DATE

Steve Saretsky -

Condos Continue to Increase Their Market Share of Total Sales; Detached Shrinking Over the past few months i’ve continuously highlighted the growing trend for buyers choosing condos over single family homes. The desire for Vancouver condos continues to grossly outpace single family homes, for obvious reasons, affordability. With foreign buying activity dwindling, in large part thanks to China’s capital controls which are halting overseas real estate investment, the market for Vancouver detached homes has been shrinking. (Single family home sales above $3 Million have plunged 27% ) Single family homes as a percentage of total market sales dropped to 22.8% in July, 2017. In simpler terms, for every 100 sales in Vancouver, roughly 23 are detached homes. This number has been steadily dropping since it peaked in January 2016 at 34.8%. With the detached housing market peaking in early 2016, for various reasons, the sales mix began to shift towards condos. The share of sales for Vancouver condos increased from 59.1% in January 2016 to 68.2% in July, 2017. I expect this trend to continue as the PBOC remains serious about controlling capital outflows.  With the average single family home out of reach for the majority of locals, prices appear

Steve Saretsky -

A Year Later, The Debate Continues. Did the Foreign Buyers Tax Work? It’s been just over a year since the BC Government announced the 15% foreign buyers tax. A tax that was aimed to cool the market and squash speculative activity. So, did it work? The tax was designed to “cool” the market, not crash it. From January 2014 to January 2015, the average sales price of a Vancouver detached house increased by 42%. From January 2015 to January 2016 prices increased a further 43%. From January 2016 to January 2017 the average sales price dropped 20%. Also note the 6 month moving average, which is on a clear trajectory downwards, peaked in August, 2016 the same month the tax was implemented. Detached Home Flipping Hits The Brakes Further, detached house flipping has been nearly cut in half. In 2016, Vancouver detached houses being flipped within one year made up 4.46% of sales, and reached 8.1% over a two year window. It has since dropped to 2.29% and 5.7% respectively. So we’ve since had an immediate halting of detached home prices and flipping activity. Yet condos continue to rise, so what gives? Condo Prices Still Increasing Despite many Vancouverites hoping

Steve Saretsky -

The Tale of Two Markets- A Year After the Foreign Buyers Tax Although I normally don’t like to look too much at mid month numbers, the heavily requested mid month market update is back. Like i’ve been saying for awhile, it’s a tale of two markets. The detached and condo markets appear to be going in very opposite directions. Sales have had a decent uptick from August 2016 but keep in mind that was the first month of the foreign buyers tax, a move that stunned the market. Vancouver Detached Market Vancouver detached sales through the first 15 days of August hit 74 total sales. This was good for a 25% increase compared to last year. However, it was still the third lowest totals in the past decade. Sales continue to putter along, dragging it’s feet, particularly in the Luxury real estate market where sales have plunged 27%. New listings have also dropped in the first few weeks but appear to be settling in right around it’s ten year average. Vancouver Townhouse Market Townhouse sales are also on the upswing. This is partly attributed to new inventory hitting the market. Vancouver townhouse sales jumped from 24 sales in August 2016

Steve Saretsky -

BC Real Estate Market Slows, Dollar Volume Falls 19% Year to Date It was the Vancouver Real Estate market that initially got the party started. As prices began to climb, the contagion spread across the province. Prices across BC ignited, house lunacy resulted in multiple offers in Prince George, and double digit price gains in Chilliwack. However, Recent data released by the BC Real Estate Association suggests the province could finally be cooling. The total dollar volume, which tracks the overall dollars spent on BC Real Estate fell 19% year to date. BC homebuyers have spent a whopping $10.9 Billion less this year. Most of the declines came from Greater Vancouver, which suffered a 26.3% decline, followed by the Fraser Valley & Victoria. Sales & Prices Total unit sales fell 17% across the province year to date but remain above the ten year average. The average sales price year to date dropped 2.8% for BC. The biggest decline was felt in Greater Vancouver, where luxury home sales have ground to a halt.  However, with that being said the year over year price movement haven’t changed much. Comparing July 2016 to July 2017, the average sales price is still up 5% for BC.

