Real Estate Market Bubble?

I would like to briefly tell you about the CMHC Market Insight Presentation that I attended today. This presentation was meant to answer the questions that REALTORS® in the Fraser Valley (and most other areas) are asked daily:

What are interest rates expected to do? Where's the market headed? Are we in a housing market bubble?

The answers that I will give here are applicable to the Fraser Valley of B.C., Canada, and may also apply to the Greater Vancouver area.

Well, the short answer is that for 2007, the interest rates are expected to stay rather flat. If any change occurs, it will be in the range of a quarter to three quarters of a point.

Due to the strong economy, labour shortage, low unemployment rates and interprovincial and international migration to B.C., demand for housing will remain high, which will keep housing prices high. There will most likely be fewer housing sales in 2007 compared to 2006, however prices are likely to increase in the order of approximately 8% over the year. Housing starts remain high in B.C. There were approximately 9,800 in 2006, many in Multi-Family units, and the number for 2007 is expected to be very similar.

Regarding the "bubble" question that many people are fearing may happen, the bottom line that is coming out of the mouths of most experts lately is that without a decrease in demand for housing, prices will remain high. As long as people find the Fraser Valley a desirable place to call home, and as long as people have secure, steady employment that gives them the means to buy a home, we will see high housing prices. The only thing that would cause prices here to fall would be a severe blow to B.C.'s economy, or for people to stop realizing what a beautiful place the Fraser Valley is to call home.

If I can be of any help to you, please do not hesitate to contact me. Thanks! Cyndi