Happy New Year, what a strange year it was!
Hello from beautiful Coal Harbour, Vancouver BC. 2009 went down as the strangest and most surprising year in my real estate career to date. Sept 2009 saw an almost complete collapse of the market, followed by the most mirraculous overall recovery anyone could have imagined. I do, however, advise caution when reading broad-brush statistics. They can be very misleading when it comes to Vancouver's various sub-markets, in particular, Vancouver's downtown luxury condominium market.
For January 2010 Coal Harbour specific stats, click here: CH Monthly Stats.xls
While the overall real estate market fully recovered for the mostpart, and in some cases surpassed previous highs set in 2007 and 2008, the recocery was not uniform accross all segments of the market. The recovery was largelly fulled by three things: 1. low interest rates; 2. temporarily-low prices; and 3. a pent-up demand caused by a market paralysis Sept 2008-March 2009. These 3 forces conspired, along with a willing suspension of disbelief among many buyers who still insist that "Vancouver is different", to lift the market from its depths. (for general market stats, see my Jan General Market blog: http://www.shaunkimmins.com/Blog.php/category/General%20Market%20Info/374 )
Coal Harbour is Unique
I'd like to make the critical distinction that the Coal Harbour sub-market is a very different animal from other sub-markets in Vancouver's real estate scene and in order to understand how values work in this area, it's important to look at who owns real estate here. Coal Harbour, more than any other area in Vancouver's real estate market, is a non-resident haven. Many Coal Harbour owners are international and therefore take a more global view of their real estate holdings in the area. The Coal Harbour real estate market is not driven by local economic conditions nor is the market there fulled by working class, salaried workers. Rather, Coal Harbour is largely owned by international executives and business people who do not occupy their properties full-time. Becuase of these demographics, Coal Harbour is more directly effected by macro, global economic issues that do not pertain as directly to other areas of the city's real estate market where ownership is more local and therefore more dependant on local employment.
Luxury still Hurting
2009's recovery was a bottom-up recovery and was mostly sparked by interest rate-dependant first-time buyers and those looking to move up. The scope of the recovery is essentially inversely proportional to the price of the real estate considered. Studios and one bedroom condos were the first properties to recover and enjoyed the biggest proportional gains while properties at the highest end of the luxury market have continued to suffer - some shedding as much as 10% during 2009. Global wealth has been impacted significantly and this translates to luxury real estate prices in Coal Harbour. The good news is that it appears more and more daily that global economies are in recovery and 2010 will be a telling year. Many still predict a double-dip recession and if that's the case, luxury real estate will be further impacted.
Shaun's 2010 Prediction?
One of two things will happen. If the economy ( as well as global economies) continues to recover strongly, I that expect the post Olympic sell-off of investor-owned studios, 1 & 2 bedroom rental units - into summer 2010 - paired with an increase in interest rates and the arrival of the HST tax will have a negative impact on the value of the lower end of the market and a positive effect on Coal Harbour's luxury condo market. However, if economies stumble and we see a double-dip recession, interest rates will likely remain low, further fuelling the bottom end of the condo market and further impacting the luxury market negatively.
Only time will tell but one thing is sure: Canada's and particularly Vancouver's real estate market recovery seems to be out of step with many macro economic fundamentals and many expect to see a 10%-20% correction into 2011. From there values will grow slowly as we move into the future and investors looking for rapid growth will be looking elsewhere to emerging markets such as Brasil. For those wishing to capitalize on Vancouver's dream recovery, Spring 2010 appears to be a good time to take advantage of market optimism and low interest rates. Contact Shaun for more information and a market assessment of your Coal Harbour condo.
January 2010 monthly Coal Harbour stats
Blog by Shaun Kimmins | January 6th, 2010
Happy New Year, what a strange year it was!