Report refutes rumours of a housing bubble

The numbers are in and it would appear that our sky-high property values are being held together with far more than a thin film of soapy water.

Reports by the Canadian Real Estate Association and Central 1 Credit Union suggest that B.C.'s real estate market may be slowing down but sure isn't a bubble ready to burst.

Central 1 Credit Union's report, issued on Sept. 15 forecasts that the total number of B.C. home-sales will be slightly lower this year from last, dipping down less than a point, but that house prices will soar to an all-time high, up an estimated 6.8 per cent from 2010.

The author of Central 1 Credit Union's report, economist Brian Yu, suggested that low interest rates - which look to stay low until at least early 2013 - and a limited supply of land will keep housing prices moving upwards. But it doesn't end there.

Photograph by: Terry Peters, North Shore News

The most compelling factor to suggest we're not in the midst of a bubble is far more pragmatic: people are living in the homes they buy. According to Yu, market speculation seems to be at normal level, comprising only two to three per cent of the total B.C. market, so if the economy slows there will be less likelihood of a speculation-induced bust as homeowners will tend to hold onto their homes rather than sell them in a weaker market.

Adding ammunition to Yu's argument was the release of the Canadian Real Estate Association's report on the same day suggesting that 70 per cent of markets across the country are in balance. Even a spike of activity in the Vancouver and Toronto markets seen earlier in the year has eased back to normal levels.

I've intuitively felt that our housing values in Vancouver, specifically here on the North Shore, are not artificially inflated but rather reflect desirability of the locale and the limited supply of buildable land that our topography permits. Our communities on the North Shore are delineated by a perimeter of mountains and ocean that creates one of the most beautiful locales on earth while preventing outward growth. The fact that we're only minutes from a thriving, world-class metropolis suggests to me more than ever the adage "location, location, location."

There are those who argue that the trap door will eventually drop but I suspect it won't be anything so dramatic. My instinct tells me that we'll be able to weather whatever market storms come our way.