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February 9, 2001

Real Estate is still a great investment

How would you like to own an investment that increased in value more than five times over the past twenty-five years?  That’s what would have happened if you had bought a home in Greater Vancouver in 1975. The average sales price of $57,763 is now worth an estimated $330,000.

As any REALTOR® can tell you, population growth has driven price increases in the Vancouver area.  And while Vancouver’s real estate boom has slowed since 1994, population growth and changing demographics will continue to drive price increases in the next quarter century.

The numbers point to promising prospects. British Columbia will be the fastest growing area in North America, according to David Baxter, head of the Vancouver-based Urban Futures Institute, which studies land use and community change. 

Baxter expects the population of the metropolitan Vancouver region to grow by 58 per cent to 3.3 million people over the next 25 years.  That’s 1.2 million more people than are here now.  “While most of this growth will be in the 45 and older population, all age groups will grow,” says Baxter. 

The baby boom generation now aged 32 to 51 makes up about one third of our population.  Their aging will result in a surge in the over-55 population of 145 per cent by 2026, who will eagerly “move out of the suburbs and back into the urban environment,” according to Baxter.

As well, Vancouver will remain an internationally recognized magnet attracting a higher percentage of immigrants than other provinces because of our mild climate and strategic location on Canada’s Pacific Rim.  Asian immigration is expected to continue, particularly from Hong Kong, Taiwan and Mainland China.

For real estate investors prices can only go up, since housing demand is forecast at 29,600 new housing units per year. 

Single family homes will remain the most preferred housing type.  But as the population ages, lower maintenance, higher density homes such as townhouses, apartments, and small lot, single family homes will become popular.   

High density will be a fact given that Vancouver is geographically constrained by the Gulf of Georgia, the North Shore Mountains and the Canada-US border.  This results in high land prices and limited land available for development.

For real estate investors, now is the perfect time to buy to take advantage of the slower real estate market.  Real estate is cyclical, with the average cycle lasting six years, during which time prices fluctuate depending on interest rates, the economy and migration.  But the overall value of homes continues to increase over the long term.  

Vancouver prices are at or near cyclical lows.  If you take the opportunity to invest today, twenty-five years from now you’ll be looking back on a great lifetime investment.