Vancouver Housing Crash 2016
Vancouver Housing Crash 2016
The real estate industry is quite unpredictable where you might be making big money at one day of the week as the prices of property are rising whereas on the second day you may experience a doom. It is more common in developed economies like Canada where the change in economic variables like interest rate, stock market rates and others etc, affect the economy adversely and many businesses suffer the spillover effect of these changes.
Housing Bubble in Vancouver
Since last year we were witnessing the formation of a housing bubble in the Canadian city of Vancouver where we saw the demand for houses rose giving a boost to the industry. Many blamed the Chinese immigrants for this sudden rise in the demand and were of the view that this influx of foreign money was the main reason behind the formation of this bubble. This made the prices of housing in the city reach the sky and these sky-rocketing prices were not affordable by most of the local people. The houses simply got out of reach for the working class which turned the people against this housing bubble and they were anticipating a crash in the bubble.
Vancouver Housing Crash 2016
There have been housing crashes in Canada in the past as well but the housing crash we witnessed this year was more prominent because it had made news even before it happened. The housing bubble that had been rising since last year was not welcomed by the native people and they were in look of an opportunity that could burst this bubble. Many economists and financial experts were predicting this crash since long and believed that whenever the bubble bursts it will have adverse effects on the economy especially the real estate. An announcement by the British Colombian government proved to be the last nail in the coffin of the housing bubble. They announced a 15% property tax for foreigners which automatically decreased the demand for houses. The demand for houses in Vancouver fell from 84% in 2015 to 46% in the July of 2016 which means to almost half of the original value. However, it created a lot of problems for the real estate owners in Vancouver as the foreigners who had already bought houses decided to forfeit their payments instead of paying the new tax. This was the major cause behind the Vancouver Housing Crash of 2016.
