The Olympic Games were exciting for most Canadians – I’m sure we’ll still be talking about Sidney Crosby’s goal in years to come. But with the glow from the Olympic games beginning to fade, questions are beginning to arise about the Games’ lasting effect on Vancouver. Specificially, from a real estate perspective, the question that everyone is asking is: will the Games have a positive or negative effect on the local real estate market?
Image: David Paul Ohmer
Olympic boosters like to suggest that the Games will encourage people to buy properties in Vancouver. Visitors appreciating the city’s beauty and world class cuisine will want to stay – or so the thinking goes. But the research does not tend to support this view.
Tsur Somerville, a professor in Real Estate Finance from the University of British Columbia says, “All I can say is our research shows in general that looking at prices rather than sales before and after the Olympics doesn’t make much difference.” Although there surely are a large number of people who will choose to live in Vancouver because of the Olympics, the best guess is that they will not affect the market substantially.
So, aside from the Olympics, what will happen next to the Vancouver real estate market? Although there are no definite answers, there are some things to point out:
1. The introduction of the HST will encourage some buyers to push up the purchase of their properties. We’ve already seen the huge effect that the home renovation tax credit has had on renovations in the country; the HST will undoubtedly push some people to buy earlier.
2. Vancouver was particularly hit by the slowdown in 2008. As a result, many units were delayed, or projects were shelved. The most famous victim of the slowdown , the Ritz Carlton, will get back on track in March 2010. The result is that Vancouver’s housing inventory is very tight right now, and prices are being pushed upward.
3. Vancouver is running out of new land to develop. Unlike other cities like Toronto or Calgary, there is not an endless amount of land to develop. Vancouver’s best property is on a tiny peninsula, and with similar space constraints to Manhattan, prices are destined to keep rising as strongly as that city.
The overall view then is that Vancouver’s real estate market will likely be very strong for sellers in the next few months – at least until the HST arrives. After that, there will likely be a dip in demand that might be extended by a resurgence in supply. But with Vancouver’s natural constraints, prices will likely remain strong well into the new future.
Even without the Olympics, Vancouver’s real estate market remains a golden place to invest.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
