Vancouver Real Estate Market News
We recently touched on the issue of Foreign Ownership of Vancouver Real Estate be highlighting a study undertaken by Andy Yan a renowned Senior Urban Planner with Bing Thom Architects here. A newly released report by Sotheby's International Realty has revealed that foreign ownership of the luxury single family real estate market in Vancouver is currently sitting at 40%. Their report entitled 'Top Teir Trends Report' surveyed Sotheby's own real estate agents to find out who was purchasing the luxury homes in Vancouver, Toronto and Montreal. They deduced that most come from China, but recently there has been a surge in buyers from Iran and the United States. The report also dialed in on those purchaser's preferences. They defined a luxury home in Vancouver as follows:
- Greater than 3,500 sq ft
- Pricing starting at $2.8m
Balance is returning to the Greater Vancouver housing market.We are starting to see a closer balance between the demand from home buyers and the supply from sellers. This is creating a stabilizing impact on home prices, and has been doing so for the last three months. During April 2013 2,627 properties changed hands on the MLS®. Compared to the same month last year this represented a 6.1% decline, but an 11.9% increase compared to March 2013 where 2,347 properties were sold. In terms of numbers of sales, April of 2013 was 20.9% below the 10 year activity average, and was the slowest April since 2001. Sandra Wyant, the Real Estate Board of Greater Vancouver mentioned:
While the number of home sales remains below average, properties that are priced right are selling and we’re seeing greater balance between buyer demand and the number of homes listed for sale. This is having a steadying influence on home prices in the region.New listings on the market totalled 5,876. This is a 3% decline when we compare those numbers to a year earlier (April 2012), and 21.4% decline from March 2013. Sales to active listing ratio (which we touched on in our last article) is sitting at 15.7%. March and April of this year both showed this figure to be above 15%. The last time this ratio was over 15% was in May 2012.
There have been modest increases in home prices across the region over the last three months. This comes on the heels of home price declines of approximately five to six per cent in Greater Vancouver during the last half of 2012 - Sandra Wyant
Detached Vancouver PropertiesDuring April 2013 we saw a total of 1,064 sales for detached properties. Compared to the same month last year, this is a 5.5% decline (1,126 sales) and compared to April 2011, this is a 24.1% decrease (1,402 sales). Benchmark pricing is currently sitting at $914,000. Decreasing from April 2012 by 5.2%. Since the start of the year, this benchmark price has increased 1.4%.
Apartments in VancouverApril 2013 saw 1,052 sales during the month. Compared to the same month last year where 1,190 sales occurred this represents a 12.4% decline. Comparing against April 2011 (1,201 sales) we see a 24.1% decrease. Benchmark pricing is sitting at $365,900, declining 2.6% from a year ago. Since January this benchmark price has increased 2.1%.
Attached properties in VancouverWe saw 511 sales for Attached properties in April. Compared to a year ago, this is a 5.8% increase (483 sales). When we look back to 2011, we see a 17.8% decline (622 sales). Price benchmarks are sitting at $455,200, which represents a 3.5% decrease over the year, but from January this benchmark has increased by 1.2%. Call me anytime to discuss these figures, and how they apply to your situation. My phone is always on. Adam Chahl +1 778 385 6141.
Vancouver Real Estate has been rather 'tepid' over the past few months, when compared to our more typical market volumes and prices of years past. We are seeing some gradual signs of progress over the past month or so, we are seeing a couple of key metrics improve. Those are the sales to active listing ratio, and the decrease in year of year sales are slowing since last fall where we saw a balmy 27% decline in the number of homes sold. Let's examine the sales to active listing ratio - to come up with this figure, we take the number of homes sold in a month and divide it by the number of active listings for that same month. So if we examine March 2013, there were 2,347 sales and 15,460 active listings, we arrive at a sales to active listing ratio of 15.2%. Now statistically that puts us in a Buyer's market. Just. We consider a balanced market when that ratio sits between 15-20%. Below 15% shows a Buyers's market, when it tips above 20% then we see a Seller's market. A word of caution - just because those number are improving in the sense that we are experiencing more of a balanced market, no one expects things to return to the red hot days that we all recall hearing about in the press. Cameron Muir, the BC Real Estate Association's chief economist recently commented:
“I don’t think anyone expects to see prices accelerate any time soon like in the previous run-up,”Professor Tsur Somerville of UBC suggested that we are going to see sluggish prices for the remainder of 2013, but stopped short of suggesting a Vancouver Real Estate price crash. He says:
Given where interest rates are, it would be silly to expect a large change in pricesUnless we have a major change in interest rates, or a meltdown of the financial markets, then the whole of Canada's, if not the worlds could face turmoil. Vancouver residential sales began weakening in the fall of 2011, buyers are waiting for further softening of prices, while sellers are holding out for better offers, or they are pulling their homes off the market if there is no motivating factor to sell, resulting in a sort of stalemate. You can read March 2013's statistics here. You can call me anytime to see how this news applies to you and your specific situation. My cell phone is always on. Adam Chahl +1 778 385 6141.
