Tom Brokaw Explains Canada to The United States

Tom Brokaw explains the relationship between Canada and The United States, in a pre-recorded short film that aired on NBC, prior to the Opening Ceremonies of the 2010 Winter Olympic Games in Vancouver, British Columbia, Canada on Feb. 12th, 2010.

This makes me proud to be Canadian… And I’m VERY glad our economy isn’t like the one of our neighbours to the south.

It’s well worth the 6 minutes to watch this… Very well done!

Vancouver Real Estate Market: What’s up

Recently, we could witness one of the Canadian records regarding long and fast market growth. The record breaker was nobody else than the Vancouver BC housing market, which managed to keep its growth for almost seven years in a row. Prices of homes grew to an almost double level between 2001 and 2007, whereas inflation didn’t get over 14%. Of course, affordability of houses in Vancouver, especially for first time buyers, was seriously affected by this combination of factors.

After the US real estate market got into problems, its Vancouver relative still worked fine for some time and managed to grow until the beginning of 2008. Anyhow, the market slowed down since it’s been influenced by the pressure of affordability demand, and the market freeze stayed on for a few months. At first, the average price stabilized, but later declined, and under the influence of the global economic crisis in the autumn 2008, the real estate market of Vancouver got into record-low values in January and February 2009. People were generally worried of the deep and long taking real estate crisis as the one in the USA.

If you believe the same, look at the statistics around – February 2009 was the month of rebound, not the beginning of stagnation! Since then, all real estate key indicators in Vancouver BC show positive trend. If we look at the sales numbers, we can see that the numbers in June 2009 reached almost 6 times higher than the level from February and almost twice higher than the results from summer 2008. The percent change in June 2009 was 75.6% compared to June 2008. The average prices were decreasing till December 2008. Then the price level remained about the same until March, when it started to increase again and keeps going up steadily until now. June prices already arrived to the level of October 2008.

Is this surprising? Not so much, if you look at the data carefully. Look at the new listings change graph. The rapid inflow of new houses on the market stopped many months ago in October 2008, after this month the overall inflow was falling.

It’s because one obvious advantage residential real estate can boast – people simply have to stay somewhere. We can stay without cars, hairdressers, or holidays, but we definitely need some shelter. Even though the demand may drop, it is unlikely for it to reach zero level, even for a short period of time. There are some guideliness that the supply side should follow. Real estate items often represent the most costly part of your personal property. You can hold it and refuse selling during the period of decreasing prices, on the other hand such approach stimulates new housing starts. Finally, buyers and sellers have to reach some point of consensus and the earlier they do, the better for both.

So what are the underlying reasons behind Canadian market’s quick recovery, regarding that the US market is still struggling with the crisis? Canada managed to prevent the most painful event – wave of foreclosures. Compared to the financial health of institutions and individual home owners in the USA, the Canadian ones are doing much better. We don’t have to be richer but for sure we have better predispositions to cope if any immediate financial trouble is to come. The most affected financial sector in USA was the subprime mortgages, which are much less often used in Canada. Now our economic fundamentals could be doing better of course, but they are still quite stable.

So what next development can we predict for the real estate market in Vancouver?  Sales and average prices are likely to increase steadily during the few following months. Nevertheless, the situation will calm down after reaching the pre-burst level, due to overall economic slowdown. Next year the interest rates should still be low and prices still under the recent peak, which will make houses very affordable and thus a wonderful opportunity especially for first time buyers!