Is now the best time to buy strata units? and why?
With all these pre-sale strata units flooding into the market. Who should why? who should wait? Any chance we can wait for Vancouver housing market become more affordable? listen to this AM1320 radio interview podcast my take on this topic.
In my opinion, it depends on who you are. There are a few groups of people should absolutely buy now:
1) renters
2) Gen Y - with the help of the parents
3) long term investors
No to those speculators.
There is reason why the city issue building permits. Lower Mainland expects 35.9% population growth over the 2010 to 2036 period. Between 1991 & June 2011, BC population has grown from 3,373,787 to 4,573,321, 1,199,534 more people, a 36% increase. That is exactly 20 yrs difference. Therefore, the new projection is very much in line. The major factor driving population growth over this period will be migration to BC, International migration will account for 77.4% of the population gain, followed by interprovincial migration at 17.3%, and natural increase (birth minus deaths) at about 5.3%. With the detached housing price getting out of reached for many buyers. It is natural to see all the new strata units building everywhere.
During the first 2 months of 2012, the value of building permits issued in the province's regions climbed 52.5% (unadjusted) above the level recorded in the same period last year. Investment intentions were up in 6 regions, including Mainland/Southwest (+31/2%), where planned spending on industrial(+152.1%) & commercial (95.3%) projects soared. The commercial sectors have increasing demand so I'll share more commercial info with our listeners in our program.
Why either we don't have enough strata to sell at one time & then all of a sudden we have over supply? I suspect it has something to do with whether the developers can get financing from the bank or not. Canada being able to ride the global economic crisis smoothly is because our banking system is very conservative. Therefore, I naturally believe banks would not be willing to finance the developers if they worry the buyers will slow down buying & the pre-sale might not be able to as fast during the global economic crisis. Now when all kinds of report shows BC has a bright future with strong population growth, I assume bankers might be more relax & start lending again to developers so building permits climbed again too. After all, each pre-sale centre has banker to do the financing for the buyers.
It is in our blood that we, as Asian likes to make profit off real estate & stocks market. The different is we can't flip real estate in N. America like they do in Asia. We don't have the population nor the income to do that. Talking about affordability. BC has been unaffordable for over 20 years so this is not going to change. In order to be affordable to everybody, we have to expect a good 38% housing price drop & even during 2008, global economic crisis, we only dropped 15% in average. So, we have to forget about affordability. We can only do our best, help the next generation to buy property & force them to save money. The younger generation has very different mentality than us because most hard working parents sometimes over look after their children so the younger generation doesn't know how to value money.
With all the great selection out there now, developers giving incentives, government offers incentives to new home buyers as well as historical low interest rates that is not going to change much till the global situation improves. You really should choose the one that is affordable & right location to buy. Even if you need to subsidized a bit now should you choose to buy in the city, have the children to pay the difference. It'll help them to have a home in the future. Think long term!!
