Condo Market Continues to Propell Vancouver Real Estate in October A quick update for the middle of October. I’ve compiled sales and new listings for the period dating October 1-15. This provides a pretty good snapshot of where we stand, although it’s a relatively small data set and much can change by months end. Vancouver Detached Market The Vancouver detached market rebounded slightly on a year over year basis. Both sales and new listings increased. The 96 sales so far this month, are up from 71 for the same period a year ago. However, market conditions still tend to favour the buyer, select desired and well priced homes are still selling quickly. Vancouver Condo Market Condo sales increased 27% from the same period a year ago. Keep in mind this is compared to October 2016 which was heavily impacted from the shock of a foreign buyers tax. Despite this, condo sales remain well above the ten year average and upwards pressure on prices continues. Vancouver Townhouse Market New townhouse listings saw a huge jump compared to last October (up 53%) This is largely due to a bunch of new townhouses recently completing and hitting the market. The data set is

Vancouver Property Taxes Plummet As a Percentage of Home Prices With Vancouver Detached home prices growing 34% over the past two years (according to the MLS Benchmark) homeowners have benefited greatly from a windfall of equity, on paper anyways. This has resulted in homeowners using their homes as ATM’s, drawing down equity to finance their Vancouver lifestyle (Homeowner refinancing up 27%). This has helped cushion the blow of paltry wage growth. However, with a widening wealth gap, increased Government spending and political pressures, one has to think Governments will target wealthy homeowners next. Especially considering property taxes have failed to keep pace with home values. Annual Property Taxes Fail to Keep Pace With Home Prices As you’ll see in the charts below, the median tax rate (annual tax paid divided by sale price) for detached homes has failed to keep pace with home prices. While property taxes have increased on a nominal basis, they’ve actually been falling as a percentage of home value. Annual property taxes for Vancouver West Detached homes are just under $9000/ year, or around 0.25% of the homes value (based on median sales price). On the Eastside, property taxes as a percentage of median sales price is

Are Multiple Offers Slowing for Vancouver Condos? Vancouver condos remain red hot, however the number of sales sold above asking price is now on a 3 month slide. When a condo sells above asking it can generally be assumed it received multiple offers. Of course when a unit sells below asking price it does not necessarily mean it didn’t receive multiple bids. Yes, sales above asking price is not a perfect science, but it’s an interesting metric to keep track of. In September, 43% of Vancouver West condo sales were sold above asking price, a slight drop from 45% in August. Obviously this number is still ridiculously high but the 3 month slide does point to a bit of a slowdown, albeit partially seasonal. The sales to actives ratio still sits at 53% which is well above the 20% needed to be considered a ‘sellers market’. This tends to put upwards pressure on prices, which we’ve seen with Vancouver condo prices up 13% so far this year. As I have said for a long time, follow the sales to actives ratio to assess the temperature of the Vancouver Real Estate market. In fact, there appears to be a very close

Vancouver Pre Sale Condos Under Intense Scrutiny I’ve been highlight for a while now just how out of control the pre sale condo market is in Vancouver. The sales process lacks transparency, prices are borderline comical, and flipping activity resembles that of the infamous Tulip Mania. The reality is, pre sale condos are the exact same as a futures contract and should be regulated as such. Murky Sales Process In the midst of a housing crisis, many developments are being accused of offloading supply at overseas sales centres. With overwhelming evidence of Hong Kong Sales Centres. With the Vancouver real estate market in the midst of a speculative frenzy, pre sales have become all the rage for leveraging little money down and flipping (assigning) the contract for big profits before closing on it. Assignments have exploded in popularity of the past year. Some developments such as Kensington Gardens has seen 16% of the building flipped with the project still one year from completion. CRA Hunting for Tax Evasion The rapid increase in assignment flipping has spurred Canada Revenue Agency to take several prominent developers to court requesting the names of owners in an attempt to hunt down assignors who have

