Fraser Valley Detached Slumps, Condos on Fire After popular demand i’ve decided to put together a quick update on the Fraser Valley real estate market. For the most part it’s doing similar things as the rest of the Greater Vancouver market. The trend appears to be detached sales and prices slumping, while condos continue their torrid pace. Let’s break it down. Detached Market Fraser Valley detached sales were down 47% year over year in January. To add to that, detached sales were also 15% below the 10 year average. The detached in the Valley lagged behind Greater Vancouver on the way up and appears to be doing the same on the way down. While sales fall, inventory is also rising, up 16% year over year. The median and average sales price shows a 7% price correction since it’s peak in May. The MLS benchmark shows a 4% drop. Townhouse Market The townhouse market is still going quite strong. The sales/actives ratio of 39% (way down from it’s ridiculous high of 105%) indicates it’s a sellers market. With that being said, townhouse sales are down 22% year over year, but still 27% above the 10 year average. Inventory is down 29%

Loan Approvals and Multiple Offers Booming in Condo Market As I mentioned in a recent post, there’s an Entry Level Feeding Frenzy in the condo market. Prices and sales are picking right back up from the dark winter months, despite the detached market crumbling. I believe there’s a strong possibility this could be fuelled in part from Christy Clark’s first time buyer loan program. As CTV News reports, 356 first timers have already been approved since the program began taking applications January 16, 2017. Just to put that into context, in January there were 828 condo sales in Greater Vancouver, and 276 sales in the Fraser Valley. Although some of the loans will go to buyers in other markets such as Victoria, or the Okanagan. Nonetheless, the condo market in the lower mainland was not ready for any surplus of demand. It was and is still in the process of recovering from record low inventory levels. This especially holds true in the Fraser Valley where entry level condos were in high demand. The Fraser Valley condo market didn’t heat up until February 2016 and with or without the home loan program still had plenty of wind left in the sails.

Population Growth, Limited Supply, and a Strong Economy? As of today Greater Vancouver real estate prices have soared by 39% since January 2015. We’ve been told the astronomical price growth has been a direct result of population growth, limited supply and a strong economy. New findings show otherwise. Population Growth Population growth in Vancouver has been average at best. Metro Vancouver ranked 11th of all Canadian cities for population growth from 2011-2016. The population grew by 6.5% down significantly from the 9.3% growth from 2006-2011. Meanwhile, as prices continue to surge, research from U-Haul suggests people are leaving Vancouver. Each year, U-Haul studies how many of its trucks leave various communities on one-way trips versus how many trips are arriving. According to the U-Haul data, Vancouver is a “net-loss city,” with 52.9 per cent of one-way U-Haul trucks leaving the city versus 47.1 per cent arriving. “While migration trends do not correlate directly to population or economic growth, U-Haul growth data is an effective gauge of how well (communities) are attracting and maintaining residents.” Supply As i’ve talked about before, supply tends to be a symptom of the underlying issue and a shortage tends be more a result of unsustainable levels of demand.

Multiple Offers Still Ravaging Entry Level Condo Market Despite the detached market in turmoil mode, prices down 15% or more and sales plummeting, the condo market remains red hot, particularly at the entry level. Just as I have noted in previous blogs and videos, Christy Clark’s first time buyer loan program would likely pin buyer against buyer in a royal rumble cage match to compete for the record low inventory available.   Disguised in the form of free money, the provincial government and sellers alike have begun dangling the bait.  It appears UBC Economist Tom Davidoff’s prophecy is coming true, buyers are devouring the loan, creating a feeding frenzy at the entry level. Just last week I was caught up in several multiple offer situations with my buyers all competing at the entry level. Four or five offers later, amidst a flurry of first time buyers, the highest bidder came away the victor. Sometimes tens of thousands over ask.  Bidding up prices for the next eventual buyer.  This prompted me to dive into the numbers further. Just how many condos are going to multiple offer? In January 2017, 25% of all Vancouver West condos sold over asking price. Down slightly

