Multiple Offers Soar in March as Inventory Falls 17% Similar to last month (Vancouver Condo Report February 2017) the Vancouver condo has maintained it’s red hot pace. This is largely due to falling inventory, which is down from last years record low. Despite sales plopping nearly 29%, prices are setting new highs in Vancouver. Vancouver Condo Sales   Vancouver condo sales fell across the board. Vancouver West condo sales fell 33% year over year, while Vancouver East sales fell by 14% when compared to March, 2016. The drop off in sales is likely more a result of record low inventory levels. New Listings/Inventory Levels New listings and inventory levels continue to plummet. For Vancouver West new listings fell by 24%, while overall inventory levels also sank by 18%. This is without a doubt the biggest contributor to the overheated condo market. Current inventory levels are at all time lows and it’s not even close. Just see below. Vancouver Condo Prices Click Here to Access Price Per Square Foot Summary The Vancouver condo market is arguably as hot as it’s ever been. After hitting it’s peak in June, 2016 it cooled down and we saw some downwards pressure on prices during

Multiple Offers Roaring Back as Inventory Scrapes Record Lows Following up to last month’s report (February 2017 condo/townhouse Market report), a growing inferno has ensued. The condo and townhouse market is perhaps as hot as it’s ever been. Multiple offers are rampant, amidst falling inventory. Further Government incentives such as the first time buyer program are only making things more unaffordable for entry level buyers. Sales [table id=38 /] Although sales fell across the board, besides Richmond, the market remains red hot. Unlike the detached market, this fall in sales is likely a result of all time low inventory levels. Nonetheless, REBGV condo sales fell 18% year over year, but remain 32% above the 10 year average for March. New Listings/ Inventory Vancouver East- 206 Vancouver West- 534 Richmond- 277 Burnaby- 276 REBGV- 2123 New listings for REBGV condos fell 14% year over year. While that doesn’t sound too bad the big story here is current inventory levels which are down 35% compared to March 2016. With virtually no inventory available buyers are competing on the majority of listings. Here’s how inventory levels are looking. Sales/ Actives Ratio The sales/actives ratio is a key indicator of demand, anything above 20%

New Listings and Sales Plunge in March Further uncertainty looms about where the Detached market is heading. Similar to last month (February 2017 Detached Market Report) sales and new listings are way off pace from a year ago. The market appears to be digesting the foreign buyers tax as homes in the detached market begin to move again. Of course this varies by area and price point. Let’s break it down. Sales [table id=37 /] Detached sales appear to returning to a more normal pace after a record setting March 2016. Detached sales plopped by 46% year over year, and remain 15% below the 10 year average for the month of March. Some areas did much better than others, a good rebound in Vancouver East, whereas the more expensive areas such as Vancouver West continue to struggle, recording the fewest sales of any March on record. New Listings Vancouver East- 251 Vancouver West- 188 Richmond- 250 Burnaby- 170 REBGV- 1885 Last month new listings were down 50% year over year, and were well below the 10 year average. This helped spark the detached market in March as it capped inventory from increasing. New listings remain low in March, recording a

Bank of Canada Determined to Keep House Prices Inflated Ironically, back in 2012 the Bank of Canada warned about rock bottom interest rates creating a potential housing bubble. Here’s an excerpt from a CBC article: “We’re warning of an issue at a time that we can still do something about it,” said Bank of Canada Governor Mark Carney. According to Carney, there are a number of defences to protect against a housing bubble. “First and foremost, it’s the decisions of the individuals who take out the loans, and Canadians are a smart and prudent people,” he said. But he added that the onus isn’t just on individual Canadians, but also on the banks and institutions that must make some wise decisions and not lend to people who clearly can’t pay the money back, as well as the federal government for tightening mortgage lending rules. Carney repeated warnings against Canadians taking on too much household debt, after the Bank of Canada this week left the key interest rate untouched at 1% for the 13th consecutive time. Fast forward 5 years, interest rates are even lower today. The result: Household debt has soared, hitting record highs of 167% of disposable household income. The most of any country in