Vancouver Condo Prices Inch Upwards in September, Hit Record $872,486 The Vancouver condo market continues to push upwards, despite a cooling detached market. The average price per square foot inched upwards by a meager 0.5% from August and now sits at $1017 per foot. Here’s how the numbers shake out (View August Report Here). Vancouver Condo Sales Vancouver condo sales increased by 21% on a year over year basis. Although I don’t like comparing to September 2016 because it was right after a foreign buyers tax. However, foreign buyers tax aside, Vancouver condo sales were still 19% above the ten year average for the month of September. New Listings/ Inventory Levels Vancouver condo new listings increased by 3.5% on a year over year basis but were still 13% below the ten year average. While the increase on a year over year basis was much needed, we will need a continued increase of new listings to help replenish current inventory levels which have been pillaged by an excess of buyers. Here’s an updated image of Vancouver condo inventory levels. Down 34.5% year over year and obviously part of the reason for the flurry of bidding wars. Vancouver Condo Prices The average

Vancouver’s Detached Market Flat in September The Vancouver detached market remains relatively sluggish. This follows a similar trend which you’re well aware of if you read August Detached Report. On a year over year basis you could say sales rebounded, however, when looking at it from a more macro level, detached sales remained well below ten year averages. Detached Sales Detached sales increased on a year over year basis in all areas. However, this comes after a foreign buyers tax which plunged sales to near record lows last year. For example, Vancouver (East & West combined) sales increased 31% year over year, yet were 32% below the ten year average. New Listings & Inventory New listings surged across REBGV. Rising 10.5% on a year over year basis and 11% above the ten year average. New listings are trending above the ten year average for all areas. Inventory remained virtually unchanged, dropping 0.2% on a year over year basis. While inventory levels remain stable, they are still sitting slightly below normal levels. Sales to Actives Ratio REBGV- 14% Vancouver West- 9% Vancouver East- 12% Richmond- 12% Burnaby- 10% Similar to the last few months, most areas are in what’s considered a

Vancouver Remains Canada’s Most Unaffordable Housing Market RBC released it’s latest housing affordability report. To little surprise, Canadian Real Estate remains vastly unaffordable for the masses. After back to back declines, Vancouver’s affordability or rather unaffordability metric ticked upwards once again. The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities based on the average market price for a particular segment of the market. The affordability measures are based on a 25% down payment, and a 25-year mortgage loan at a five-year fixed rate. As per the graph, Vancouver condos require 46.2% of one’s pre tax income. While it requires an impossible 114.6% of your pre tax income to for a detached home. Keep in mind, this is assuming a 25% down payment which from my experience most buyers don’t have today. Vancouver remains the most unaffordable housing market across Canada, by a long shot. Requiring a staggering 80.7% of one’s pre tax income for the typical home. With rising interest rates, something tells me this might get worse before it gets better… Join My Weekly Vancouver Real Estate Newsletter

Buyers Paying Hefty Premiums To Lock In New Condos With Condo inventory at all time lows, and prices continuing to surge upwards, buyers are desperately leaping on pre sale developments. But it appears it’s not just the developers cashing in on this frenzy. Students and innocent bystanders are being lured by hundreds of dollars to sit in line for buyers hoping to get in on the condo mania. In an article titled ‘I was paid $400 to wait in line at condo Sale‘ Vice is reporting some hefty payouts. “It was around 4 PM on a Friday afternoon when I got the call. A friend told me her landlord, who worked in real estate, was offering $800 for two people to hold her spot in line for 15 hours at a condo presale in Port Coquitlam. As a freelance journalist, this was an offer I couldn’t refuse. “Trevor John Boorma sells cars normally, but came out for $300-a-day to stand in for another real estate agent. He estimated nearly half of the people waiting in line were proxies.” Yes the mania has indeed spread to the unsuspecting suburbs where hoards of first time homebuyers are eager to enter the market.

