While many trading businesses are joyous over the Canadian Dollar's recent strength, it does not bode good news for the barely revitalized local BC real estate market which as previous analysis has suggested has been supported mainly by foreign investors. So as Canadian $ goes for par, it will be increasingly expensive for the foreign investors even if the real estate price still remains steady.
It is not difficult to predict that housing starts will continue falling as developers wait for the market to stabilize but more importantly, credit lendings are almost a lockdown for banks, leaving developers no choice but to accept exuberant rates from private lenders thus cutting sharply into whatever little profit margin they have left. Here are CMHC released April housing data for Vancouver and Abbotsford.
Highlights are as follow:
Year to Date Starts 2008 - 6691
Year to Date Starts 2009 - 2302
Year to Date Completions 2008 - 5540
Year to Date Completions 2009 - 5377
Under Construction April 2008 - 26253
Under Construction April 2009 - 22494
Completed but Unabsorbed 2008 - 1445
Completed but Unabsorbed 2009 - 2368
Hotels and tourism are also heavily affected. Last I heard, Shangri-La Hotel was giving away free valet parking and a $100 credit towards the mini-bar and restaurants for a night's stay.
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