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Housing market 'rebound' unlikely, say local bloggers

Now that the dust has settled – momentarily I suspect – on all the latest Olympic Village bombshells, most talk has shifted to what price the remaining condos will fetch come 2010.

Given the mayor’s talk of a $1 billion liability for taxpayers, ongoing negotiations between the city and Fortress Investment and the prospect of a downgraded civic credit rating, the question is more pivotal than ever.

According to the real-estate analysts I’ve spoken to, the eventual sale price of the 472 remaining units depends to a large extent on the performance of a depressed local housing market that remains difficult – if not impossible – to forecast.

Nonetheless, the folks over at Housing Analysis and condohype, two widely read local real estate blogs, seem to think there’s little chance market levels will “rebound” to 2007 levels anytime soon.

“What people are apparently still not getting is that a 'return to normal' does not mean returning to 2007,” reads a recent post on Housing Analysis. “It was 2003-2007 that is the anomaly; not 2008-09.”

According to the blogger, the rampant speculation that’s driven up real-estate prices for the last few years is gone for the time being – and unlikely to return anytime soon. The upshot is that $1000 per square foot pricing, the reported break-even point for the Olympic Village, is a fairly improbable scenario.

"Maybe speculators will return to the market and blow a new bubble. Could happen, but I doubt it will happen in the next few years," writes the blogger.

A recent post on condohype echoes similar opinions:

“I’m increasingly worried about the expectation of a 'bounce back' in the Vancouver real estate market…many people who are supposedly well informed aren’t getting the memo about the real estate decline.”

The blogger urges caution for city hall, and argues that no future plans for the athlete’s village – including, I presume, the results of negotiations with Fortress – should hinge on 2007-level selling prices for remaining condo units.

“It must be understood that the prices at the peak of the market do not reflect the baseline of the market’s 'true' value — they are the indicators of speculative excess,” writes the blogger.

“In a declining market, the predictable direction of housing prices is toward historical norms in line with rents and local incomes.”

Geoff Dembicki is a staff reporter for the Hook.

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