DATE

East Vancouver Condo
Steve Saretsky -

Demand For the East Side Explodes As Buyers Get Priced Out of the West As prices continue to surge, buyers are being squeezed further and further east. In fact, an incredible shift is underway, particularly amongst younger first time buyers who are desperate to enter the market.  East has become the new West, as hipsters multiply on Main Street. A great migration is underway… In June 2017, 60% of East Vancouver condos sold over asking price, that’s higher than the 53% on the West side. But even more gruesome is the sales to actives ratio in East Vancouver. It reached a mind boggling 148% in June, a new record that has never been seen before. Just for context, a sales to actives ratio of 20% is considered a sellers market. The ten year average for the month of June is 29%, so 148% last month is truly considered a blow off top. One Bedroom Condos Face Explosive Demand The demand for one bedrooms is even more fierce. One bedroom inventory has plummeted 45% year over year, pushing the sales to actives ratio to a whopping 206%. That means for every new listing there are two sales. Buyers Spend Over $96

Steve Saretsky -

Multiple Offers Surge for Vancouver Condos, Particularly on the East Side The Vancouver condo market continues it’s upwards surge into parabolic territory. In my Vancouver Condo Report June 2017 I highlighted that new listings fell year over year, and inventory plummeted 20% year over year. This has created a flurry of bidding wars, price discovery has been thrown out the window. Multiple Offers Increasing Multiple offers seem to be expected on just about any condo. Sales over asking price have been rising. In June, sales over asking price for Vancouver West condos hit 54%, that’s above last years 49%. Not included on this chart is the East side of Vancouver, where the madness was even more severe, 143/237 condos sold over asking price, or 60%. Sales to Actives Ratio Still Increasing The sales to actives ratio hit a whopping 82% in June which is indicative of an insanely hot sellers market. Days on Market Still at Record Low Naturally, days on market has remained low, currently sitting at 8 days. The standard procedure of listing it and giving it one week exposure before multiple offers is very prevalent. Buyers are being forced to speed up much of their due diligence

Steve Saretsky -

Homeowners Could Be Suppressing New Listings In Vancouver & Toronto There’s been much chatter about the apparent bursting of the Toronto real estate bubble. Home sales have plummeted 37%, meanwhile the average sales price has sunk by 14%. Sounds awfully familiar to the Vancouver real estate market after the shock of a foreign buyers tax, doesn’t it? In fact, you could argue things were even worse in Vancouver at one point. Back in January, sales in Vancouver had fallen 39% year over year, with the average sales price having plunged 24% from January 2016. Since then, Vancouver has rebounded nicely, mostly thanks to a purge of new listings. There’s been an extremely close relationship between sales and new listings in Vancouver. As sales plunged, sellers refused to sell in a falling market, slowing the bleeding. At first glance, it looks like Toronto is following a different path, sales have plunged and new listings are soaring, up 16% year over year for June… However, recent data from President of Realosophy Realty, John Pasalis, suggests new listings are now beginning to trend downwards. It begs the question, will Toronto homeowners follow in Vancouver’s footsteps and suppress new listings? Or will further policy

Steve Saretsky -

If you read my post the other day (What Rising Interest Rates Mean for Vancouver Real Estate) then you were fully prepared for today’s interest rate hikes. To little surprise, the Bank of Canada Governor Stephen Poloz hiked interest rates 25 basis points. Yep, the first rate hike in 7 years. A tweet storm erupted as a hawkish Poloz hinted at another potential rate hike coming in October. Here’s a roundup of commentary from the smartest minds in the biz. Mohamed A. El-Erian, New York Times best selling author and chief economic adviser at Allianz believes the move was aimed to tame Canadian real estate prices. Meanwhile, Jared Dillan, Strategist at Mauldin Economics and author of The Daily Dirtnap believes the move was targeted at investors who have been shorting the Canadian dollar. Of course the Canadian dollar surged after the rate hike to it’s highest levels since August, 2016. Benjamin Tal, the Deputy Chief Economist of CIBC downplayed the Bank of Canada’s rate hike and instead believes the latest stress testing which I discussed last week will have a more significant impact on the Canadian real estate market moving forward. To little surprise all 5 Canadian Banks also raised their

