October 2017 Real Estate Market Update

Home buyer demand continues to differ based on housing type

Click on the above to read the News Release from the Real Estate Board of Greater Vancouver. Summary below:

  • August 2017 home sales were 20% higher than the 10-year August sales average.
  • September 2017 home sales were 13% above the 10-year September sales average.
  • Sales-to-active listings ratio for August 2017 was 35% for all property types
  • Sales-to-active listings ratio for September 2017 was 30% for all property types
  • Sales-to-active listings ratio for September 2017:
    • 14.6% detached homes (balanced market – slowed upward pressure on price)
    • 42.3% for townhomes (seller’s market – upward pressure on price)
    • 60.4% for apartments (seller’s market – upward pressure on price)

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Buyer demand continues for Townhomes and Apartment condos. We find the demand for single family home is still there, especially for homes that were well priced.

Since it’s rapid increase this January, we are seeing the Sales-to-Active ratios (for all property types) started to decrease after reaching its peak so far this year in May 2017 (see graph below).

The HPI benchmark price for all property types in Greater Vancouver continued to rise, although at a slower rate, since the ratio remained in the seller’s market.

According to First National Financial LP “Market watchers appear to be taking the same “wait-and-see” approach to interest rate hikes as the Bank of Canada” Read full article here. Summary below:

  • Economic data that support further interest rate increase:
    • Employment numbers show 10th straight month for gains
    • Wage growth popped up by 2.2% in September after months of sluggish growth. Hourly average wage reaching $26.36.
  • The two key factors that support “wait-and-see” approach:
    • July GDP was flat which forecast a slowing for 2nd half of the year
    • Household debt remained a concern and a determining factor in future rate increase.

The August GDP numbers will come out at the end of this month and they will help determine if there is a trend.

The Bank of Canada moves forward with another rate increase

On September 6 – The Bank of Canada has raised its key interest rate by one-quarter point to 1% after having raised it to 0.75% back in July. To view the announcement – click here.

  • The Bank of Canada says the decisions were based on much higher than expected growth in Q2 GDP.
  • GDP expanded by 1.1% in the second quarter, for an annualized growth rate of 4.5%.  It was the fastest increase in growth in 15 years.
  • The growth is being fueled by consumer spending, strong job growth and low interest rates. Business investment and exports also made significant contributions.
  • In the month of June the economy was led by construction which, in turn, was led by housing – particularly condos.
  • The bank left the door wide open for another hike in 2017.  But it also said it will be watching to see how heavily indebted Canadians adjust to higher rates.

The next dates for rate announcements are October 25th and December 6th.

August 2017 market update

“First-time home buyers have led a surge this summer in demand in our condominium and townhome markets,” Jill Oudil, REBGV president said. “Homes priced between $350,000 and $750,000 have been subject to intense competition and multiple offers across the region.”

  • August 2017 home sales increased 22% compared to same month last year. It was 20% higher than the 10-year August sales average.
  • Sales-to-active listings ratio for August 2017 was 35% for all property types or:

*16% for single family houses (balanced market)
*45% for townhouses (seller’s market)
*76% for condos (seller’s market)

Click here to view our August 2017 market update video featuring Board President Jill.

TD Economics Data Release: Bank of Canada hikes, with more likely to come

  • The Bank of Canada met market expectations, raising its key monetary policy interest rate by 25 basis points, to 0.75%.
  • The June jobs number from Statistics Canada was the last significant economic detail to be delivered before the Bank of Canada’s interest rate announcement today. The creation of more than 45,000 new jobs was far better than forecast and continues a trend that started about a year ago. It all but guarantees there will be an increase in the central bank’s trendsetting rate. As expected, the overnight rate increased by 0.25% to 0.75%.

REBGV June 2017 Market Update Video



Click on the image above to view our June 2017 market update video featuring Board President Jill Oudil.

Demand for condo continues to outstrip supply with a sales-to-active ratio at 93%. Detached home market has returned to Seller’s market with sales-to-active ratio at 25%.

Overall, the sales-to-active ratio has decreased over the last month but the ratio remained above 12% so we will probably not see any price reduction.

The graph below shows the average sales-to-active ratio for all property types in All of Greater Vancouver (REBGV), Richmond, Vancouver and Burnaby.

What I’ve learned from last year was that although the sales-to-active ratio had declined, the sales price did not as long as it remained above around 12%. For single family houses, the price started to drop when the ratio dipped to 13% in August 2016 before it bounced up in February 2017.