Over 400 Applicants Added to Overheated Condo Market Throughout history Governments have always fumbled the ball when handling housing crises. This one in Vancouver is no different, it’s the same old story- reactive vs proactive. Remember just a few short months ago when the BC government’s first time buyer loan scheme was announced, I called it a colossal failure. Enticing the wrong type of buyers into an overheated market at exactly the wrong time. Providing further stimulus to push prices higher. Since the program began January 16, 432 applicants in Metro Vancouver have been approved. The result, more buyers competing for fewer and fewer listings. Multiple offers are rampant, so far in March, 54% of Vancouver East condos have sold over asking price, 53% in Richmond, and 46% in Vancouver West and Burnaby. Prices are hitting new highs. For context there were a total of 2106 apartment sales in Metro Vancouver in January and February combined, if those 432 applicants were successful in purchasing that would equate to 20% of the market. Simple math, far from perfect, but you get the idea. So while CMHC and the Bank of Canada are discouraging over leveraged buyers the government is enticing them.

How China’s Real Estate Bubble Overflowed Across the Globe As foreign buyers start to dwindle in Vancouver (new data shows foreign buyers are diminishing) we are left scratching our heads, bewildered, how could the typical detached home suddenly cost over 1.4 million. Did Governments and policy makers not see this coming? Foreign Capital fleeing China is no secret. In recent years it has become a global phenomenon, widely publicized for helping push real estate prices to euphoric new highs in other cities such as New York, Miami, Seattle, Sydney, London, Stockholm, and Munich the list is endless. Perhaps most ironically, China has inflated a real estate bubble of their own. China has been on a debt binge, a credit expansion post 2008 financial crisis. Which has resulted in them inflating their own real estate bubble. It’s become so obvious that even those within the industry are concerned. Chinese billionaire Wang Jianlin who made his fortune developing real estate in China calls the current situation the “biggest bubble in history.” Things have gotten so out of control Beijing recently announced it would takes steps to keep home prices from spiking further by raising the down payment required for second homes and suspending some housing

Detached Homes Above 1.5 Million Take Brunt of the Blow It’s been just over 7 months since the foreign buyers tax was implemented. The results are mixed, opinions vary. Yep, despite sales plummeting more than 57% a consensus has not yet been reached. Meanwhile, as the detached market deteriorates (arguably the highest concentration of foreign capital) the condo market remains red hot. A Spring Time Inferno has ensued, with more than 50% of condos selling over asking price in some areas. Mostly consisting of first time buyers armed with interest free loans from Christy Clark and local investors bankrolled by profit hungry banks. Despite all the noise and finger pointing, some interesting data is emerging. Tracking REBGV (Greater Vancouver) detached house sales 7 months before and 7 months after the foreign buyers tax shows the biggest correction has come from homes above 1.5 million. The Sales/actives ratio, which is key indicator of the health of a market, shows that home sales above 1.5 million have seen a 49% drop peak to trough in their sales/actives ratio, while homes below 1 million dropped 37% peak to trough. Further, the change in inventory year over year has also increased the most for

FOMO Alive and Well in Vancouver Condo Market It’s never over till it’s over and as i’ve mentioned in previous posts (Bottom of the Barrel) it’s far from over. Yep the condo market in Greater Vancouver has been set ablaze. I’m sure you’re sick and tired of hearing about it, just as many Realtors are, it’s why many are no longer cheerleading the market. Multiple offers continue to ravage the market, decimating the pocket books of buyers and rewarding the few sellers who take a once in a lifetime opportunity to cash in. Of course i’m talking about the condo market, sorry detached sellers your time has come and past. So far condo sales in March resemble that of trench warfare. A bloody mess of multiple offers and not so civil behaviour. In Richmond, 53% of condos have sold over asking, followed by 54% in Vancouver East, 46% in Vancouver West and Burnaby. Yes the FOMO still runs strong in the Vancouver condo market, pushing prices to new highs. It’s what the investing world calls loss aversion. Best summarized as “loss aversion refers to people’s tendency to prefer avoiding losses to acquiring equivalent gains: it’s better to not lose $5