Since April 2008, Vancouver mortgage rates have been on a steady decline. Financing Minister Jim Flaherty constantly reminds us that rates will go up soon, and then fixed rates drop shortly after. So what gives?
It's important to remember the government's role during a recession. Although there has been a lot of stimulus (especially in the US and Europe), there is caution of high inflation following any recovery. Government usually combats high inflation first by raising interest rates, which reduces borrowing and generally reduces growth. Flaherty's obvious concern is that with low interest rates and Canada household debt on the rise, that if interest rates rise many Canadians will be unable to service their debt. So, they warn us that rates will go up... but they never do.
What has been really interesting is Flaherty diving right into the mortgage industry and requesting lenders increase their rates whenever a 5 year fixed rate drops below 2.99%. Who knows why 2.99% is acceptable, but 2.89% is not, but Flaherty does not want borrowers feeling "payment shock" when their mortgage comes up for renewal in 5 years and rates are inevitably higher (by the way, not only is 2.89% available through brokers but even 2.79% for certain circumstances). Flaherty has already warned banks not to enter a rate war, and made a "stern call" to Manulife to encourage them to go from 2.89% to 2.99%. Like the banks really need to be lining their pockets with fatter margins. The way I see it, they are privately run companies and pay big bucks to limit their risk.
So currently, there is both downward pressure on rates (due to falling/low bond yields) and upward pressure (Mr Flaherty) which should keep rates really tight to the 3% mark for medium term rates (5 years).
[caption id="attachment_35034" align="aligncenter" width="589"] LIBOR Rate since 2009 - See the correlation
between variable rate discounting and the LIBOR[/caption] But how about variable rates? Discounts off prime went from Prime - .9% to Prime within a 6-8 week period in August - October 2011, immediately after the US debt was downgraded from AAA to AA. Variable rate discounts are priced primarily on what is happening with the LIBOR rate (London Inter-Bank Offered Rate...very similar to our overnight lending rate which our Prime rate is based off of) and the LIBOR has been dropping steadily since July 2012. This is why we have seen discounts off prime go from nothing (3% net rate) to Prime - .35% or .4% (net rate 2.6% - 2.65%). I expect the trend to continue, at least for the short term, which should see better variable discounting in the near future. Final Thoughts: Expect fixed rates to stay around the 3% level for 3-6 months and for variable rate discounts to increase slightly to Prime - .5% or even Prime - .6% by the end of the year. Our Vancouver Mortgage Broker, Kyle Green weighs in on the outlook for Vancouver Mortgage Rates. Kyle can be reached by his website, or at his office: +1 778 373 5441.
With the first quarter of 2013 coming to a close we take a look back on the month of March and reflect on the activity and prices that we saw. It seems an increase in activity is balancing out the market, and keeping average prices in check. During March Vancouver Real Estate Statistics for 2013 we saw 2,347 sales on the MLS®. Compared to the same month in 2012, this was a 18.3% decline. Comparing to February of this year, that represents a 30.6% increase. This March was the second lowest in terms of number of sales since 2001, and the figures show us 30.2% below the 10 year average.
"While home sales were below what’s typical for March, we are seeing more balance between the number of sales and listings on the market in the last two months, which is having a stabilizing impact on home prices," Sandra Wyant, REBGV president said.In terms of new listings, we saw 4,839 in the Vancouver area. Year on year this is a 17.2% decline when we compare to March 2012, and a slight increase of 0.1% compared to February this year. March of this year saw the new listing average sitting 14.4% below the 10 year average. Total number of properties listed is stiing at 15,460, which represents a 1.5% increase compared to the same month last year, and 4.5% increase compared to February 2013.