Steve Saretsky -

Bank of Canada Expected to Hike Interest Rates This Week Markets appear to be pricing in an imminent Bank of Canada rate hike on Wednesday. Here’s why Maclean’s believes interest rates are going up. Should Stephen Poloz and the Bank of Canada follow through with an expected 25 basis point increase it will likely have a few impacts on Vancouver Real Estate. Changing of the Guard First, it has the potential to create a psychological change or a shift in the market. The real estate market has gotten comfortable with historically low interest rates, the first rate hike in over a decade should signal to the market that borrowing money is about to get more expensive, and ultimately buyers purchasing power will be lowered. Could this trigger sellers to cash in now? With condo inventory at a decade low it would certainly be a welcoming change. HELOC Debt Will Rise Canadians owe $211 Billion on Home Equity Lines of credit. With real estate prices rising, more and more Canadians have been using their homes as ATM’s. With the average balance of a HELOC around $70,000 and nearly 40% of people with HELOC’s not making regular payments against the principal, rate

Steve Saretsky -

OSFI Calls for Stress Tests on Uninsured Mortgages In a potential landslide move, OSFI (Office of the Superintendent of Financial Institutions) released draft changes to the Residential Mortgage Underwriting Practices and Procedures, which included a stress test for uninsured mortgages & a ban on bundled mortgages. The proposed changes to Canadian mortgages include: Requiring a qualifying stress test for all uninsured mortgages; Requiring that Loan-to-Value (LTV) measurements remain dynamic and adjust for local market conditions where they are used as a risk control, such as for qualifying borrowers; Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements. So what does this all mean? It means all mortgages including those which have a down payment with 20% or more will be required to pass a stress test. The stress test would likely include an additional 2% rate on top of the borrowers proposed mortgage rate. This means borrowers will likely qualify for less. Further, the proposed ban on bundled mortgages targets mortgage providers teaming up with unregulated rivals to circumvent rules limiting how much they can lend against a property. This will hurt alternative lenders like Equitable Group where 10% of the company’s new mortgage originations

Steve Saretsky -

MLS Benchmark Jumps 3% Month Over Month in Vancouver The latest June data has been released and If you haven’t already read my Vancouver Real Estate Detached Report June 2017 or the Vancouver Condo Report June 2017 some of these numbers may surprise you. The MLS Benchmark price for Vancouver jumped nearly 3% month over month to $1,233,200. Full disclosure, this includes all three market segments (detached, condo, and townhouse). Vancouver MLS Benchmark For those who might be mystified by this price acceleration it’s important to also factor in real time price movements, which I find are best noted using the average sales price. As you will see below, the average sales price paints a slightly different picture. The average sales price indicates prices actually fell month over month, and have been treading water for the past year. The average sales price is up 0.3% year over year. Now this is not to say the MLS benchmark is not accurate, it just tends to lag, and does not show larger price fluctuations in a more volatile market. So how does one interpret this all? Here’s my take. The detached market appears to have flatlined, according to the average sales price

Steve Saretsky -

Vancouver Condo Inventory Plummets 20% In June This is beginning to sound a little repetitive (May Numbers Here) but the Vancouver condo market continued it’s torrid pace in June. Thanks in large parts to falling inventory, which dropped 20% year over year. Sales remained strong, as a plethora of buyers were stuck competing over the few listings available. Full analysis of sales, new listings, and prices below. Vancouver Condo Sales Condo sales fell 8% year over year but were still 13% above the ten year average. I’d argue sales could have been higher if we had more inventory as many buyers remain shutout after losing in multiple offers. New Listings/ Inventory Levels New listings dropped 3% year over year in June, and were 13% below the ten year average. Sellers appear to be nervous about selling as competition to re enter the market is fierce. Vancouver condo inventory fell to a paltry 835 units available for sale. This is a 20% drop year over year, and the fewest available condos for sale of any June in the past decade. This graph highlights just how severe the lack of available inventory really is. Vancouver Condo Prices Condo prices continued to rise