BC Economy & Debt Crippling Younger Generations As if you needed another grim reminder of the miserable BC economy and the tsunami of debt hanging over the younger generation. A new study from the University of British Columbia says B.C. is Canada’s “worst-performing economy” for younger generations. Full-time earnings for 25- to 34-year-olds in 2014, the last year for which data was available, is down by over $8,400 from the period of 1976 to 1980. Meanwhile, Full-time earnings fell by $9,600 for the typical 35- to 44-year-old, and by $6,700 for the typical 45- to 54-year-old. Go to school, rack up student debt, get a degree and land a steady job they said. The age old wisdom that’s failing youngsters. Yep, wages are in the gutter, house prices are shooting through the stratosphere, and debt is insurmountable. According to the report, it now takes 18 years of full time work to save for a 20 percent down payment, that’s up from the so called tough days where it only took 8 years. But who’s counting. Certainly not our politicians. “Some people just have to get up and whine every day.” – Rich Coleman BC Housing Minister If you don’t want more debt

New Listings Dropping Across All Market Segments Markets continue to throw unexpected turns and twists. The Vancouver real estate market has seen a purge of new listings so far in 2017. The normal rush of spring listings does not appear to have hit yet, begging the question if or when will that supply will hit the market. Sales continue to sputter from 2016 highs. Here’s the full breakdown of the mid March market update. REBGV Detached Detached sales continue to stumble out of the gates in 2017. Yes, despite murmurs that the market may be heating up, sales numbers do not appear to reflect that. Interperate as you see fit. Detached sales are down 51% year over year (March 1-15), and 16% below the 10 year average for that same time period. Inventory appears to be on track to close out the month of March up between 15-20% from March 2016. However, despite sales falling, and inventory rising, new listings are down signifcantly. If anything could reignite the market it would be a continued decline of new listings. New listings for the detached market are down 38% year over year, a trend that began back in February. REBGV Townhouse REBGV

5 Year Fixed Mortgages Set to Rise as the US Hikes Interest Rates As expected, Janet Yellen of the US Federal Reserve hiked rates today. A 25 basis point hike means the cost to borrow money continues to go up. That’s two rate hikes in the past three months, with several more expected in 2017. So what does this have to do with Vancouver real estate? Well, first off expect fixed rate mortgages here in Canada to continue their upwards climb. US Rate hikes are pushing US bond yields higher which ultimately influence the Canadian 5 year bond yields (which are tied to fixed mortgage rates). A little confusing I know. For more clarification visit this post.  “The quarter-point increase in the U.S. Federal [Reserve] interest rate typically results in the same increase for fixed-rate mortgages here in Canada, which we should expect to see in the coming weeks,” said James Laird, co-founder of rate comparison website RateHub.ca When Canadian 5 year bond yields shoot higher, so too do fixed term mortgages. The two have a very intimate relationship. Yep 5 year Canadian bond yields are rising, it’s upwards movement over the past year is significant. Acquiring a fixed term mortgage

How the Big Banks Have Created a Debt Monster As i’ve mentioned in previous posts such as Leverage and Debt Driving Real estate prices, much of our housing woes are a direct result of risky banking practices. I find it amazing that people are somehow surprised that home prices are rising because banks are lending more and more money. The bigger the mortgage the bigger the home you can buy. And yes mortgages are getting bigger, much bigger. Canadian mortgages now topple 1.4 trillion dollars (not billions despite the picture below), while coincidentally Vancouver prices have soared, ranking as the least affordable city out of the 40 largest Canadian cities and a multiple of 11.8 times median household income required to buy a home. Banks, such as TD, have been exposed for breaking the law and upselling customers for products that can put them into debt. Longtime employees say their jobs have become similar to that of the stereotypical used car salesman, as they’re pushed to upsell customers to reach revenue targets. They say there has always been a sales component to the job, but the demand to meet “unrealistic” quarterly goals has intensified in recent years as profits from low interest rates have dropped.