Steve Saretsky -

Number of Vancouver Condo Sales Sold Over Asking Price Dips to 49% In July You know it’s a crazy market when you have to call 49% of Vancouver condos selling over asking price a slow down. While it’s probably not the number local buyers were hoping for, any slowdown is welcoming news. In July, the percentage of Vancouver West condos which sold over asking price dropped from 53.9% in June to 48.6% in July. Sales to Actives Ratio Also Falls In July The sales to actives ratio which is key indicator when determining market conditions also slid downwards in July. The ratio fell from 68% to 43% for Vancouver West. This is part of a seasonal down trend which is expected this time of year, however, it’s also a decline of 7% year over year. Days on Market Remains Virtually Unchanged Despite the minor slowdown, the days on market remains virtually unchanged. The median days on market for Vancouver West condos is 9 days, which is the exact same as it was a year ago. Overall it’s a welcoming cool down, if you can even call it that. It sure beats a sales to actives ratio of over 200% for

Steve Saretsky -

Vancouver Homeowners Tapping Into Equity at Alarming Rates With Vancouver real estate prices surging over the past few years homeowners are tapping into their equity (refinancing) at alarming rates. It’s important to understand refinancing and how CMHC quantifies refinancing. “The consumer had a mortgage previously, opened a new mortgage in the current year, the address did not change, and the total mortgage balance increased by more than 10%.” The big takeaway in this scenario is that homeowner mortgage balance had to increase by more than 10% to quantify as a refinance. As per the latest data from CMHC, Vancouver homeowner refinancing (drawing equity) increased 27% year over year. Perhaps even more alarming is the massive growth in consumer refinancing for Abbotsford/Mission. Home prices have surged in these generally lower income areas and with that homeowners are tapping into recently discovered wealth. This is what economists call ‘the wealth effect’. As home prices increase, homeowners feel wealthier, so they tend to borrow and spend more. This was the case in the United States during their housing boom, as researched in the Book ‘House of Debt‘ . From 2002-2006 low credit-score homeowners borrowed an average of $0.40 for every $1 increase in

Steve Saretsky -

Luxury Home Sales In Vancouver Slump Amidst Tightening In China China has been on an aggressive effort to curb capital outflows. As of July 1, Chinese officials took it a step further limiting foreign currency transactions to a paltry $9,000. According to one of the foremost experts on the Chinese economy, Anne Stevenson-Yang, of J. Capital Research Ltd., says the new controls are aimed at stopping “ants moving house.”  A Chinese term for getting a lot of people to make small money transfers to ultimately transfer enough to buy property. But people find ways around the rules, she says. The wealthy often already have their money offshore, so they are not affected by new controls. Regardless, foreign exchange reserves have increased every month since January. And while the impacts on global real estate might be up for debate, the slowdown is already rearing it’s ugly head in Vancouver’s luxury market. Single family home sales above $3 Million have plunged 27% year over year while inventory has spiked 24%. The slowdown also correlates with the BC Government’s latest data which suggests foreign buyers have been dwindling for months. Time will tell how long China is able to sustain recent tightening. If China remains

Steve Saretsky -

Vancouver Condo Prices Continue to Accelerate in July Vancouver condo prices continued to tick upwards in July. A similar trend if you read the June report.  The average sales price hit $880,197 which is good for an 8% increase year over year. New listings saw a small increase but not enough to help inventory levels which are stuck at historical lows. Vancouver Condo Sales Vancouver condo sales fell 2.5% year over year, and for the first time since 2014, sales dipped below the ten year average for the month of July. With that being said sales remain robust and multiple offers continue to ravage desperate buyers. New Listings/ Inventory Levels A sigh of relief for all buyers, new listings for Vancouver condos increased 4% year over year and were just slightly shy of the ten year average. However, the big problem remains ultra low inventory levels. After years of excessive demand it has plunged inventory levels to record lows. With sales hardly slowing, inventory levels have not been able to replenish. The 975 active listings at the end of July, 2017 were the fewest recorded in recent history. Vancouver Condo Prices The price per square foot for Vancouver condos increased