In Toronto, home sales collapsed by more than 37% in June as compared to same month last year. New listings shot up by nearly 16% but prices still increased by an average of 6.3%.

Market activity picks up in May

Real Estate Board of Greater Vancouver released their monthly stats report today click here to read.

Home sale last month (May 2017) is reaching the “all-time record sales number” of May 2016 and an 23% increase from April 2017 (see infographic below).

“While sales are inching closer to the record-breaking pace of 2016, the market itself looks different. Sales last year were driven by demand for single-family homes. This year, it’s clear that townhomes and condominiums are leading the way,” said Jill Oudil, president of the Real Estate Board of Greater Vancouver (REBGV).

She said first-time home buyers and people who are downsizing from single family houses are both competing for condos and townhomes while the numbers of homes available for sale remained low.

This is pushing the sales-to-actives ratio for condominium to 95%, meaning almost all (95%) of condos listed are sold. The days a property remains on the market remains low. Buyers have to take action right away or risk losing out. It is often looking at the property today and make offer this or the next evening, often with little or no subjects. We are seeing sold price almost $30,000 to $100,000 above asking price for condos!

Single family houses are also returning to sellers market from buyers market at the end of last year with sales-to-actives ratio reaching 31% last month.
The sales-to-actives ratio for townhomes remain strong at 76%.
All property types are now in sellers market. AGAIN.

 

Impact of BC Election on Real Estate

The BC Provincial Election is coming soon on May 9, 2017. In the past the housing market slows during election time because people are uncertain about the economic future of a province because we don’t know which party is going to be elected yet. People tend to want to wait until after the election when a party is firmly in place to make big decisions such as whether to buy or sell real estate.

This year however, we are not seeing a slow down before the provincial election. Contrarily, we are seeing multiple offers everywhere, in both Metro Vancouver and the Fraser Valley. Condos and Townhomes continued to be hot commodities that multiple offers situation is everywhere. If you see a home coming onto the market, it’s usually, open house weekends, taking offers on Monday. Sometimes you see a home sold before the open house even takes place and often it is sold for more than the asking price.

And now single family houses are making a come back. A successful mortgage broker told me, last year, most of the his clients were applying for mortgages to buy condos. This year, half of his clients are still buying condos but half of them are buying single family houses.

Yesterday, I heard the news on TV reporting “Residential property sales in Greater Vancouver declined 25.7% last month.” And the anchor went on to report other news. I found it very misleading and no wonder people were asking why the market is down when you say there are multiple offers everywhere.

You can see the numbers in Vancouver Real Estate Board of Greater Vancouver Stats News. The sales volume (# of sales transaction) has decrease 25.7% last month as compared to April 2016 when the market was at its highest.

But if you kept reading, it also reported that:

  • April sales were 4.8% above the 10-year average for the month.
  • Jill Oudil, Real Estate Board of Greater Vancouver president said. “Demand (for condo and townhouses) has been increasing for months and supply is not keeping pace. This dynamic is causing prices to increase and making multiple offer scenarios the norm.”
  • By property type, the sales-to-active listings ratio (Supply vs Demand) is 26% for single family homes, 58.2% for townhomes, and 82.2% for condominiums. (Generally, analysts say home prices often experience upward pressure when it surpasses 20% over several months.)

The political parties all agree that supply of new homes in B.C. must be significantly increased in order to improve affordability especially entry level or ‘missing middle’ types of homes. All parties have come to different conclusions on how to increase supply, and how to police speculative demand.

Here is a breakdown of party proposals: B.C. Election 2017: Political parties make promises for affordable housing

And issues on real estate speculation that needs to be addressed: Vancouver’s presale condo market reaches fever pitch

Vancouver’s Real Estate Market Will Keep Falling? NOT!

We see some news articles recently talking about the housing bubble. One of the articles showed charts of decreasing sales volume in Greater Vancouver.  Indeed, according to Real Estate Board of Greater Vancouver, home sales had decrease 30.8% in March 2017 as compared to the record-breaking number seen in March 2016.

But the one sided number didn’t show buyer demand versus supply.

Demand for homes continues to outpace supply in Metro Vancouver

When we look at sales volume as compared to total inventory in sales-to-active-ratio, we see that the market is reviving in townhome, condo and now even single family home markets. The real estate markets had slowed down dramatically over the winter. For detached homes, the sales-to-active-ratio even reached buyers’ market during the winter but now we are starting to see buyers coming back into the market.

The sales-to-active-ratio for Single family homes in Richmond and Burnaby South had increased and started to reach seller’s market again despite dropping to buyers market over the end of last year (see below charts).