Steve Saretsky -

Detached Market Continues to Stabilize, Inventory Up 9% The detached market appears to have begun it’s seasonal downturn. This comes after a relatively decent spring season where sales returned to more normal levels. In case you missed the May 2017 numbers, you can check those out here. Let’s analyze the June numbers below. Detached Sales REBGV detached sales fell 14% year over year in June. Although it’s still a pretty substantial drop, you’ll notice it’s not nearly as steep as the 50% declines we were seeing back in the winter of 2016. However, the detached market really began to cool in the Spring of 2016, therefor the year over year sales declines from here on out should not appear very significant. REBGV detached sales were 3% below the 10 year average, which suggests a stabilization. New Listings & Inventory New listings are also recovering. There have been wild swings over the last 8-10 months as sellers have faced a ton of uncertainty with new housing policies. It appears to be business as usual, REBGV new listings were up 1% year over year in June, while Inventory is also up 9% overall. Sales to Actives Ratio REBGV- 24% Vancouver East- 20%

Steve Saretsky -

Housing Starts Slow Across Greater Vancouver as Developers Fail to Keep up With Construction Recent data suggests housing starts are falling midway through 2017. From January through May, new housing starts fell from 10,860 in 2016 to just 9104 in 2017. That’s good for a 16% drop year over year. This is hardly surprising as trying to match our record housing starts in 2015 and 2016 would be hard to do. This historical housing boom has left an avalanche of new supply in the pipeline. There are currently a whopping 37,009 units under construction in Greater Vancouver. That’s up nearly 26% year over year. This graph highlights just how unprecedented the numbers are. It seems developers are struggling to keep up as projects are continuously being delayed. Such as Kensington Gardens which is experiencing a flood of assignments. Either that or they don’t want an avalanche of new supply hitting the market at the same time. As we can see below, the completion rate has never been lower. Get a weekly Roundup of Market News Sent to your Inbox.

Steve Saretsky -

16% of Kensington Gardens Up For Assignment With Project Still One Year Away From Completion There’s been plenty of debate over Vancouver pre sales condos being flogged overseas before most local buyers can get their foot in the door. While there’s still no official data, evidence is mounting of offshore investment in pre sale condos. While locals might eventually end up as the end consumer, the question becomes how many will be left empty and what is the impact on prices when flipped (assigned) shortly after. A recent development from WestBank called Kensington Gardens highlights this growing trend of assignments. Kensington Gardens Flip Jobs Currently there are 65 assignments (some sold, some still active) of the total 404 total units in the development. That equates to 16% of the building being flipped before completion which is still one year away. I would expect the number of assignments to continue growing as the building nears completion, particularly if foreign buyers want to avoid the 15% foreign buyers tax upon closing. With the developer charging a 1.5% fee on each assignment it’s a lucrative deal for both sides. So what’s the big deal? With pre sale prices now hitting $1500/ foot in

Steve Saretsky -

Home Flipping Fluctuating as Markets Diverge There’s been a lot of talk about speculation in the Vancouver real estate market. Thanks to the help of UBC economist Tom Davidoff, together we were able to track the amount of house flipping activity in the market. Before we analyze the numbers, it’s important to understand the difference between speculation and house flipping. Speculation is defined as “investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.” One could argue this is what some Vancouver buyers do in order to justify current prices. House flipping on the other hand is a symptom of speculation, where a buyer buys and sells a home within a one year period. Sometimes upgrades and renovations are done, other times they simply hold and sell into a rising market for a quick profit. The Numbers So far in 2017,  4.36% of Vancouver homes (condos, townhouses, and detached) have been flipped within one year. In 2016 that number was 4.13% and just 1.95% in 2015. House flipping has been steadily growing, but numbers are well off our 2007 record of 7.24%. You’ll also notice the number was high in 2008, 6.11%,

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Demand For the East Side Explodes As Buyers Get Priced Out of the West As prices continue to surge, buyers are being squeezed further and further east. In fact, an incredible shift is underway, particularly amongst younger first time buyers who are desperate to enter the market.  East has become...

