Forget gold, “invest in Vancouver real estate” is the message from the world’s biggest asset manager, Laurence D. Fink. Despite the craziness of Vancouver real estate, what is the actual ROI these days base on rental income? We all agree that the housing price is not going to be uplifting as fast as was it was 3 years ago. Many people are not in rush to sale or to buy a property. Instead, people a holding them and renting the units out.
1 & 2 bedroom condo has always been a popular option to purchase and rent due to high demands. Let’s look at the overall ROI in the major cities in Greater Vancouver.
Vancouver is the highest populated city in Canada. It’s classified as the top-five global cities with a good and affordable quality of life. It was ranked top 10 in the world’s most well-living towns and. This article reports the latest real estate statistics in Vancouver. It also provides an extensive analysis of all the real estate news and trends.
Vancouver’s real estate news economic trend has been forecast to grow to 2.5% in 2018. This shows an upward direction from recent years. From recent surveys in Canada, there’s a high investor demand and redevelopment opportunities expected to take place. However, most investors and regional developers expect an increase in interest rates, and it impacts on the policy changes. This will lead them to be more reserved or conservative in 2018. Due to this, the industrial veterans plan on preparing for a turnaround by:
Being more choosy and not in a rush in making their portfolios
Efficiency in operations
Holding off acquisitions by maintaining the present state of affairs
National Market Stats
Vancouver shows a favorable real estate market. Looking at the recent months, home buyers have been less active thus leading to a significant drop in the prices of all housing types. This is the best time for buyers to purchase houses since there are more choices to choose from. Also, the competition is less as compared to the market in the recent years.
There has been an evident an noticeable expansion in the country’s logistics and distribution sector due to the drastic industrial growth in Vancouver. This follows an initiation for creation for more industrial space. The increase in automated warehouses and centers of distribution has led to increased demand for facilities that are highly wired. In conclusion to this, the future demands development of more industrial space to meet requirements of the e-commerce driven continent.
The Retail Sector
The rapid growth in online shopping and consumers has greatly and continuously impacted Vancouver’s retail sector. This has created another perspective/picture for retail property across the country. The most critical success factors for retail property owners and investors will be based on flexibility and creativity. Retail centers must upgrade their shops to be areas that can not only provide shopping needs but also:
Have a variety of other services
Building public spaces
Having cultural programs
Having events etc.
The Condominium Sector
In future, the condominium sector is said to perform and with high demand in most markets steadily. In the downtown of Vancouver, the condo units are attractive to young professionals. However, the retiring employees prefer living close to the urban centers enjoying their more carefree condo. In conclusion, the condo sector is evolving in alignment with the demand and new needs.
The Single-family Residential
In 2018 the country’s economy has been forecasted to grow to only 2%. This growth is expected to force most Vancouver residents to buy new homes. Compared to the year 2000, the number of built homes has also increased by more than half, since 2-3 dwellings are constructed currently by multi-family.
Most built rental properties are seen to be performing well in Montreal, Quebec City, and Halifax. However, it is noted that, in Vancouver, more rental properties are being built, but emerging taxes and regulations are a significant challenge for them Quebec residents mostly look for desirable places, and they prefer moving to centrally located houses near their workplace. Halifax also records a large number of condo stock ordered online, but a significant cost advantage is noted in rental offers.
Do you know
AirBnB is implementing new government tax starting October 2018? This is what some AirBnB owners in BC have received in the past few days.
CURRENT TRENDS AND DEVELOPMENTS
Government policies will have an impact on the affordability of houses. They will not only solve the problems at hand, but they will create merging problems. As most Vancouver residents think of their housing expectations, other cities are making great milestones in densification projects.
Some of its regions demand that the government needs to address House affordability as a serious issue. Others are of the opinion that the approved projects take too long and are also too expensive. In the short term, the supply of houses could increase significantly when municipalities fasten the process and reduce fees as well.
According to a monthly report done in August 2018, the demand for homes decreased significantly by 36.6%, as compared to August 2017. Also, a 6.8% decline is observed in August, as compared to July.
Technology always has a high impact on our daily lives and day to day activities. Technology and data has helped real estate companies in Vancouver;
Make better and well-thought decisions
Understand their customer needs
Identify new and profitable opportunities
Data and technology are being used by real estate companies in Vancouver to make better decisions. Companies should be willing to invest in modern IT equipment and data infrastructure to help them run effectively. Also, companies should, therefore, make sure that they hire the right people with the professional skills to interpret the data and ask the right questions.
