Welcome, dear readers, to another New Year.
With the first post of 2009 I started off this blog with the following;
"The battle between the so-called 'Real Estate Death Watch' doomsayers and the pollyanna R/E promoters reached a cresendo with the brutal crash of the Stock Market in September/October 2008... The Bears and Bulls of the Vancouver Market are gearing up, after their holiday break, for another round of cogitation to influence the hearts and minds of the Vancouver house buyer/seller."
The passsing of 12 months has done little to change that dynamic.
So let's start 2010's posts off with a salvo from one of the Bulls.
Meet James Schouw, Chairman of James Schouw and Associates. Schouw specializes in ultra high-end custom developments.
And he has a few comments for all the real estate nay-sayers out there who are surprised by the way real estate rebounded last year.
"To understand recent industry gains, it's important to look at often misunderstood real estate dynamics," said Schouw.
And what are those 'dynamics'?
To Schouw it all boils down to the net migration of people to Vancouver. People like it here, they are moving here, and supply/demand will ALWAYS drive prices upward.
In his op-ed piece in the Vancouver Sun, Schouw scoffs at those who believed the global economic and credit crises were enough to kill our beloved Vancouver real estate market.
Schouw contents that all the naysaysers simply did not contemplate the rate at which the population in Greater Vancouver grows.
That growth, and the resulting pressure on real estate, will always push prices up.
Schouw scolds that naysayers noting that people who wait out the market typically find themselves competing against almost 1,000 more people every week in need of a home in Greater Vancouver.
"In early 2009 I advised prospective buyers to beware the peril of waiting for news of the market bottom before buying a home because such statistical feedback tends to materialize too late to be useful."
Schouw goest on to lecture that, "contrary to some conventional wisdom, an individual or family doesn't have to be thrilled about the economy or the Olympics to participate in the housing market. They just have to be living. People need homes, and they can't just walk away en masse as they can with other investment vehicles."
Thus, according to the wisdom of Schouw, local housing demand - a function of population change - has continued to grow as it has done for years, along with most of Canada.
"Recent Statistics Canada data indicates that during the 15 months to July 1,2009, BC's population alone grew by 92,593, requiring almost 40,000 additional homes. That's a normal rate of population growth for BC, representing the number of births and new arrivals minus deaths and people leaving, and isn't likely to slow."
It's the old supply and demand argument. People moving here, scare land resulting in the predictable conclusion that you should "buy now - or be priced out forever"
Schouw even tosses in the Asian buyers line.
"Along with Greater Vancouver, which not insignificantly is the closest major North American commercial centre to Asia, global population is growing too, by the better part of 100 million every year. With the growth of commercialization, industrialization and wealth strongest in Asia, it's difficult to ignore the emerging importance of Canada's immense resources, especially on a per capita basis, including fossil fuels, water, minerals and agriculture."
And what about rising interest rates? Won't that bring down Vancouver's real estate bubble?
Not according to Schouw. Interest rates are irrelevant!
"As the city continues to mature into its world-class role, increasingly desirable to prospective residents from all continents, home ownership and rental will become less affordable, especially in the urban core. Local real estate will likely be increasingly wealth driven, as opposed to income driven. Income sufficient to finance a home is of little concern to wealthy families that don't need financing."
So there you have it.
Fears of a collapse?
Not according to Schouw.
"Greater Vancouver's real estate market will continue to be driven by the growing number of people that simply need homes. Speculation, the catalyst of a 'bubble', is largely absent from the market due to lingering fear from the lessons of 2008. A bubble will only materialize if overconfident developers and speculators manage to oversupply demand. For now, if you own Greater Vancouver Real Estate, relax and have a happy new year."
And if you don't own? Buy now... it can only go up, up, up!
The classic Bull Speak. Or BS for short.
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Monday, January 4, 2010
Welcome, dear readers, to another New Year.