Vancouver, Canada -- (SBWIRE) -- 05/10/2013 -- Vancouver is the gateway between North America and East Asia. Underneath the affection of "Economic Globalization", this city's real estate and housing market is affected by economy environments and policies of not only Canada, but also USA, and Asian countries. Dramatic Vancouver home prices have been boomed since the late 1990s. This kind of real estate price booms are not only happening in Canada, but also in USA, China, among other countries. This dramatic price increase is not easy to explain, because many domestic and local economic fundamentals do not match up with the Vancouver house prices increase. That is why analyzing Vancouver house prices trends is extremely complicated and difficult. There are too many factors are driving the trends of Vancouver home prices, including short term and long-run trends.
“Briefly, we can focus at some main short term factors which drive house prices in Vancouver, such as: Incomes, Rental Prices, Construction Costs, Foreign Buyers and Immigration.” said Sophie Carter, a seasoned realty investor in Vancouver, BC, Canada.
“Let’s see Incomes first.” explained Ms. Carter, “In a way, the trend rise in Vancouver house prices is associated with citizens' growing Incomes. Growth in both Average Household Income and Per Capita Income leads to permanently higher demand for housing, in terms of quantity and quality. The increase or decrease in the level of Incomes will act to change the demand conditions within the housing market. The higher Incomes will cause households to increase their consumption of all normal, luxury, and durable consumer goods. House should be a durable consumer good too, then the demand for housing will increase.”
“We have heard a lot about "Affordability", refers to various measures of homeownership costs relative to Incomes.” added Ms. Carter, “Not just house prices, but also mortgage Interest Rates and sometimes the other components of the cash costs of owning a house, are included in these calculations. Undoubtedly the Affordability is sensitive to Interest Rates. While Interest Rate is going up, Affordability is going down. While Interest Rate is dropping down, Affordability is climbing up. While Affordability is strong, house prices will move to higher level; while Affordability is weak, house prices will move to lower level.”
Rental Prices: “When you own a 5% down payment, and can spend the money as same as monthly rent to buy a house through mortgage, will you continue to rent or start to buy?” continued Ms. Carter, “This is a realistic question. High Rental Prices always easily push tenants to convert into home buyers, especially during low Interest Rates period. When high Rental Prices encourage enough people to buy their homes, the trend of home prices may rise. On the opposite, if local Rental Prices can stay at a low level, reasonably, many people would rather rent a home instead of bearing heavy debts to own. This will lower house buying demand, bend the trend of home prices to decline.”
Construction Costs: This part includes material and labor costs. It is simple, rising realty Construction Costs push house prices up, period.
Foreign Buyers and Immigration: Vancouver is a very special city. She owns hundreds of thousands of immigrants, and she is so beautiful that attracts numerous overseas buyers to invest in her real estate market. Sometimes, Vancouver house prices may run out of Canada's basic economy track, since too many Foreign Buyers carry huge funds to this city to purchase realties, especially high-end and luxury properties. To a certain extent, this kind of "hot money" would affect Vancouver home prices unpredictably.Other contributing factors include the aging population, and, eventually, higher Interest Rates.
About Vancouver Home Prices
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