Affordability of Detached Homes in Vancouver
Most Vancouver residents earn an average income. This being the case, recent reports by real estate portal Zoocasa, shows that purchasing a detached house across Vancouver is highly unaffordable. However, this could be affordable for someone who has an extra source of income.
Zoocasa checked a report from August’s detached home’s prices, and the least income necessary to buy such property based on a 20% deposit. The expected income was then compared to the actual average income per household in each area. This was all in efforts to get the local house-cost to the income gap.
Below is an info-graphic chart showing the ranks of various Vancouver regions stating the income required to purchase a detached house, from the least to the most affordable:
From the info-graphic income gaps reports above, Vancouver West was seen to have the highest price of detached homes with a figure of $2,832,600. It’s then closely followed by West Vancouver with a higher income gap, and then Richmond falling in the third place with a lower income.
West Minister who takes 13th place out of 21 areas, also showed a report showing a gap of $92,810 between the average incomes to the income required to buy a normal house. Also, cities like Maple Ridge are seen to strain still to obtain an average income that should be more than $34K less, required to buy a normal house.
It’s important to note that although Vancouver Real Estate is expected to lead all Canadian cities with 2.5% in GDP, every real estate market has its problems and opportunities.
The city of Vancouver belongs to the Greater Vancouver Regional District. This dynamic city has the qualities of a port city and the charm of the Canadian mountains. It is impossible to talk only about the city of Vancouver, not to mention the surrounding districts such as West Vancouver, Richmond or Surrey to mention but a few. Living in Vancouver means living in one of the most cosmopolitan andhighest-quality cities in the world. All this raised it to the highest standards in real estate development worldwide and therefore housing prices are stratospheric. The reasons that real estate prices are so crazy:
1. Quality of Life:
This beautiful and dynamic city is located on the Canadian Pacific coast and belongs to the province of British Columbia. Its 631,486 inhabitants make up 1/5 of the total population of Greater Vancouver. What were once clearly differentiated districts are now confused in their boundaries. For the people of Vancouver, moving to Surrey or West Vancouver makes no substantial difference. Whether you travel by metro, bus or car, you will always feel safe and have easy access to various services. It doesn’t matter where you are in the city or Greater Vancouver. In Vancouver, you will discover the versatility of modern living combined with the rural and wild essence of its surroundings.
2. Multicultural Microcosms
The people of Vancouver are the corollary of Western Canada’s most striking cultural syncretism. You will enjoy an exceptional cultural experience just by traveling from West Vancouver to Richmond. And even in the city center itself. Multiculturalism transformed Vancouver into a multilingual city beyond French or English. Cantonese, Mandarin, Spanish, Hindi or Tagalog may be the dominant languages in some places. So much so that you won’t be surprised to find posters that advertise “English is spoken here” as something exceptional.
Vancouver’s cultural syncretism does not overshadow the classic gleam of buildings that express the finest style of Canadian cultures such as The Orpheum, Queen Elizabeth Theatre, Vancouver Playhouse and the extraordinary hanging bridge of Capilano. These coexist with unique spaces like Chinatown.
3. High-Class Immigration
For the middle and upper classes of the Far East, Vancouver has all the qualities of a western city, with none of its faults. This unique appeal hasincreased the demand for housing for thousands of Chinese immigrants, who find Vancouver an exceptional city. Air connections allow you to travel in as little as 11 hours between Vancouver and Beijing. As a result, while house prices around the world have plummeted since 2008, it did not stop rising in Vancouver until 2017.
4. Attractive for Investors
Cultural versatility has made Vancouver a magnet for foreign investors. These investors discovered in Vancouver all the advantages of a modern western city, with the exceptional adaptability that results from the convergence of multiple cultures in one place. In addition to the Port of Vancouver, there are powerful industrial and commercial conglomerates, which offer investors comparative advantages over other locations.
Along with the investors comes the fresh money, which increases the value of the properties. This trend remained stable until 2017, whenreal estate prices began to decline. This is a consequence of the market contraction of up to 14.6% lower than the sales of the previous year. However, in the real estate market, the decrease in prices stimulates investors. It is quite likely that the price crazy in Vancouver will continue.
