Analysis of the Real Estate Market in Greater Vancouver, 2018

This report provides an analysis of the real estate market in Greater Vancouver. It examines the interplay of supply and demand, illustrating how changes in these factors impact home prices. The report discusses the influence of foreign buyers, the effects of mortgage rates, and the impact of government policies such as taxes on the housing market. The analysis utilizes graphs to visualize market dynamics, including the impact of price changes and the shift in demand due to foreign investment. The report references sources from 2018 to provide context and support the analysis of the market conditions during that period. The report concludes by discussing how reductions in home prices can lead to a decrease in the supply of homes.

Running Head: Real Estate Market
The State of Real Estate Market in Greater Vancouver
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Running Head: Real Estate Market 2
Graph: Demand and supply of homes in Greater Vancouver
Price
Oversupply Supply
Pn
Pe
Demand
Qn Qe Quantity
According to Ubs.com (2018), there has been a rise in the home prices and this have resulted in
reduced demand for homes. Initially, demand and supply of homes forms an equilibrium at
PeQe. After a home price rise to Pn, demand for homes falls to Qn. There is an oversupply of
homes because home owners are willing to sell more at the high price Pn.

Running Head: Real Estate Market 3
Graph: Demand and supply of homes in Greater Vancouver
Price
Supply
P1
Pe
D2
D1
Qe Q1 Quantity
According to Evans (2018), the increased demand for homes by foreigners have resulted
in demand shifting from D1 to D2 which is at a higher price P1; number of homes rise to Q1.
Due to the high price which has led to uncertainties of a bubble burst, the amount of mortgage
has been restricted; this explains the reduced demand for homes. However, the imposition of tax
on the foreign home buyers is expected to shift the demand curve from D2 to D1 (leftward shift)
or lower. The increase in interest rate is increasing the cost of mortgage loans repayment and
thus investors are avoiding borrowing which interprets to reduced demand.

Running Head: Real Estate Market 4
Graph: Demand and supply of homes in Greater Vancouver
Price
S1
Pe
P2
D1
Q2 Qe Quantity
According to Lee-Young (2018), the reduction in home prices has resulted in reduction in the
supply of homes since seller’s willingness to pay is reduced by falling prices.

Running Head: Real Estate Market 5
References
Evans, Pete. 2018. "Stress Tests, Foreign Buyers and Higher Rates Likely to Impact Housing
Market in 2018". CBC. https://www.cbc.ca/news/business/real-estate-trends-1.4460775.
Lee-Young, Joanne. 2018. "Some Realtors Believe Major Price Correction Underway In Metro
Vancouver". Vancouver Sun. https://vancouversun.com/business/local-business/some-
realtors-believe-major-price-correction-underway-in-metro-housing-market.
Ubs.com. 2018. "UBS Global Real Estate Bubble Index 2018". Chief Investment Office.
https://www.ubs.com/global/en/wealth-management/chief-investment-office/our-
research/life-goals/2018/global-real-estate-bubble-index-2018.html.