We sat down with Vancouver realtor Ryan Dash to reflect on the real estate market in 2019 and hear his thoughts for what is to come in 2020. But first... a straight to the point hit on a touchy subject:
1. What are your forecasts for the next 6 months, 12 months and 5 years in your area?
• The forecast for the next 6 months looks very interesting. I believe we are seeing a couple things. It’s important to remember that much of the recovery we are experiencing is simply from an overhanded policy induced correction at every level of government. We don’t need more taxation, it won’t solve affordability. The ability for developers to build faster and create more units for both owners and renters is really the only thing that will alleviate the issue.
• This is because our population and economy continue to grow. With the housing recovery well underway, we are seeing higher sales volume, much lower supply (supply is down -32% since Nov 2019), a growing population (BC’s population grew by 36,000 ppl in Q3 alone), 23% fewer housing starts in 2018 & 2019 have led to heating markets like Mt. Pleasant where the sales to active ratio is above 70% for condos. I think you’re going to see a market with a shifting price environments based on the supply of the product type you are looking at.
• CMHC has called for a 5% rise in home prices nationally for 2020. Other institutions like TD are calling for higher growth in BC specifically – closer to 8.2%. Again so much of what will happen to our markets is relative to the LNG Project in Kitimat, Trans Mountain Pipelines and the massive tech boom going on. I am confident that property will be a good investment for the next 2 years; especially with the influx of Amazon, Shopify and other large tech companies supplying the area with high earning employees.
• 5 Year projection is still too far away to know a predictable outcome, especially with federal policies in place - we just don't know how long they will remain active. Certainly, in terms of real estate cycles we are at the beginning of a new one and if the past is indicative of the future, we will continue to see positive growth so long as the elements discussed so far remain the same.
2. What do you think will be the best investment for home buyers within the following segments- townhomes, homes, condos, apartments?
• The best investment for a Buyer always depends on the level of risk the Buyer is willing to entertain. If you have $500,000 to invest, I wouldn’t invest it in Vancouver proper. I believe there are better emerging markets in places like Central Surrey, Port Moody, South Coquitlam, Lougheed and New Westminster. These areas all have rapid transit – skytrain – and many of the renters here are servicing Vancouver because of that rapid transit. That brings higher wages and a growing population to these emerging markets. Watch for developments in these areas as they try to meet the demand of new immigrants or those relocating because of affordability issues. As Vancouver continues to become more and more unaffordable (and believe me it’s not going to get better), the emerging neighborhoods with rapid transit infrastructure will become the next best markets.
• If you are looking townhouses, I believe the demand for this sector is also going to do well. As single family home living continues to become a thing of the past for most future families in Vancouver, you’re going to see the rise of multi-family dwellings, duplexes, fourplexes and townhouses. Condo’s aside, this is the next generation of family style living for Vancouver. The reason these properties are popular is simply because growing families need similar elements of a single family home (like a yard, extra storage space and more privacy) which are things that an apartment can’t offer. Single family homes will be out of reach for most people in the next 25 years and I believe going long term with these units is a safe investment.
3. What developments are happening in your area that are important for the long term potential?
• The New Hospital that will be constructed where the current train station is at main and terminal. Not only will it bring a new hospital to the community but it will also bring an influx of working professionals who will have both, the earning capacity to buy homes in the area which will continue to diminish supply or pay for higher rents as the area continues to improve.
• Amazon moving a tech center to Vancouver. I have been relocating Tech employees for a few years now and once that building is complete it will continue the trend of bringing in quality professionals who are paid higher wages which will continue to support the housing recovery. We are anticipating nearly 1,100 amazon employees. That doesn’t include other tech companies that are also sending their employees to work and live here.
• The Broadway skytrain expansion. Both residential and commercial property values down the Broadway corridor will do well as the rapid transit infrastructure continues to expand. Savvy investors will always look to buy real estate along well established, easy to use, rapid transit corridors – they want those things because their renters’ value it. Anytime you can take away the cost of owning, you can increase the value of your rent. Renters will always pay more for convenience and rapid transit is the most valuable one. Once completed, market rents for that area will be very high. The Broadway corridor will also make Broadway a much busier place. Commercial property is definitely something you may want to consider as an investment should you have the capacity to purchase it.
4. What is the biggest negative or worry for your area with regards to investment vulnerability?
• With growth comes denser populations and as a result it puts greater demands on the city. The biggest concern I have is that we actually haven’t dealt with any of the affordability issues. We’ve been told we have but anecdotally I’m not seeing it. We’ve simply pushed affordability further down the line through government induced policies which hasn’t improved the situation very much.
• Anytime a government is involved at the Municipal, Provincial and Federal levels – Investors and Buyers know that market forces are being manipulated and it isn’t a true reflection of what’s happening. As a result, they go elsewhere (which is what happened). This brings inherent market volatility as investors jump ship to other investments or markets that are not being influenced by such policies. The current policies are a band aid solution that won’t alleviate the simple supply / demand constraints our city has been going through and will continue to.
• Volatility isn’t a good thing for investors or any market for that matter, it’s a good thing for speculators and we don’t need more of them. We need a strong housing and development plan, derived in conjunction with development and real estate industry professionals. We need a primary focus around reducing the time it takes the city to approve construction for local developers (who by the way are some of the best in the world). Speeding the ability to approve a project will help bring more units to the market, much faster and will alleviate the supply constraints, reduce government intervention and allow for a more balanced market. Seattle has built 13 towers this year to deal with their growth. That is what we are up against.
• The biggest threats to our Real Estate market are better, faster growing and less expensive markets that are attracting Investors & Buyers alike from purchasing in the Vancouver area. Naturally this will occur anyways as the cost of living rises but we need to make sure we aren't creating another pressure cooker situation like we've seen in the past.