5. Variety of Offers
There aresubstantial differences between real estate prices depending on the location, whether it is within the city of Vancouver or the Greater Vancouver. West Vancouver has the most expensive homes that can range from $3,900,000 for a three-bedroom home to over $20,000,000,000. There are also other less expensive locations such as homes located on Fraser Av. which can range in price from $400,000 to 1,200,000. There is a wide range of offers, which sometimes stuns potential buyers.
Vancouver the Best Place to Live:
The 2016Foreign Buyers Tax regulations imposed a 15% tax rate, and later on has increased to 20% in February 2018. This legislation affected the real estate market, significantly decreasing sales compared to the last ten years. However, even after the effects of the Foreign Buyers Tax, investors timidly continue to buy. No further explanation is needed. You already know the reasons:Vancouver the Best Place to Live.
Vancouver, one of the largest Canadian states, is known for having the most unaffordable real estate conditions in Canada, and is currently being rated as the most unaffordable in the entire North American market! Fluctuations in Vancouver’s real estate market put it under continuous evaluation and analysis in attempts to provide the residents with educated suggestions on their investments in residential properties. The July/August 2018 residential properties market in Vancouver has been particularly remarkable with abnormal sales rates and price variations.
Summer 2018 Sales Rate in Vancouver
While the summer season is generally known to be a dormant period for the real estate market, this year’s summer sales in Vancouver are significantly lower than previous year’s rates. In fact, the reported values of 2,070 sold properties in July 2018 is the lowest that the market has seen since July 2000. The estimated overall property sales rate in July 2018 has been reported to be 14.6% less than the previous month (June 2018) and around 30.1% less than that of July 2017.
These reduced rates evolve from the decreased demand for the three main types of residential spaces available in Vancouver: the detached homes, townhomes and apartments. The decrease in demand can be resorted to more strict lending requirements and higher mortgage rates and has been particularly observed since the introduction of the Foreign Buyer Tax in 2016. This tax required owners of properties valued between $3M and $4M to pay 0.2% surtax, which is raised to 0.4% for properties valued above $4M.
How much of the Available Properties was Actually sold?
As a result of the low demand, the percentage of residential spaces that were actually sold when compared to the total available houses (also known as Sales-to-Active-Listing Ratio or the Absorption rate) is only 17.1%, such that only 27.3% of the available apartments, 9.9% of the available detached homes and 20.2% of the available townhouses were actually sold over the course of the month. These percentages are the lowest that have been observed in Vancouver’s real estate market over the past 30 years, and detached houses are found to be the most impacted by the low demand.
Did Prices really Change this Summer?
The benchmark price for apartments in July 2018 is 0.5% less than that in June 2018, whereas the percentage is 0.6% for detached homes and 0.4% for attached homes/townhomes. These percentages are however still higher than Summer 2017, but reflect a deceleration in the growth rate. This is the alarming part! A slow growth rate will ultimately lead to ‘negative growth’ which is basically a reduction in prices. This is anyway expected due to the decreased demand, but is influenced by several other factors that impact the market’s supply-demand curves such as the applied surtax and the high mortgage rates. As a result, the majority of buyers are now adopting a “wait and see” approach where they observe the market status for few more months before taking any actions. Hence, houses and apartments are taking longer to be sold and may even require price adjustments.
The supply of homes for sale in Metro Vancouver is rising but residential home sales in the region fell by 37.7 per cent in June. According to a report recently released by the Real Estate Board of Greater Vancouver (REBGV), home sales were 28.7 per cent below the 10-year June sales average thanks to stubbornly high prices even as more houses were added to the market.
“Prices are slow to adjust,” said Tom Davidoff, real estate economist with the University of British Columbia’s Sauder School of Business. “The price momentum has certainly slowed and there is reason to think you will see a further softening of the market going forward. Before prices fall, you tend to see sales activity fall first.”
On the higher-end part of the market, prices are also dropping. In West Vancouver, the benchmark price for detached properties slipped to $3,392,500 in June, down 6.5-per-cent since 2017.
Prices could also continue to fall thanks to an annual 0.2-per-cent property surtax that is being imposed in British Columbia on homes valued above $3-million and up to and including $4-million. For homes valued above $4-million, a 0.4-per-cent annual rate applies. This means the owner of a property assessed at $4-million will pay $2,000 in extra taxes next year, while the owner of a $6-million home will have to pay around $10,000.
