Olympic Effect

[MikeMcC874]

Simple question: Do you think the world having eyes on Canada, BC and the west in particular, will have any effect on housing prices?

Seems to me the `Hong Kong hand-off` more than a decade ago now played a pretty bit part in putting Vancouver into the worlds eye. Will this refresh their memory of how desirable BC and Alberta are as a place to live and vacation?

Opinions?

 

[TheVancouverMarket]

The info you are looking for is right here, published by the Centre for Urban Economics and Real Estate at University of BC.

The paper is titled: "Hunting for the Olympics Bounce: Any Evidence in Real Estate" and was published Jan 2010.

http://cuer.sauder.ubc.ca/download/researc...ect_shortv6.pdf

Hope you find it useful. Share your thoughts on the report, if you have any.

 

[Rickson9]

QUOTE (MikeMcC874 @ Feb 4 2010, 01:42 PM) Simple question: Do you think the world having eyes on Canada, BC and the west in particular, will have any effect on housing prices?

Seems to me the `Hong Kong hand-off` more than a decade ago now played a pretty bit part in putting Vancouver into the worlds eye. Will this refresh their memory of how desirable BC and Alberta are as a place to live and vacation?

Opinions?

I hope it causes a post-olympic housing crash so that I can go shopping out West. That`s what I hope for and dream about.

 

[MikeMcC874]

Thanks Bruce.

This is what I was wondering. It seems to indicate the Olympics historically has little or no `real` effect other than the obvious construction boost. I am surprised that a drop does not tend to follow the big show.

Mike

QUOTE (TheVancouverMarket @ Feb 7 2010, 02:42 AM) The info you are looking for is right here, published by the Centre for Urban Economics and Real Estate at University of BC.

The paper is titled: "Hunting for the Olympics Bounce: Any Evidence in Real Estate" and was published Jan 2010.

http://cuer.sauder.ubc.ca/download/researc...ect_shortv6.pdf

Hope you find it useful. Share your thoughts on the report, if you have any.

 

[TheVancouverMarket]

QUOTE (MikeMcC874 @ Feb 7 2010, 08:09 AM) Thanks Bruce.

This is what I was wondering. It seems to indicate the Olympics historically has little or no `real` effect other than the obvious construction boost. I am surprised that a drop does not tend to follow the big show.

Mike

I will read the full report soon but even a cursory glance at the graphs shows that almost all the host cities with the exception of two (LA and Seattle) experienced a decline right after the event. Does anyone else see that or am I imagining it ?

While economists like to argue that there was only a boost to the construction industry, you could argue that the construction industry and related trades and services has a profound effect on the local economy and ultimately that leads back to employed people buying or renting homes amongst other things. Rising employment, rising wages (in construction and related trades) must have an economic impact on housing, risng rents and house prices ?

I am studying real estate economics at University of British Columbia and I was a little surprised at their conclusion but economic analysis and it`s results depends on the assumptions, data and the models that you decide to use.

For example, I know many many people who were in construction related trades who got jobs and created business and bought houses (and some lost jobs in the 2008/9 construction downturn). So I am not convinced that the Olympics had no effect at all on house prices.

That`s just my view from street level working with clients. Maybe from the point of view of pure economics, they are right.

I fully expect the house prices to fall after the event. That`s my personal opinion. The current pace of things seems to be unsustainable.

 

[Thomas Beyer]

QUOTE (TheVancouverMarket @ Feb 7 2010, 12:42 AM) Hope you find it useful. Share your thoughts on the report, if you have any.
I expect a DROP of price for 3-6 months after the event due to
a) glut of condos coming on market in Olympic Village (7000+) and
b) HST on July 1, 2010, and
c) too strong a rise from 1Q 2009 to 1Q 2010 already .. way too fast for any real economic recovery, and
d) higher unemployment in Vancouver area right after the event

HOWEVER, long term Vancouver is still the Switzerland of North America due to mild climate, world class city, ocean, mountains, no land south, no land west, no land north, agricultural land reserve, tight building restrictions .. so while Vancouver might temporarily drop it will always be attractive, and thus APPRECIATING over the long term !

Olympic impact on rest of West will be minor .. exposure does help .. but most folks know where Vancouver or Calgary is (not so sure re Saskatoon, Winnipeg or Edmonton ..)

 

[Dan_Eisenhauer]

Another question to ask yourself, if you think the Games had, or will have an impact on pricing:

Would you invest hundreds of thousand of dollars in a property because of a two week event? The 86 World`s Fair had no appreciable affect on prices, and it ran all summer. What drove property values in the late 80s and early 90s was the supposed "closing of Hong Kong", and the hundreds, or even thousands, or Chinese who wanted to get out before the border closed.

I have not read the above report, although I have done others. The Olympics had no impact on housing prices anywhere except in small towns such as Lillihammer (sp??). They will not affect us here in Vancouver, and most certainly will not have any affect nationally.

 

[PaulW]

QUOTE (Dan_Eisenhauer @ Feb 9 2010, 01:52 AM) Another question to ask yourself, if you think the Games had, or will have an impact on pricing:

Would you invest hundreds of thousand of dollars in a property because of a two week event? The 86 World`s Fair had no appreciable affect on prices, and it ran all summer. What drove property values in the late 80s and early 90s was the supposed "closing of Hong Kong", and the hundreds, or even thousands, or Chinese who wanted to get out before the border closed.

I have not read the above report, although I have done others. The Olympics had no impact on housing prices anywhere except in small towns such as Lillihammer (sp??). They will not affect us here in Vancouver, and most certainly will not have any affect nationally.

Hi Dan...I noticed you live in North Vancouver...I actually grew up there and now live in TO...I know people ask me all the time...why did you move? Also curious on your website...I too am looking at RTO as a strategy here in TO. Any thoughts/learnings you would share?

Thanks,


Paul

 

[magoomba]

QUOTE (ThomasBeyer @ Feb 8 2010, 06:17 PM) I expect a DROP of price for 3-6 months after the event due to
a) glut of condos coming on market in Olympic Village (7000+) and
b) HST on July 1, 2010, and
c) too strong a rise from 1Q 2009 to 1Q 2010 already .. way too fast for any real economic recovery, and
d) higher unemployment in Vancouver area right after the event

HOWEVER, long term Vancouver is still the Switzerland of North America due to mild climate, world class city, ocean, mountains, no land south, no land west, no land north, agricultural land reserve, tight building restrictions .. so while Vancouver might temporarily drop it will always be attractive, and thus APPRECIATING over the long term !

Olympic impact on rest of West will be minor .. exposure does help .. but most folks know where Vancouver or Calgary is (not so sure re Saskatoon, Winnipeg or Edmonton ..)

Thomas, the Olympic Village is 1,100 units. Most priced around $800 to over $1,000 per sf.
About 1/3 have been pre-sold. The city seems determined to release them in phases once the games are over (in order to not flood the market).
That being said, there are dozens of other condo projects starting up or in progress.
In fact, I predict the city will be more lenient in handling out construction permits and allowing condos to go higher and higher in the near future.
The main reason is they need to make up a huge revenue shortfall.

Foreign buying is definitely having an effect especially in the higher end product forcing locals to bid up the prices on the lower end.
Seems Vancouver is developing a reputation as being a playground for rich foreigners and jet setting crowd.
Affordability-wise, locals are pretty much priced out. Wages are stagnant and unemployment will begin to pick up.

Even with foreign money at play, I predict a correction of around 15% to be played out in the next 2 to 3 years.
It will be interesting to see how the foreign demand balances out the falling local demand.
Perhaps another global credit crisis will take the wind completely out of the foreign sails.