Condo Sales Fall Again, Inventory Levels Remain Critically Low The Vancouver condo market remains quite hot. Sales continue to fall, following a similar trend to (December Condo Report December 2016) however, because inventory is still at historically low levels buyers are still stuck competing for the few condos available. This is causing some multiple offer situations which can lead to price increases. Sales Here’s a five year history of Vancouver condo sales for the month of January. [table id=32 /] Vancouver condo sales fell across the board from one year earlier. Using a larger data set, Vancouver west condos fell 30% year over year. Condo sales were also 7% below the 10 year average for January. Average Days On Market Vancouver West- 33 days Downtown- 40 days Yaletown- 23 days West End- 23 days Kitsilano- 29 days False Creek- 35 days Vancouver condos are selling quickly. This is primarily because inventory remains scarce, especially at the lower end of the market (anything under $600,000). However, days on market is up 3% from the same time one year ago. As we head towards the spring market things generally tend to sell quicker so it’s likely days on market drops in the

Sales Plummet But Inventory Still at Historic Lows Quite the contrary to the sinking detached market (January 2017 detached market report) condos and townhouses remain quite stable. Despite a significant drop in sales, inventory remains at historically low levels preventing prices from moving much. The divergence from the detached market is really quite remarkable. Sales [table id=30 /] Condo sales across Greater Vancouver slumped year over year. For January sales fell year over year by 14% in Vancouver East, 30% in Vancouver West, 18% in Richmond, 39% in Burnaby, and 24% in REBGV. Despite sales falling year over year, they remain above the 10 year average. REBGV condo sales were 11% above the 10 year average for January. Except for Vancouver West which was 11% below the 10 year average. New Listings Vancouver East- 155 Vancouver West- 493 Richmond- 209 Burnaby- 206 REBGV- 1640 New listings remain at historic lows across the board. New condo listings in REBGV were 22% below the 10 year average for January. The lack of new listings is keeping total inventory at all time lows. Total condo inventory in REBGV fell 36% year over year. Here’s where we currently stand. Sales/Actives Ratio Vancouver East- 42%

Detached Sales Falling, Inventory Piling Up Continuing the trend, detached sales fell again for the tenth consecutive month. January was more of the same, as the detached market continues to favour the buyers. With fewer and fewer sales, inventory continues to pile up and placed added pressure on sellers to reduce prices. Sales [table id=29 /] As per the table, detached sales fell 47% in Vancouver East, 72% in Vancouver West, 66% in Richmond, 58% in Burnaby, and 57% in REBGV. For further context, REBGV detached sales were 34% below the 10 year average for the month of January. New Listings & Absorption Rate Vancouver East- 220 Vancouver West- 308 Richmond- 343 Burnaby- 177 REBGV- 1932 New listings this January were right on par with the 10 year average for REBGV. With that being said, the absorption rate indicates demand is not keeping up with supply. The absorption rate for January 2017 was 24% for REBGV detached homes. (List/sells of over 75% tend to lead to price increases. Times, when our market is slowing tend to have list/sells below 50%.) Sales to Actives Ratio Vancouver East- 9% Vancouver West- 7% Richmond- 9% Burnaby- 12% REBGV- 11% All areas are in

Detached Sales in Vancouver Plummet to Record Lows in January There’s nothing I love more than debating the impact of foreign capital distorting the Vancouver real estate market. Not that more evidence was needed, but recent changes in the Vancouver real estate market highlight some eye opening January stats. Recently China implemented new capital controls forbidding citizens from exporting cash to purchase international real estate. (The Chokehold). The timing could not have come at a worse time as sales were already slowing from a 15% foreign buyers tax. So what happens when you turn off the tap? In January, Richmond detached sales fell 66% year over year, Vancouver West fell 72%, while West Vancouver sales fell 74%. For Vancouver West and West Vancouver it was the worst January on record. It was the second worst January for Richmond sales, trailing only January 2009 (Financial crisis). Make no mistake this is not a return to normal from a hot 2016. As seen in the chart above, Vancouver West detached sales fell 61% below the 10 year average, West Vancouver fell 51% below the 10 year average, and Richmond dropped 46%. With the benchmark price of homes in these areas so incredibly