Steve Saretsky -

Detached Homes Enter Buyers Market in July If you read my June Detached Report I highlighted how the detached market was transitioning towards a more balanced market after heating up during the busier spring season. In July, this trend continued. Vancouver single family homes officially dipped back into buyers territory with a sales to actives ratio of 12%. Detached Sales Detached sales have slowed considerably in the last few months. The data suggests this is more than a normal seasonal slow down. REBGV detached sales fell a modest 12% year over year, but now remain 20% below the ten year average for the month of July. Meanwhile, Vancouver West & East detached home sales recorded the fewest July sales over the past decade. New Listings & Inventory Similar to last month, new listings have been normalizing. REBGV new listings fell 8% year over year but were 4% above the ten year average for July. This appears to be happening across the board. REBGV active inventory dropped 2% year over year. Sales to Actives Ratio REBGV- 17% Vancouver East- 14% Vancouver West- 10% Burnaby- 11% Sales to Actives ratios dropped month over month, continuing a downwards trend from last month which

Steve Saretsky -

CRA Takes Aim at Condo Assignments & Foreign Buyers With prices escalating out of control in recent years, it has attracted a growing herd of speculators, eager to profit on a historical bull market. And profit they did. Perhaps one of the most lucrative ways to do it is through pre sale condos. The Scheme is a speculator’s dream, allowing buyers to leverage a favourable deposit structure and a rising market to flip the contract at a higher cost before completion. These flips are incredibly difficult for CRA to track especially if the buyer is overseas. A perfect concoction to make a quick buck and dodge the tax boogeyman. Feds Take Developers to Court That dream could be coming to an end. First reported over at BIV, The federal government is taking the developers behind the Marine Gateway project on Marine Drive and the Residences at West on southeast False Creek to court, probing for information on buyers who flipped their presale contracts before construction was completed to verify compliance with the Income Tax Act. This could be the first of many shoes to drop. As many Vancouver developments are being flooded with assignments, such as Kensington Gardens, which has seen

Steve Saretsky -

Vancouver Real Estate Overheating Led by Condo Market CMHC has it’s eye on Vancouver once again. Canada’s National housing agency believes the Vancouver real estate market is showing signs of overheating as per their latest report. “Conditions in different segments of the Vancouver market have further diverged since the beginning of the year. The townhouse and apartment markets are currently above the threshold for overheating, leading to higher asking prices and more dwellings selling in multiple offer situations.” Of course if you’ve been reading this blog this would come as no surprise. There’s been a clear divergence between the detached market and the condo market. Both appear to be going in opposite directions. The Vancouver detached market, although having a nice recovery in the spring, has failed to climb back to peak prices. The average sales price is down 8% year over year. On the other hand, you have the Vancouver condo market which could be reaching peak insanity, the sales to actives ratio recently exceed 200% for one bedroom units. Further, the average sales price is still climbing, up 14% year over year in June. The surge in condo prices is hardly surprising after a BC Government first time

Steve Saretsky -

Vancouver Condo Price to Rent Ratios Exceeds Major US Cities There seems to be no end in sight for Vancouverites hoping for more affordable housing. Vancouver condo prices are accelerating by about 2% each month, while renting isn’t getting any cheaper. According to PadMapper Vancouver was the most expensive city to rent in Canada. In June the median rent price for one bedroom units grew by 2.5%, settling at $2,090, while the median rent price for two bedrooms increased by 2.5% to $3,230. While rent prices have been increasing, they haven’t been able to keep pace with purchase prices. Hardly surprising since you can’t take out a mortgage to pay for rent, therefor rents tend to align much closer to local incomes. Here’s how the price to rent ratio’s shake up in Vancouver compared to a couple big time US cities that Vancouverites love to compare to. One Bedroom Price to Rent Ratio [table id=40 /] Two Bedroom Price to Rent Ratio [table id=41 /] So what does this mean? Here’s how Trulia Interprets Price to Rent Ratio’s: Price-to-Rent Ratio of 15 or less: Buying a home is a better deal than renting for people planning to live in a home