Steve Saretsky -

Multiple Offers Surge for Vancouver Condos, Particularly on the East Side The Vancouver condo market continues it’s upwards surge into parabolic territory. In my Vancouver Condo Report June 2017 I highlighted that new listings fell year over year, and inventory plummeted 20% year over year. This has created a flurry...

Steve Saretsky -

Homeowners Could Be Suppressing New Listings In Vancouver & Toronto There’s been much chatter about the apparent bursting of the Toronto real estate bubble. Home sales have plummeted 37%, meanwhile the average sales price has sunk by 14%. Sounds awfully familiar to the Vancouver real estate market after the shock...

Steve Saretsky -

If you read my post the other day (What Rising Interest Rates Mean for Vancouver Real Estate) then you were fully prepared for today’s interest rate hikes. To little surprise, the Bank of Canada Governor Stephen Poloz hiked interest rates 25 basis points. Yep, the first rate hike in 7...

Steve Saretsky -

Bank of Canada Expected to Hike Interest Rates This Week Markets appear to be pricing in an imminent Bank of Canada rate hike on Wednesday. Here’s why Maclean’s believes interest rates are going up. Should Stephen Poloz and the Bank of Canada follow through with an expected 25 basis point...

Steve Saretsky -

OSFI Calls for Stress Tests on Uninsured Mortgages In a potential landslide move, OSFI (Office of the Superintendent of Financial Institutions) released draft changes to the Residential Mortgage Underwriting Practices and Procedures, which included a stress test for uninsured mortgages & a ban on bundled mortgages. The proposed changes to Canadian...

Steve Saretsky -

MLS Benchmark Jumps 3% Month Over Month in Vancouver The latest June data has been released and If you haven’t already read my Vancouver Real Estate Detached Report June 2017 or the Vancouver Condo Report June 2017 some of these numbers may surprise you. The MLS Benchmark price for Vancouver...

Steve Saretsky -

Vancouver Condo Inventory Plummets 20% In June This is beginning to sound a little repetitive (May Numbers Here) but the Vancouver condo market continued it’s torrid pace in June. Thanks in large parts to falling inventory, which dropped 20% year over year. Sales remained strong, as a plethora of buyers...

Steve Saretsky -

Detached Market Continues to Stabilize, Inventory Up 9% The detached market appears to have begun it’s seasonal downturn. This comes after a relatively decent spring season where sales returned to more normal levels. In case you missed the May 2017 numbers, you can check those out here. Let’s analyze the...

Steve Saretsky -

Housing Starts Slow Across Greater Vancouver as Developers Fail to Keep up With Construction Recent data suggests housing starts are falling midway through 2017. From January through May, new housing starts fell from 10,860 in 2016 to just 9104 in 2017. That’s good for a 16% drop year over year....

Steve Saretsky -

16% of Kensington Gardens Up For Assignment With Project Still One Year Away From Completion There’s been plenty of debate over Vancouver pre sales condos being flogged overseas before most local buyers can get their foot in the door. While there’s still no official data, evidence is mounting of offshore...

Steve Saretsky -

Home Flipping Fluctuating as Markets Diverge There’s been a lot of talk about speculation in the Vancouver real estate market. Thanks to the help of UBC economist Tom Davidoff, together we were able to track the amount of house flipping activity in the market. Before we analyze the numbers, it’s...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022