Bad News for Taxpayers Could Be Good News for Home Buyers
As the demand for homes declines, a buyers’ market could emerge in Metro Vancouver. After all, price growth has also slowed since June in the sale of townhomes and apartments.
According to the REBGV, the sales-to-active listings ratio for all property types in June 2018 was 20.3 per cent. By property type, the ratio is 11.7 per cent for detached homes, 24.9 per cent for townhomes, and 33.4 per cent for condominiums.
Generally, analysts say home prices can start to fall when the ratio dips below the 12 per cent mark for a sustained period. Conversely, home prices often rise when the ratio surpasses 20 per cent over several months.
Brendon Ogmundson, deputy chief economist with the British Columbia Real Estate Association says lower demand is bringing most markets around the province back into more balanced conditions after years of inflated prices. But, it’s a change that is not happening quickly.
Climbing Inventory May Lower Vancouver Home Prices… Slowly
In June, 11,947 homes of all types were listed for sale on the Multiple Listing Service (MLS), up 40.3 per cent from June last year. Also, the composite benchmark price for all residential properties in Metro Vancouver in June was $1,093,600. This represents a 9.5 per cent increase over June 2017 and is virtually unchanged from May 2018.
Benchmark prices in Greater Vancouver for detached houses were up 0.7 per cent over the past year to $1,598,200. Sales of detached homes in June 2018 reached 766, a 42 per cent decrease from the 1,320 detached sales recorded in June 2017.
Apartment sales reached 1,240 in June 2018, a 34.9 per cent decrease compared to the 1,905 sales in June 2017. The benchmark price for an apartment is $704,200. This represents a 17.2 per cent increase from June 2017 and a 0.4 per cent increase compared to May 2018.
Attached home sales in June 2018 totaled 419, a 37.3 per cent decrease compared to the 668 sales in June 2017. The benchmark price of an attached home is $859,800. This represents a 15.3 per cent increase from June 2017 and is virtually unchanged from May 2018.
“Buyers are less active today,” Phil Moore, REBGV president said. “This is allowing the supply of homes for sale to accumulate to levels we haven’t seen in the last few years. Rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening home buyer activity.”
A fourth increase in one year from the Bank of Canada on its interest rate is also making buyers a little apprehensive with the rate now at 1.5 per cent. Still, government intervention and an overall decline in home sales mayl be enough to help make the Metro Vancouver housing market more affordable? Only time will tell.
For years the Real estate industry has been among the most lucrative sector in the world. The sector has made some people who decided to invest in the sector super rich. Over the years the sector has grown tremendously. It is not surprising to see foreign investors pouring millions of dollars in the same industry. In the past real estate in Vancouver, was dominated by the local investors. However, recent stats have shown that the trend is slowly changing with non-resident slowly taking a piece of the real estate pie. These recent findings can be attributed to the hues and cries caused by activists and academics who believed that recent increase in Vancouver properties prices was due to non-resident purchases.
In 2017 research was conducted by Statistics Canada to determine the claims from activist and the academics. In December 2017, the agency released its first poll of data. According to the data provided by Statistics Canada, 7.1 % of the property owned in Vancouver are owned by individuals who do not resident in Canada (nonresidents).
Areas like Sun Peak, Whistler and Strathcona Electoral Area B (15.4 percent), have the highest rate of non-resident ownership. Leading the way is Sun Peak at 17 % non-resident ownership followed by Whistler is at 16% non-resident ownership then Strathcona at 15%. According to a statement by Andy Yang the director of the City Program at Simon Fraser University
“Out of that 16 percent (for Whistler), it’s about 1,900 units that are non-resident occupied,” He adds, “What it really gives to you is the type of marketplace that is a global one … It touches upon the ongoing challenges of housing in Whistler and Sun Peaks as workers in those cities can’t compete with this non-resident marketplace.”
Other areas which have a relatively high number of non-residents include; West Vancouver and Richmond which are 7.1% and 6.5% owned by non-residents respectively. Let’s not forget about popular tourist destination like Tofino, Fernie, and Revelstoke which are 7.5%, 6.6% and 5.2% owned by non-residents respectively.
Data from Statistics Canada also shows that 6% of the homes owned in Vancouver by residents are owned by corporations. For non-resident property, there is a general declined of properties owned by foreign corporations. Instead, most foreign investors set up Canadian Corporation then transfer the property to the Corporation saving millions of dollars in terms of tax
Studies from Canadian Housing Statistics Program (CHSP) show that more than 60% of nonresidents properties are condominium apartments. It is also important to note that these condominium apartments 50% of them are located in City of Vancouver, while 14% in Richmond
How does foreign ownership affect Vancouver Real Estate Industry?