China Attempts To Reign In Property Bubble Despite various attempts to slow China’s massive real estate bubble, nothing has thwarted it to date. Desperate authorities are taking another swing this time around at what some property developers have called “the biggest bubble of all time”. As of Saturday, Property owners in Xi’an, Chongqing, Nanchang, Nanning, Changsha, Guiyang, Shijiazhuang and Wuhan must now wait two years before they can resell flats, regardless of whether they are new builds or older homes. It remains to be seen if this will have any impact on China, which has undergone the single largest credit binge in economic history. Massive amounts of leverage and build up of household debt from the property sector have become a huge concern. Spillover Effect Into Cities Like Vancouver Naturally, with an abundance of excess credit, and rising home values in China, that money has overflown into other parts of the world, in particular Vancouver. According to David Green-Morgan, global capital markets head of research at JLL the surge in outflows only took off in the past couple years. In 2007 China’s commercial property outflow was less than $1 billion. Now it exceeds $20 billion annually. At the Shenzhen Real Estate Expo, marketing

Luxury Home Sales Declining Year to Date, Not Rising There’s nothing worse than an industry fluff piece, no matter what the industry is. A recent report circulating through the mainstream media states Vancouver Home Sales Over $1M are rising, setting the stage for a re-vamped luxury market. However, that is simply not the case. Let’s debunk this one. Here’s what the article states. “Luxury real estate expert Sotheby’s International sees good things ahead for high-end property sales in Vancouver. Sotheby’s says sales of properties over $1 million increased five per cent in Vancouver during July and August, compared to last year, and the company predicts upscale sales will continue to climb as they recover from legislated efforts to cool the market.” My Take on Luxury Home Sales Official numbers from the Vancouver Real Estate Board state luxury homes sales have actually declined year to date. From January to August, home sales above $1M have declined by 18% this year. While sales have increased on a year over year basis in the last couple months (July & August) the numbers don’t paint the true picture. Comparing August 2016 sales, the very month a historical foreign buyers tax was introduced, will of

One Bedroom Condos Up Nearly 50% Year over Year In Certain Areas As i’ve been highlighting for some time now, one bedroom condos remain the hottest segment of the market. A growing choir of first time buyers experiencing a ‘just get in’ mentality are driving up prices with hopes of climbing the property ladder. First time buyers, combined with local investors seeking a secondary investment are clashing to snatch up the remaining one bedroom units. Just last month Vancouver one bedroom condo inventory plunged 53%. Recent price growth in Vancouver is well documented, but it’s actually the outlying areas experiencing the largest price growth. Here are the top three. 1. New Westminster Condos Increase by 46% With New Westminster condos nearly flat for almost a decade, prices have exploded over the past year. The average sales price of a one bedroom condo is up 46% year over year. Yes, forty-six. Interactive chart here. 2. Surrey Condos Increase by 45% Year over Year North Surrey (Whalley area) one bedroom condos increased by 45% year over year in August. You’ll notice prices were virtually flat for a long period of time before rapidly accelerating in early 2016. Interactive chart here. 3. Burnaby

Median Family Income In Metro Vancouver Just $72,000 As first reported in the Vancouver Sun, new census data highlights just how out of whack housing prices have become from local incomes. The median total income for households in Metro Vancouver was a paltry $72,662. Despite Vancouver having the priciest real estate by a long shot, incomes were only the 15th highest across the country. Median Income In Downtown Vancouver $89,825.53 Using an interactive chart via Better Dwelling, the median household income in the Downtown peninsula was $89,825.53. Still a stretch considering the median condo price this year sits at $749,500. Costing you an average of $1051.41/ per square foot. Here’s how it looks from a monthly carrying costs perspective. Assuming a 20% down payment, with a 3% mortgage interest rate over 25 years. [table id=42 /] Therefor based on today’s incomes it would cost about 44% of your pre tax income for a Downtown Vancouver condo. Keep in mind this does not included maintenance or extra insurance. As per CMHC, they quantify affordable housing as no more than 33% of your pre tax income. There’s no doubt Vancouver is an equity driven market, with local incomes having been detached from house