, many people are migrating to B.C. and Ontario to seek work and better economic prospects.

Home prices in Vancouver are expected to grow by just 7% this year before decreasing another 2% in 2017.

The report notes most other markets in Canada are fairly stable, save for provinces like Alberta where home prices continue to decline. In Calgary alone, home sales have dropped 36% from their 2014 peak.

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DH Vancouver Staff
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