Findings from Statistics Canada, shows that there is a big difference when it comes to the prices of houses owned by non-resident and residents. In Metro Vancouver, the average price of a single-detached home owned by non-resident is worth 2,275,900 while the average price for a single detached home for a resident is worth $1,568,100, which is 45 % lower as compared to homes owned by non –resident.
The same difference is still evident in some other municipalities across Vancouver. For instance, in the City of Vancouver, homes owned by the non-resident are valued at 26% higher than homes owned by residents. For single detached homes owned by non-resident on average are valued at $3,638,500 while for residents their single detached homes on average are valued at $2,882,60
Not only are the values of the non-resident higher but also the sizes of their homes. From the same finding by Statistics Canada shows that non-resident own close to 4,800 sq. feet while for resident there single detached homes are close to 3600 sq. feet which are 32 % smaller than non-resident
The same price differential gap also exists in condominium apartments. In Metro Vancouver there exist a huge differential gap between the resident owned condominium apartment which values at $ 530,800 while non-resident apartments are valued at $692,000 which is 30% higher than those of resident
Elsewhere in the City of Vancouver, non-resident condominium apartment are worth 26% more than resident condominium apartment. On average resident-owned unit is worth $741,000, while for a non-resident-owned unit is worth $930,600, approximately 26 percent more.
It is important to note that even though the value of a non-resident real estate is higher than that of a resident. There is a significant increase in growth of the real estate industry. Findings from the Canadian Real Estate Association Home Price Index show that from January 2005 to November 2017, there has been an increase of 173.7% in the value of properties across Vancouver
However they are gaps in the study says Andy Yan, director of SFU’s City Program. He emphasizes that the study did not take into account cover presales, which can be subjected to flipping. Flipping a unit before the completion of a unit allows non-residents to take advantage of Canada tax system and avoid foreign buyers’ tax. This existing gap has made presales especially in Vancouver to double
It is expected that the prices of real estate properties in Vancouver will continue to grow as foreign ownership continues to grow. Steve Zaretsky, Vancouver realtor explains why the real estate industry is expected to grow in the coming years
“There’s a strong belief that prices will go up and they’ll continue to go up because foreign ownership is predominant,” he said. “So as long as that narrative continues to play out, it allows locals to speculate on higher prices.”
So if you are an investor who is looking where to invest his money. Vancouver real estate is the ideal place for both local and foreign investors. With the industry expected to grow by more than 20 %, Vancouver real estate sounds like a sound investment decision.
Living in a comfortable place happens to be the dream of everyone. However, many people have not been able to live up to this dream, as the cost of such comfortable places is expensive- higher than they can afford. Many people are currently not happy with their dwelling place, but only little can be done to change what has already been made.
The C.D. Howe Institute in Vancouver, reveals a research made into housing in Canada, it was stated that in about nine (9) years, ranging from 2007 to 2016, around $600,000 has been added to the cost of an average home. This huge addition has been greeted by people with much dissatisfaction. In the Metro Vancouver new homes, the reasons for the continuous decrease is, due to the higher prices, rising rates, tax increase and also the inclusion of mortgage conditions.
Anyone who needs a luxurious home, should understand that Vancouver has a whole lot of packages to offer. The style of the homes would conventionally fit everyone’s taste. One can own his or her own property with the basic amenities in place to enable one live a comfortable life. However, such comfortable places could come with an expensive price. Early in 2016, house sales in Metro Vancouver dropped by a large percent.
A Housing Developer Addresses The Affordablitiy Issue Of Vancouver Properties
A particular website stated how Metro Vancouver has evolved drastically for close to 40 years. A housing developer which goes by the name Michael Geller, talks about some relevant and important real estate issues which is still must talked about even till now. Geller asserted that the thought of many people as regards the issue of affordability in Vancouver which seems to be a catastrophe, is not something which is just happening for the first time. Factors such as the effect of the investment from foreign bodies, a very low rental vacancy rate amongst others, which have plagued real estate experts in the past, are currently still being looked into. So, in order to fully grasp and solve the issues which are caused by these factors, it would be necessary to look into the past, and work with the results gotten then, comparing them side by side with the current issues. Once this is done, progress would undoubtedly be made, and the affordability of housing would surely be improved.
