Real estate sales: the China factor

How important is the China factor in affecting sales of real estate in B.C?

"Being a small town with an abundance of modern amenities should make Kelowna a shoe-in for growth coming out of the recession, but not being an immigration hub could be slowing its progress".

During an Urban Development Institute meeting yesterday, Neil Chrystal, president of the UDI Pacific Region and CEO of Polygon Homes Ltd. gave his take on the local real estate market, noting he was surprised by some of the incongruencies between this city and Vancouver.

• “Vancouver bounded back and Kelowna got nothing,” said Chrystal, adding he’s wondered what the difference could be and landed on the lack of appeal to the Asian consumer.
• “Vancouver is a great destination for people from mainland China,” said Chrystal, to the roomful of developers and industry experts. “We had that and you didn’t and you couldn’t replace the second home buyer.”

Read the full article here>.

China housing market.

An article posted on Seeking Alpha "4 Reference Points on China Real Estate" raised the question whether there’s a housing bubble in China.

The influx of money from China is an important factor contributing to the strong run up in home prices in metro Vancouver the past 8 years. A fascinating interview in this month’s (January) issue of China International Business magazine with Zhang Xin, the CEO of SOHO China revealed her thoughts on the real estate market in China.

"She is unambiguous in her belief that her industry is in the midst of a bubble."

A downturn in the housing market in China could have a significant impact on the housing market in metro Vancouver.



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Vancouver housing market: Vancouver is different?

Vancouver property still good buy for post-Olympic era

Following a Royal LePage's recent forecast that property in western Canada's largest city would rise 7.2 percent this year, Bob Rennie, principle of Rennie Marketing Systems, Canada and USA, told Xinhua in an exclusive interview that Vancouver properties would conservatively rise 4 to 4.5 percent in 2010, which would present an ideal opportunity for investors.

"Every market has people who want to jump in and jump out, but there is something unique about Vancouver that once people get their name on title they tend to hold and that's what maintained prices. And a very low vacancy rate has maintained prices on property prices." With Chinese-Canadians about 300,000 of the city's 2.2 million population Rennie said Asian investors were increasingly an important factor to the market, accounting for about 25 percent of the overall sales.

"With the amount of money being made in China, and with the acceptance of China to Vancouver, we have to be in the top two places on the planet for China to look at, to move money to. We see it happening right now, it's happening a lot. It used to just happen in the luxury market, now it's happening in all the market."

Read the report here>.

Will the Vancouver housing market keep up with the steady price gain, or suffer a sudden collapse?



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Greater Vancouver Real Estate - Supply & Demand

A few months ago, "Housing Analysis" posted some very interesting data on the supply and demand for homes in Greater Vancouver. The period covered was from January 2005 to October, 2009. View the link here>.

The average monthly sales for 2005, 2006 and 2007 was around 3,500 units, with seasonal higher sales from April to July and the lowest level of sales around December and January. The average listings was around 10,000 to 12,500 homes. The MOI chart showed that during the above 3-year period, the inventory was fluctuating around 4 to 5 months of suplly.

Months of inventory

A balance market is generally when there are around 6 months supply of homes. When the "months of inventory" (MOI) is above 6, home prices tend to fall. When the MOI is below 6, the market is bullish and home prices tend to go up. From May 2008 to March 2009, the MOI exceeded 6, and home prices fell. When the MOI fell below 6 in April 2009, home prices rebounded.

The Greater Vancouver real estate price chart below is seen to confirm the strength or weakness in the housing market.




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