Detached Vancouver PropertiesTotal number of detached sales for Vancouver MLS Listings totalled 933 for March 2013. This is a 21.1% decline when comapred to March 2012 when 1,183 sales were recorded. The benchmark price decreased from the same time last year to $906,900.
Apartments in VancouverDuring March 2013 we saw 982 apartments sold in the Vancouver area. A 17.5% decline compared to March 2012, when 1,191 properties were sold. When we compare to March 2011 we see a 39.5% decline (1,622 units sold). Benchmark pricing decreased from the same time last year by 3.3% to $362,100.
Attached property salesWe sold 432 attached properties in Vancouver during March 2013. Again registering a decline year on year of 13.6% when compared to the 500 units sold in March 2013. When we compare back even further to March 2011, we see a decline of 34.8% (1,622 sales that month). Benchmark pricing decreased 2.5% from the same month last year, and is sitting at $454,300.
Return to GST in BCImportant to remember that we have reverted to old system of GST and PST as of April 1st. With regards to Real Estate in BC we need to be aware of the following:
- Sales taxes on a new home are now subject to GST and a 2% BC Transition Tax, which brings the total to 7%.
- HST on Real Estate Commissions has been reduced to 5% from April 1st.
As of March 28th, Bank of Montreal (BMO) will not be renewing their lowest mortgage rates - their 5 year posted rate that they recently lowered to 2.99% a move that has drawn attention from Ottawa and in particular finance minister Jim Flaherty, as he encourages lenders not to engage in a full on price war over rates. BMO had been seeking to make up market share from its rivals by heavily publicizing the posted rate cut from 3.09% to 2.99%. The posted mortgage rate is that at which a borrower must qualify against. Flaherty's concerns stem from the ongoing risk that Canadians maybe taking on more debt than they can handle, and with a lower posted rate, more borrowers would be able to qualify for higher value mortgages. Buyers can of course still secure mortgages with lower rates than 3.09%. Just last week our clients have been approved for 5 year fixed term mortgages at 2.89% and 2.99%. This is because lenders will often discount their rates from the posted rates. BMO's press release stated that they were 'increasing' their mortgage rates, which, in realty means they are just letting their promotional rate expire, and as a result the posted rates will jump back up to 3.09%. To follow, Manulife Bank announced last week that they were also cutting their 5 year fixed rate to 2.89%, but after a call from Mr Flaherty's office who deemed the move unacceptabl, they quickly changed their tune, and brought their rate back up only a day later. The access to cheap money continues, but only if you can qualify. We have heard numerous stories over the past few weeks of offers on properties falling apart due to clients not being able to get approved financing. Don't let this happen to you! All of our clients are pre approved with the top mortgage brokers in the city with the lowest mortgage rates. Contact me anytime regarding this and how it affects you: Adam Chahl +1 778 385 6141.
According to a new report by British based Real Estate firm Knight Frank, Canadian Luxury Real Estate will be set for a boost from an increasing number of wealthy individuals around the world, that will push up the demand for luxury real estate, making high-end properties in Vancouver increasingly valuable. The report states that over the next 10 years there will be 50% more people with net assets worth more than $30m US - this translates into around 286,000 people. Emerging markets in Asia and Latin america will see the most growth of the wealthy, and China's wealth population is expected to more than double over the 10 year period. According to the study, in Canada, we will see a rise of 35% over the decade to around 6,640 individuals, centered mainly around Toronto. As we see the number of wealthy individuals increase, as a result, we will see an increased demand for luxury real estate in desirable areas like Vancouver. Supply of luxury Real Estate is unlikely to spike, and as a result we will see upward pressure on the prices of these assets, despite the recent softness. Andrew Hay, the head of global residential property at the London based firm Knight Frank highlighted that the current weakness in Vancouver's Luxury Home market is probably a temporary one:
The amount of money pouring into high-end real estate in any specific location shifts as wealthy people look for new places to put their funds, currency rates fluctuate, and governments put in place measures to cool overheated real estate markets, he said. “There is an increasing amount of money waiting to be spent, but it is better informed and changes direction quicker than ever before.”Canada, along with New Zealand and Australia will continue to be targets of the wealthy to park their money and set up home. Due to the rule of law, strong domestic balance sheets, political stability, and of course, being great places to live! Don Campbell, of the REIN network in Vancouver noted, as we did in our recent blog post, that the pattern of home price growth in Vancouver tracks the movement of Chinese GDP - an indication that Chinese investors have considerable influence on the Vancouver Real Estate Market Let us know your thoughts on this, comment below, and don't forget my phone is always on. Call me if you have questions, or to put a plan in place to see how you can take advantage of this information. Adam Chahl +1 778 385 6141.
