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The Olympic effect

As Games begin, real estate is all uphill Add to ...

The Winter Games begin in Vancouver today, and so far it seems the big event has had zero impact on local real estate.

If anything, it might be a good time to buy because there's slightly less competition. However, prices for desirable mid-market homes are holding strong in the face of low inventory. Overall, Vancouver's market appears to be on hold, with buyers waiting post-Games, and many realtors, property inspectors and mortgage brokers choosing to go on vacation during the lull.

"We are starting to see a levelling-off period where people are saying, 'Nothing is happening for the next month, so let's take it easy,'" says Rudy Nielsen, president of Landcor Data Corp. and Niho Land & Cattle Co. "Everything is stabilized. It's a holding pattern to see what will happen after the Olympics."

That holding pattern doesn't mean a dip in prices, however. Buyers and sellers in this market mean serious business.

"There are still the hard-core types looking," says realtor Nancy Steele, who's a regular property investor in her own right. "And the people listing to sell are serious. They are not testing the market. They are wanting to move."

First-time home buyers continue to look on the city's east side, where the market is strong for houses between $650,000 and $900,000.

Ms. Steele went to an open house last weekend in Burnaby and the selling agent already had eight offers. She recently saw four parties go through a unit at the Maynards Block near the Olympic Village, and three of them made offers. A house in Strathcona, near Vancouver's Downtown Eastside, is on the market for $1.58-million.

Ms. Steele managed to find a relative deal for herself recently in tony West Vancouver's British Properties, a triple lot property for $1-million. She also bought a condo in the downtown Woodward's Building for $275,000 and flipped it for $350,000.

That said, she doesn't think the deals are currently any better than usual.

"There are deals in every market."

As to whether prices may go up after the Olympics, if they do, nobody feels it will be related to the Games.

"All I can say is our research shows in general that looking at prices rather than sales before and after the Olympics doesn't make much difference," says Tsur Somerville, University of British Columbia professor in real-estate finance.

One theory is that Vancouver prices are holding strong because of low inventory.

"We haven't been affected by the Olympics because the inventory is still quite low," says long-time realtor David Jones.

Realtor Kenny Wong concurs: "Inventory-wise it's pretty low. There's not much selection of anything, that's why prices are so high."

Prof. Somerville cautions that part of the reason for low inventory is that during the economic downturn of 2008, many major developers protected themselves by halting projects. Supply, especially for condos, has been slow to catch up.

"There's a mismatch between demand recovering more quickly than supply," he says.

There is another factor often at play in Vancouver - the perception that there is nowhere for real estate to go but up.

Mr. Nielsen's Landcor Data Corp. released a report this week that bolstered that view. House prices in Metro Vancouver have more than doubled in a decade, and sales have gone up 70 per cent. Foreign buyers comprised part of the market, but 94 per cent was local.

In 2009, a record was set for the highest priced detached house, sale price $7.4-million, and the highest priced detached house, sale price $14.2-million. Those records were set after an economic downturn in 2008.

But sellers can get caught in a slump, as Ms. Steele herself did in 2008.

"The only flip I ever lost money on was one I sold around Christmas time last year. I took a beating on that one," she recalls.

Mr. Nielsen says he lost everything in the recession of 1981. He quickly recovered, but promised himself he'd never again take on debt. And he recalls the post-Expo dip in real estate. After Expo, Mr. Nielsen says real-estate sales doubled over a four-year period, topping out at around $75-billion. But by 1989, those sales, he says, plummeted to $60-billion.

As to forecasting the state of the market post-Games, his answer is cautious.

"I think there is too many unanswered questions yet," says Mr. Nielsen.

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