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The Canadian Economy

Steve Saretsky -

Condos Continue to Increase Their Market Share of Total Sales; Detached Shrinking Over the past few months i’ve continuously highlighted the growing trend for buyers choosing condos over single family homes. The desire for Vancouver condos continues to grossly outpace single family homes, for obvious reasons, affordability. With foreign buying...

Steve Saretsky -

A Year Later, The Debate Continues. Did the Foreign Buyers Tax Work? It’s been just over a year since the BC Government announced the 15% foreign buyers tax. A tax that was aimed to cool the market and squash speculative activity. So, did it work? The tax was designed to...

Steve Saretsky -

The Tale of Two Markets- A Year After the Foreign Buyers Tax Although I normally don’t like to look too much at mid month numbers, the heavily requested mid month market update is back. Like i’ve been saying for awhile, it’s a tale of two markets. The detached and condo...

Steve Saretsky -

BC Real Estate Market Slows, Dollar Volume Falls 19% Year to Date It was the Vancouver Real Estate market that initially got the party started. As prices began to climb, the contagion spread across the province. Prices across BC ignited, house lunacy resulted in multiple offers in Prince George, and...

Steve Saretsky -

Number of Vancouver Condo Sales Sold Over Asking Price Dips to 49% In July You know it’s a crazy market when you have to call 49% of Vancouver condos selling over asking price a slow down. While it’s probably not the number local buyers were hoping for, any slowdown is...

Steve Saretsky -

Vancouver Homeowners Tapping Into Equity at Alarming Rates With Vancouver real estate prices surging over the past few years homeowners are tapping into their equity (refinancing) at alarming rates. It’s important to understand refinancing and how CMHC quantifies refinancing. “The consumer had a mortgage previously, opened a new mortgage in...

Steve Saretsky -

Luxury Home Sales In Vancouver Slump Amidst Tightening In China China has been on an aggressive effort to curb capital outflows. As of July 1, Chinese officials took it a step further limiting foreign currency transactions to a paltry $9,000. According to one of the foremost experts on the Chinese...

Steve Saretsky -

Vancouver Condo Prices Continue to Accelerate in July Vancouver condo prices continued to tick upwards in July. A similar trend if you read the June report.  The average sales price hit $880,197 which is good for an 8% increase year over year. New listings saw a small increase but not...

Steve Saretsky -

Detached Homes Enter Buyers Market in July If you read my June Detached Report I highlighted how the detached market was transitioning towards a more balanced market after heating up during the busier spring season. In July, this trend continued. Vancouver single family homes officially dipped back into buyers territory...

Steve Saretsky -

CRA Takes Aim at Condo Assignments & Foreign Buyers With prices escalating out of control in recent years, it has attracted a growing herd of speculators, eager to profit on a historical bull market. And profit they did. Perhaps one of the most lucrative ways to do it is through...

Steve Saretsky -

Vancouver Real Estate Overheating Led by Condo Market CMHC has it’s eye on Vancouver once again. Canada’s National housing agency believes the Vancouver real estate market is showing signs of overheating as per their latest report. “Conditions in different segments of the Vancouver market have further diverged since the beginning...

Steve Saretsky -

Vancouver Condo Price to Rent Ratios Exceeds Major US Cities There seems to be no end in sight for Vancouverites hoping for more affordable housing. Vancouver condo prices are accelerating by about 2% each month, while renting isn’t getting any cheaper. According to PadMapper Vancouver was the most expensive city...

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The Saretsky Report. December 2022