In a controversial decision last week by Vancouver city council, our first 'co-housing' development has been approved with city council allowing the re-zoning of the land on Main Street and 33rd ave from RS-1 to Commercial zoning (CD-1). This is the first development to be approved under the City's new affordable housing interim rezoning bylaw. Mayor Gregor Robertson wrote:
“Confronting the challenge of housing affordability has been a top priority of my work as mayor, and it’s encouraging to see early progress after the steps we’ve taken to enable innovative and affordable housing projects like this one,”Co-housing is actually a very creative way that could solve some of the affordability problem with our housing in Vancouver. Many countries in Europe have co-housing and it's proving very successful. It originated in Denmark in 1927 and now around 1% of the population, or around 50,000 danes now live in co-housing, where the community spirit is much stronger. Co-housing is different to co-operative housing, co-housing is a different approach to affordable housing where living areas are shrunk and instead the development provides larger common areas like kitchens and meeting areas. Mostly appealing to families. The project still needs to go before an urban design panel to re-work the design of the building, and there was some opposition from some councillors and local residents. What are your thoughts on the plans? Do you think this is a positive way to influence the affordability issues in Vancouver? Comment below!
February 2013 saw an increased level of sales compared to January this year. An increase of 33%. We saw a total of 1797 sales on the MLS for the month. Historically this was 29.4% lower than February 2012. Although we see an slight increase month on month, we still see homes sales trending below historical averages. Last month's sales figures were the second lowest February in the region since 2001, and trended 30.9% lower than the 10 year average for February.
“Sales in February followed recent trends and were below seasonal averages, though our members tell us they saw more traffic at open houses last month compared to the previous six to eight months, said Eugen Klein, REBGV president.Sales to active listing ratios are sitting at 12.2%, that's a 2% increase from last month. This is the first time since June 2012 that the ratio has been over 11%.
“With a two-point increase in our sales to active listings ratio and a reduction in the average number of days it’s taking to sell a home, February showed some subtle indications of a changing sentiment in the marketplace compared to recent months,” Klein said.In terms of new listings, a total of 4,833 new listings came online during the month. Compared to the same month in 2012, that was a 13% decline, and a 5.8% decline from the 5,128 new listings in January 2013. Historically, new listing numbers in February trended 4% higher than the region's 10 year new listing average.
Detached Vancouver HomesIf we look at the number of sales of detached properties in Vancouver we see a total of 704 sales for the month of February Compared to the same month last year when 1,101 units were sold, we see a 36.1% decrease. If we look back to 2011, then we see at 49.8% decrease from the 1,403 units sold in February 2011. In terms of benchmark price, the detached market peaked in May 2012 and has decreased 6.8% since then to $901,500.
Apartment PropertiesWe sold 760 apartment properties in February 2013, which was a 25.5% decline compared to 1,020 sales in the same month for 2012. Compared to 2011 where 1,206 properties changed hands, then we are looking at a 37% decrease. Benchmark price is sitting at $360,400 which is a 3% decline from the same month last year, and since the peak in May 2012, prices have declined 5.8%.
Attached Properties333 attached properties were sold in February 2013, 21.5% down from the 424 sales in the same month for 2012, and 31.9% down from the 489 sold in the same month in 2011. Prices are benchmarking at $455,500 and compared to the same month last year this represents at 0.7% decline. Peaking in April 2012, the attached benchmark price has declined 6.5% Call me today to make sense of these numbers, and what they mean to you. Adam Chahl - 778 385 6141.
Later this spring, city officials will suggest to city council that amendments be made to the Laneway housing program to include other family zone areas. Laneway housing was launched in Vancouver in 2009, and so far has issed 800 permits, and more than 500 have been constructed on lots zoned RS-1 and RS-5. These zonings contribute 94% of single family lots in Vancouver. The proposed amendments will include:
- A faster permit process for laneway houses that are one story, and ensure that provision has been made for on site parking.
- Allow more floor area for living and storage space, without increasing the footprint of the home.
- Encourage more developments of one story laneway housing, which have less impact on neighbours and are more accessible for an aging population and families with small children.