Over the past 10 years, Vancouver Real Estate has proven to be a solid investment for investors. This past year has proven that market gains are a better bet than gold and silver. Even with the market turmoil, the impressive numbers returned have not been released, but speculation is that there are huge smiles on investors’ faces. The average home in Metro Vancouver has generated a return of at least 7.5% over the past ten years. The average house price was only $250,000, but last year the price was around $660,000 according to the ReMax housing report.
This performance in the Vancouver real estate site outperformed most commodities and gold in the latter part of 2010. Real estate is a solid investment, but only for the long term. High house prices across Canada are making a frightening impression on the outlook for investment longevity. The next few years will be a bit difficult for investors to recoup their initial investments. Investors will have to be a bit patient, even if their initial investments take more than five years to recover. In other parts of Canada, the compound annual rate reached 8% on returns.
High prices in Vancouver and Metro Vancouver have affected sales and deterred some investors from buying properties and raising capital. That didn’t stop the major players from having Vancouver beat the national market average of 6.6%. The housing market tends to follow the growth in disposable incomes, but the rate was higher than normal. Income growth in Canada accounted for about a quarter of the national compound return. The future of real estate in Metro Vancouver is uncertain with foreign investment from China and other parts of Asia. Cash flow is definitely a nice plus in the short term, but buying from a foreign investor is a bit more difficult than getting a loan from a loan shark.
Even with the temporary label of “unaffordable”, most investments over the next few years will be hard to swallow, unless there is a sudden change in the economy or other factors that would favor the real estate area. That doesn’t mean other places in Canada aren’t attractive or that the returns won’t be there. It will take some time for things to settle down, but local investors are tired of the long way to go. Residents’ choices are limited by the current conditions offered by the Canadian real estate market.