The rising house prices around Vancouver have left many feeling depressed and pessimistic about the future.
Many are waiting for prices to come down and some surveys show that people want to to decline at least 30 per cent or more, believing that it is in an extreme bubble right now.
The average price of a home in Metro Vancouver right now is around $1.2 million. Trying to find a detached home in any city like North Vancouver, Richmond, Burnaby, New Westminster etc, could easily cost you more than $1 million.
For that kind of price to see a detached home become a reality it requires a significant down payment that many Canadians cannot fathom ever being able to come up with.
Some realtors have already warned that house prices could fall in B.C. at least 20 per cent within the next year, but others think it might continue to go on forever.
Right now it is the housing bubble that is defying the odds and is an experiment unfolding before the world. How is it going to end? We aren’t sure yet.
One recent forecast on the topic is suggesting that we might continue to see prices rise even further before seeing some potential drop at some point.
By next year it is expected by many that we might see a drop anywhere between 20 to 40 per cent but it is really anyone’s guessing game as to what might happen.
There is growing pressure from Canadians that want to see policy makers step in to try and cool the situation, but up until not that doesn’t look like it is going to happen.
If it does, it isn’t likely a motion will be introduced anytime soon to significantly address the situation. This is because past efforts to address the situation haven’t change it in any meaningful ways, affordability has arguably gotten worse.
Some think that the solution might be raising interest rates, but there is no sign on the horizon that the cheap money is going to come to an end anytime soon and that rates will be meaningfully increased.
Believe it or not there are some who are actually denying that there is even a housing bubble at all, that there is no problem that needs to be dealt with.
Meanwhile there are millions of Canadians who have given up, and more who will as things get worse, on the dream of owning a home and seeing better for their life and family.
They have to give up that dream of home ownership because they are too quickly being priced out of the market. They just cannot keep up with the rising costs of ownership and that barrier to entry keeps getting further away.
At least 36 per cent of those under 40 who don’t own property right now, have already given up on the prospect of that one day changing, according to recent polls.
Imagine feeling like no matter how hard you worked or how hard you tried that it didn’t make a difference, that you couldn’t make your way to the entry of home ownership for yourself or your family. That’s going to fuel a bit of depression.
It isn’t only impacting urban communities in B.C. or Canada either, it is spreading.
This means more people are going to feel that squeeze and be priced out of the communities that they live and work in. This sounds like a recipe for disaster.
Vulnerabilities are increasing the more that we see this market surge, it isn’t going to be good news for everyone. It is increasing household debt and some are going to be taking on more than they can afford.
Trying to Cool the Canada Housing Market
If we see interest rates rise will it be enough to significantly address the problem? Canadians need affordable housing now, not years from now.
If they do make those interest rate changes it is likely only to be for a short period of time, bank officials have indicated that they would be modest and simply a tool to try and cool the market.