Congratulations on a break-even Vancouver investment property. Not as easy as it sounds in one of North America`s highest valued markets and not easy to replicate if you plan to reinvest your equity here and don`t have a significant downpayment.
This discussion started in May 29, 2010 and we have not yet realized a major decline in Vancouver prices. Yes listing inventory levels we`re up for a time, but the number of new listings and total active listings have been trending downward by as much as 30% since April.
Last month average residential prices in Greater Vancouver were still up 12% over August 2009.
Cameron Muir, the Chief Economist for the BCREA, suggests that the end to the buyer`s market may be on the horizon, but the truth is that markets will always swing back and forth and change equals opportunity.
As for dire market predictions I will resist the temptation to take a position as my job as an investor is not to be right, my job is to make money in spite of the cycle. When you believe the sky is falling you will look for reasons to validate your position, which leads to fear, inaction, or hasty decisions. For example, we are not selling our primary residence here as my family needs a nice place to live and we can weather any swings.
I concur that Metro-Vancouver is over-valued according to the fundamentals, but it has a few wild cards in its favor such as 40,000 arrivals each year, which translates into 16,000 to 18,000 residences and includes 55% of Canada`s investor immigrants, a 2% vacancy rate, low mortgage rates that are holding, and barriers such as water, mountains, agricultural land reserves and the U.S. border that drastically limit the availability of developable land.
According to Tsur Somerville from the UBC Centre for Urban Economics and Real Estate the higher the population of a city the higher the house prices and our population of two million will have the same house prices as a metropolitan area of seven million because people have to commute the same distance.
In recent months some of Canada`s biggest investors and REIT`s have been gobbling up multi-family assets here because of these factors.
As for advisors, a good question to ask is will this person profit when I sell or buy a piece of real estate or any other investment for that matter.
Personally I would look at your situation much more closely before rendering an opinion, but you would be wise to stress-test all your investments for higher interest rates in the future.