A Tale of Two Markets
As we head into the fall, it is a good to review the trends that have developed in our real estate market over the past 6 months.
Throughout Vancouver we have seen two distinct markets emerge during the past spring and summer. The attached market (condos, townhouse, and half duplexes) has seen significant year over year price increases, less listings, and more sales. The condo market is very much a sellers market right now, with limited supply and a high sales-to-listing ratio. At the same time, the detached market has become a more balanced market with more listings, less sales and prices holding steady. Buyers are currently in the drivers seat when shopping for a detached home - with a large selection to choose from in most neighbourhoods and at most price points.
After a tepid fall and early winter where buyers waited on the sidelines to see what the fallout from the Foreign Buyers Property Tax surcharge would be, the market came back to life in March. Today's condo prices are up by about 20% on the Eastside and 13% on the Westside from where they were a year ago, with all of that gain occurring in the last 6 months. Much of the demand has been in the $400,000 to $900,000 range, but there is also significant demand for larger and more luxurious units, particularly those with views, significant outdoor space, or in desirable neighbourhoods. The condo market has been fuelled by first time buyers, young families up-sizing, and boomers down-sizing. Factor in increasingly unaffordable detached homes - anything liveable will start at close to $3M on the Westside and close to $2M on the Eastside – and it’s easy to see why the attached market is so hot.
Change may be in the wind. We’ve seen mortgage rates start to climb on the heels of the Bank of Canada’s recent rate increases which will start to impact affordability for buyers at the limit of their budget. Further mortgage qualification tightening will also have an effect on some buyers’ ability to secure the financing they would like.
Our new BC NDP/Green government campaigned on increasing housing affordability and imposing new restrictions on foreign buyers and speculators – with the new legislative session about to begin, we will find out what measures the province will take to address both supply and demand.
The federal government also announced new reporting requirements this year for principal residence capital gains exemptions, this could damper some of the more freewheeling and speculative players in the market. Keep in mind that the Canadian dollar has also strengthened considerably over the past 6 months, making purchases with foreign capital more expensive.
Locally, the City of Vancouver’s empty home tax will take effect in January. This, coupled with upcoming restrictions on short-term rentals, should increase the rental supply as well as discourage “land banking” where speculators buy properties and leave them empty.
Nationally all eyes are on the Ontario, which on the heels of a number of measures designed to cool the market has seen price and sales fall significantly since new legislation was introduced in April. Whether this is a temporary lull as we saw locally in the last year, or the beginning of a more sustained market correction remains to be seen.
Nonetheless, with the strong economy in the Lower Mainland, continued net immigration into the province and our desirable climate and lifestyle, I would be reluctant to bet against the Vancouver market. I predict that in the next year we’ll continue to see a sellers' market with more moderate increases in prices for condos and other attached homes, coupled with a balanced or even a buyers' market emerging for detached homes, especially at the mid to upper end of the market.
As in any market, there are opportunities, for both buyers and sellers.
For sellers, it is always important to be priced competitively, and to have a professional high quality marketing plan to ensure that your property is a prospective buyer’s first choice. Having some flexibility in final terms and dates can be the key to a successful sale. As always, all real estate is local – the value of your property is specific to your neighbourhood, block, and improvements, and to the number of other similar properties competing for buyers’ attention. Call me for an up to date market evaluation and to find out how our proven marketing system can get you top dollar, quicker.
For buyers, having the very latest sales information to determine comparative value, and the ability to receive listings as soon as they are posted on the MLS system is key to getting the quality home you want. Pre-qualification for financing and the ability to fast track due diligence will make your offer more attractive. I’ll work with you to make sure you see the latest listings for properties that match your needs and budget. Once you decide on a place, I’ll guide you through the process and work with you to craft an offer that gives you the opportunity to secure it on your terms.
Give me a call to get started; I’d be pleased to help!
My best for a great fall!