In addition, MLS® HPI Benchmark Price for single family home in Vancouver West seemed to increase slightly over the last month (see below).

What I’ve learned over the years is that markets always go up and down. And it always goes up more than it comes down.

A veteran real estate agent said, unless we face some natural disaster or war, it is unlikely to see large price drops. If you are buying for the long term, it is always good advice to buy real estate and wait rather than wait to buy real estate.

All these statistics are general and covers many different neighborhoods.  There are also many different ways of looking at the data and interpreting them. If you look at smaller areas, the data points may not be enough to reflect correctly the market condition.

So I think if you want to learn a market, go to open houses, look at a lot of them and talk to real estate agents. I think it is the best way to know how a market is doing instead of believing one hundred percent in news articles. And I’ve learned that predictions are just educated guesses.

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The Real Estate Market is Still HOT!

The Real Estate Market is Still HOT!

At least in the townhome and condo market.

Real Estate Board of Greater Vancouver’s President Morrison said in the newest stats report that: “While home sales are not happening at the pace we experienced last year, home seller supply is still struggling to keep up with today’s demand. This is why we’ve seen little downward pressure on home prices, particularly in the condominium and townhome markets.”

See the full report here:
Low supply continues to limit Metro Vancouver home buyers

From the graph above, we can see that due to the lack of inventory compared to the sales volume, the price kept going up (at least in the townhouse and condominium markets).
The new BC Home Partnership program and the new Property Transfer Tax exemption amount will likely encourage more first time home buyers to enter the real estate markets and drive up the demand for entry level condos and townhomes even more.

The BC Government announced it will be increasing the first time home buyer property tax exemption to $500,000, saving first-time buyers up to $8,000 in property transfer tax on the purchase of their first home.

In addition, the Government is investing in housing supply and affordability by:

  • Supporting the creation of nearly 5,300 units of affordable and supportive housing.
  • Rental assistance programs for low-income families and seniors support over 33,000 households each year.
  • BC HOME Partnership program will provide over $700 million in mortgage down payment assistance loans to an estimated 42,000 first-time home buyers over the next three years.
  • Increasing the threshold for the first time homebuyers’ exemption from property transfer tax to $500,000 from $475,000.

The BC Government is trying help first-time home buyers get into the red hot real estate market but has not yet address the housing supply situation.

Finance Minister Mike de Jong said “We can’t just focus on getting more people into the market, on its own, without adding to supply, that’s just going to drive prices higher.”

It is taking a long time to get building approvals and the cities have a long backlog of proposed housing units. Currently, there are 69,500 application pending a zoning, rezoning or combined application.
Bob de Wit, CEO of the Greater Vancouver Homebuilders Association, said 69,500 is a “big number” in an area with an average of 20,000 housing starts a year.

In addition, the Government wants developers to pay for municipal amenities like community centres, parks, and skytrain stations but Vancouver Councillor Geoff Meggs said it “sounds like a complex new way for Victoria to impose the entire cost of transportation investments on municipalities.

Anne McMullin, the president of the Urban Development Institute warned that “In pricinple, it makes sense that new development should contribute to the cost of new transportation needs — but costs always get passed along.”

B.C. Budget 2017: Little help for housing in budget. | Vancouver Sun

Permit rules holding up 69500 housing units: Development industry

Single Family Home Price Tripled Since 2006

Real estate boards across the country are releasing their January numbers. According to the report (Metro Vancouver housing market off to a quieter start than last year) release by the Greater Vancouver Real Estate Board, Sales for all housing types continued to drop, falling 39.5% compared to same month last year and dropped 11.1% from December 2016. On the other hand, in Toronto, sales jumped nearly 12%, led by condos.

But a more accurate way of looking at the housing market is to take into consideration of both supply (inventory) and demand (sales). The sales-to-active listings ratio for January 2017 is 21%. Although this is the lowest ratio since January 2015, it is still above the 12%-20% for a balanced market.

Basically, the market is normalizing. It is not a extremely strong sellers market as we’ve seen in 2016 but we are still having multiple offers and no subject sales. If the home is in good condition and well priced, buyers are still fighting for it.

The following are sales to active ratio for 3 different regions in Greater Vancouver for different property types (if you would like data for a specific region, please email us):



It is a good time to buy single family house now because detached homes are in buyer’s market where buyers have more purchasing power.
Since 2006, single family house tripled their values while townhomes and condos only doubled in value in Vancouver, Burnaby and Richmond.
We have seen much stronger appreciation for single family homes compared to condo and townhomes.