Big drop predicted for Vancouver real estate prices
Outspoken financial commentator and former MP Garth Turner is making a bubble-bursting prediction about the Vancouver real estate market, saying prices there could drop by as much as 40 per cent.
But such dire forecasts have been common for years, and at least one local analyst says the often controversial Turner is mistaken.
Still, Turner, a former minister of national revenue and Ontario Conservative MP, said there are obvious reasons he’s forecasting a sharp downturn.
"The average household in Vancouver isn't making enough money to afford the average home," Turner said. "At the same time, we've had a lot of speculation in the market ... and we've had changes to mortgage lending rules."
A steady decline in the number sales and prices over the last 90 days, Turner believes, is just the beginning.
"We'll have something around a 30-to-40 per-cent decline in prices."
Despite his dire outlook, the market has been robust for most of the last decade and condo marketer Cameron McNeill believes Turner will be proved wrong.
"The fundamentals that are driving the market below the surface are just too strong for any sort of bubble circumstance to happen," says McNeill.
Detached house prices, particularly on Vancouver’s West Side, are well over $1 million, but McNeil says most people aren't that stretched to buy a condo or a townhome, so Turner’s affordability argument doesn't stand up.
"The fact of the matter is, in Vancouver today, you can buy a condominium and you can rent it out and you will have 40 people in line trying to rent that condominium," McNeill says. "If you have that much desire for people to live in a condominium, I think the market's got no problem sustaining itself."
With files from the CBC's Chris Brown