Vancouver’s Housing Bubble To Slowly Deflate

According to TD Economics, Vancouver housing prices will let off serious steam in the next two years to the tune of 12 per cent. A TD Economics report released yesterday confirms what many of us already know – the Canadian housing market is significantly overvalued, especially here in Vancouver.

Vancouver Real Estate | BCBusiness
A new report estimates Vancouver’s real estate market prices will decrease up to 12 per cent in the next two years.

According to TD Economics, Vancouver housing prices will let off serious steam in the next two years to the tune of 12 per cent.


A TD Economics report released yesterday confirms what many of us already know – the Canadian housing market is significantly overvalued, especially here in Vancouver.

TD estimates the national market, which experienced growth of 7.5 per cent in 2011, is about 10 per cent overvalued, and will soon soften due to increases in interest rates and recent economic instability (please refer to the European debt crisis).

While it’s no surprise, Vancouver will lead the pack of Canadian cities with a “severe correction” over the next two years.

The report’s writers begin their overview by establishing Vancouver as “the poster child for those worried about a real estate bubble in Canada.”

It’s good to know the writers have such confidence in our ability to weather a price correction.

Here in the Lower Mainland, we should “expect sales and price to deflate by about 15% and 12%, on a quarterly, peak-to-trough basis, over the 2012-13 period.”

The drop in sales and prices will come “as demand tempers and mortgage rate increases come into effect.”

Slowed economic growth in China could also curb foreign investment in Vancouver real estate – which they estimate comprises 10 to 15 per cent of real estate sales here.

These numbers are a beacon of hope for potential homebuyers who were already waiting for the HST to be repealed in 2013.

Even with the expected price drop, the cost of living in Vancouver is still unaffordable as many residents hand over a large percentage of their disposable income for housing.

We’ll see what happens as the bubble continues to deflate.

To read the full report, click here.