In the long term, Vancouver housing prices are heading one way — up.
2020 is a year that will never be forgotten. In every corner of society, in every industry, every business and household, the effects of COVID-19 are dramatic. Our daily lives, patterns and behaviours have shifted. Nobody has been immune to COVID-19 or its wave of disruption.
At the midpoint of the year we can reflect on the challenges we’ve faced so far, and can anticipate incredible socioeconomic uncertainty for the second half of 2020.
I am constantly asked to make predictions of the real estate market. I study the stats and the data, and lately I’m as equally perplexed as the economists clearly are. I’d like to give a definitive prediction of Q3 and Q4, 2020, but this year I cannot. Yet one thing remains abundantly clear, one immutable truth that remains constant; Canada, and in particular Metro Vancouver, remains one of the most desirable places in the world to live.
I acknowledge that Vancouver is growing and changing, and its characteristics and neighbourhoods have evolved over the years. Many long-term residents indeed prefer the Vancouver of 2000. Yet clearly long-term and new Vancouverites alike are prepared to make substantial sacrifices in the face of unaffordability to live here.
Generally, we live in Vancouver by choice, and of course moving to another city or town is possible. Leaving is a choice many have made. Centres such as Victoria and Kelowna, both are also exceptional communities, have grown — partially fuelled by Vancouver graduates.
I also acknowledge that Vancouver’s growth and high real estate prices come with great challenges. We should be careful not to become a resort city and playground solely for the wealthy. A diverse and healthy community will be important to maintain much of our soul and character.
The demise of the modern city has been predicted for many years. And yet urban centres around the globe continue to grow at seemingly unfathomable speed. In just fifteen years from now, Canada’s population is estimated to be 42,250,000 - roughly the same as the projected population of greater Delhi. In fact, pick any two of the ten largest mega-cities worldwide (Delhi, Tokyo, Shanghai, Dhaka, Cairo, Bombay, Kinshasa, Mexico City, Beijing, Sao Paulo) and their combined projected 2035 population will exceed all of Canada.
When I try to think of that reality, I am reminded how relatively quaint and highly livable Vancouver remains. And it reinforces my conviction that Canada and Vancouver will continue to be one of the most desirable places in the world to live.
In 2020, many patterns and behaviours have accelerated and changed. More flexible employment cultures and the adoption of new technologies may influence some geographic living choices. But any void left in Vancouver will be met by unprecedented demand.
I don’t need to list all the coveted ingredients that make Vancouver special. But we should be reminded that it is no longer a well-kept secret. The world continues to discover Vancouver, and immigration and the free flow of capital will continue to find its way to the best corners of the globe.
Whether or not one feels this growth and change is a good thing, I am convinced that Vancouver will remain highly desirable, Canadian immigration will soar, and the world will continue to discover our beloved city. Greater Vancouver will also continue to have massive new housing supply constraints, but that’s a conversation for another day. Therefore, I am confident that in the long-term real estate values will continue to push higher.
Real Estate should always be considered a long-term game. Actually, for most it’s not a game at all. It is our home, our business, our playground. Yet, many Vancouverites seem to watch it as closely as the stock market – betting and hedging on the price fluctuations. In the Vancouver real estate arena, it is always best to be patient and think long.
Sitting at the mid-point of 2020 we are faced with socioeconomic uncertainty ahead. Real estate prices have not weakened as both Canada and Vancouver have seen transactions and supply fall. Our economic recovery will be bumpy and the housing market may follow. Yet, a recession coupled with a rising inventory of sales listings as some people are forced to sell, may create a ‘best in 10 years’ buying opportunity. Low interest rates, low supply, and a strong conviction about Vancouver’s future may bridge this recession gap. Don’t hold your breath waiting for prices to collapse and don’t be surprised if Vancouver housing prices remain sticky despite our bumpy economy. As the past 40 years have shown us, waiting on the real estate sidelines is a losing game. It could be six, 12, or 18 months out, but conditions are lining up for another real estate price surge in the medium-term.
Although I cannot easily make a prediction for the balance of 2020, I can make a confident long-term prediction: In 2035 the average price of a home in Vancouver will more than double from 2020 values. (That’s roughly 4.75% compounded annual return). A $1,000,000 home will exceed $2,000,000 in 15 years.
Cameron McNeill is Executive Director and Partner at MLA Canada.