Despite wide speculation of overheating, BC’s residential real estate market is fully priced but stable – barring sharp interest rate rises, reports the Q3 2014 update from housing data group Landcor, released November 19.
Chief economist Will Dunning conceded that his previous reports might have been shaped by misconception.
He writes in the latest update, “I have to say that I am shocked – SHOCKED – by what I have found. Now that I have looked closely at the numbers, a decade’s worth of prejudices have been blown away. What I see is a stable market, which has good prospects of remaining stable and healthy for some time.”
Dunning observed that, “Coincident with the popping of the housing bubble in the US during 2007 to 2009, it started to look like BC might follow the same path. But falling interest rates came to the rescue.”
He wrote, “[The] level of sales is fully justified by economic fundamentals – speculative froth appears to have been removed from the housing market.
“All things considered, trends in the BC housing market can be explained by economic conditions and the policy environment. The era of an artificially overheated market appears to be well in the past.”
However, Dunning added, “I also see that, as a result of prolonged shortages, housing in BC is fully priced and a sharp rise in interest rates could be quite disruptive… I would say that BC is more vulnerable to higher interest rates than Canada as a whole.”
To read Dunning’s full report, click here.