Christy Clark Reverses Foreign Buyers Tax for Foreigners with Work Permits Late last night Christy Clark announced she would be reversing the 15% foreign buyers tax for foreign workers who work, live and pay taxes in Metro Vancouver. To little surprise it caused a basket of mixed emotions. Many are concerned this could create loopholes for wealthy foreign investors to re enter the market and inflate prices once again. My thoughts echo those of UBC Economist Tom Davidoff’s who welcomed the province tying the tax exemption to someone’s work permit – a federal document that is hard to forge. But he worried there could be a massive loophole if foreign buyers were allowed to duck the tax by paying nominal amounts of provincial income tax on their global wealth. He added that the new exemption should not lead to a new spike in foreigners buying in Metro Vancouver’s lagging market because relatively few people are on work permits. So, will this leniency create more tax loopholes? For example, international student work permits allow students to only work 20 hours per week. Will an international student use the work permit to skirt the 15% tax and use foreign capital from Mom &

Condo’s Now Driving Metro Vancouver’s Real Estate Market I’ve been highlighting for quite some time just how segmented the market really is. It’s why it bothers me when some real estate reports group all three markets (Single family, townhouse, and condos) and spew out one single number. The reality is that the detached market has taken the brunt of the correction. I’ve also argued in a previous post (Are we in Denial?) that there is a strong likelihood the correction will eventually trickle it’s way through the market as it did previously on the way up. Perhaps that’s all speculation at this point but the sales numbers indicate no market segment is going untouched. Regardless, as it stands right now, there’s a new conductor of the real estate gravy train. The condo market has taken over and is pushing full steam ahead in an effort to keep this train rolling. Below you’ll see a breakdown of sales composition by segment. Back in January, 2016 condo and single family homes had an equal share of the market at 43% of total sales across REBGV. By December 2016 condos were responsible for 54% of all sales, while single family homes plopped to

CMHC Highlights Shifting Market Conditions in Vancouver Today the boys over at CMHC (Canada Mortgage and Housing Corporation) released their first report of 2017 on the Vancouver real estate market. Full report here. To little surprise, CMHC once again declared Vancouver as overvalued. However, in the process they also announced a cooling market and no signs of overbuilding. Let’s break it down. Overheating CMHC believes there is now weak evidence of overheating in the market. REBGV detached sales were down 52% year over year in December, townhouses 40% and condos 25% so really no shock there. Meanwhile,  sales/new listings which is a key indicator of demand fell again for the second quarter. The general rule of thumb is a sales/new listings ratio above 75% puts upwards pressure on prices, while below 50% puts a downward pressure on prices. However, it’s important to note that this chart combines all three markets (detached, townhouse, condos). They are all performing differently. Much of the downfall is from the detached market. Price Acceleration The report calls for signs of moderate evidence of price acceleration. “The low supply of new and resale homes provided support to home prices. Going forward, a moderation in sales and additions

West Vancouver at The Epicentre of Housing Crisis If there was ever one area in the lower mainland that highlights the severities of the housing crisis it’s West Vancouver. Similar to Richmond, it’s known for luxury mansions, sky high prices and a dwindling sense of community, any attempt towards productive solutions have quickly been stymied. To understand the severity of West Vancouver’s housing we simply need to look at recent price growth. The MLS benchmark price of a West Vancouver detached home soared by 61% from January 2015 to the peak of the market in June 2016. So what caused a breezy 61% increase in less than two years, brining the price of a typical home to $3,365,600. Conventional wisdom believes it’s an influx of foreign capital which has also propelled Canada to become known as “the ultimate tax haven entity in the world.”  However, BCREA economist Cam Muir is not convinced foreign capital has distorted the local market. Queue the 15% foreign buyers tax. Prices instantly plopped, while sales are in total free fall mode. When comparing sales year over year, since August 2016 sales have fallen each month by an average of 66% in the detached market. But