Comparing Sales Of 2017 And 2018
Taking a look at the spring sales in the luxury real estate market in Vancouver, the spring sales took a downturn, however the prices continued to rise. Reports further showed that in the first quarter of 2018, the sales activity in the region decreased, the luxury detached home sales lessened by 38.2 % as when compared to 2017, also the sales of luxury condominiums decreased by 26.5%.
It would surprise people to note that despite the lessening of sales, price gains were still gotten, this left people in bewilderment as to how that managed to occur. The president and CEO of Royal LePage, Phil Soper, revealed some reasons which people might hardly look into. He mentioned that the prices had not dropped, but remained high due to the fact that much was carried over from the previous year-2017, and there are strong indications that it would drop during this current year.
However, due to the recent happenings as regards the springing up of new policies which relate to tax, and which also affects buyers- both foreign and domestic ones, who purchase properties such as homes in Vancouver, the price appreciation was predicted to reduce or lessen in 2018, this price appreciation applies to the luxury market. Also, the volumes of sales would expectedly be lower than usual.
Buying Or Renting A Place In Vancouver, What’s Your Pick?
Now, for those who are contemplating between the cost of buying or renting in Vancouver, they should understand that there is really no difference, the returns gotten from the investment would not really be much when comparing both sides. A summary of the analysis which was conducted by a group called the Quantitative Rhetoric which provides monthly reports about the cost of buying or renting a place in Vancouver, stated explicitly that all what mattered, is the ratio of how much one intends to rent or buy, as the final calculated amount on both sides has little or no difference when compared.
Higher prices, rising rates, new tax announcements, and latest mortgage requirements are all playing important factors towards the plummeting of housing sales in the Metro Vancouver area. As housing sales dipped to the lowest level in the recent years, Metro Vancouver’s new homes have soared in the initial quarter of the year, with stats in Vancouver alone being more than twice as high as the same period in 2017. There were 6,542 home sales on the Multiple Listing Service (MLS) in Metro Vancouver during the initial quarter of 2018, which is a decrease of 13.1 percent from the same period last year. This represents the region’s lowest first-quarter sales total since 2013, reported by the Real Estate Board of Greater Vancouver (REBGV).
A Comparative Analysis
The overall housing sales in the first quarter of the year were the lowest in the past 5 years. In fact, even the local listings of detached, attached and apartment properties dropped by almost 7 percent in March as compared to previous year. But total housing stats across the region increased to 6,864 units in the first three months of 2018, up by 30 percent from the last year. Massive increments were also noticed in the Northern Vancouver area, where about 1,422 new homes were initiated, comparable to only 107 in the same period the preceding year. Even though there have been almost 43,000 new homes under construction across the Metro Vancouver area, the current inventory remains incredibly low.
Housing Price Benchmark Reaching Astonishing New Heights
Sales have started to outstrip supply for condos and townhouses. The benchmark price for a condo was close to $700,000 in March. This is a leap of 26% compared to the preceding year. Standard townhouse prices across Metro Vancouver reached $835,300 last month, which is a 2 % hike over February and an overall 18% rise from March 2017.
Renters are paying the real price when it comes to living in these highly expensive areas. According to the Canada Mortgage and Housing Corporation, average rent has nationally gone up previous year by 2.7 percent to $947 per month. Meanwhile, rental property is becoming tougher and tougher to avail. The CMHC says that the overall vacancy rate for cities across the country was three percent in 2017, down from 3.7 percent in 2016. In its annual report on housing rentals, the corporation said the demand for a purpose-built apartment is outpacing the growth in supply, while the rates of condos rented out are also declining.
This uncontrollable price outburst has taken the market by surprise. This is becoming a serious concern for both businesses and residents looking to recruit new candidates. It is becoming immensely cumbersome to buy quality real estate in Vancouver. The government of British Columbia is looking to follow new measures intended to mitigate the highly inflammable housing costs.
Increasing construction can meet the rising demand for rental studios and multi-family homes. Beyond that, it wouldn’t hurt for people to look for suitable accommodations adjacent to or on the outskirts of the Metro Vancouver area!
It is easy to comprehend why people are moving up in the housing continuum and freeing up the real nature of rental homes. But the main question is – is it economically viable to shift the paradigm over to detached homes and condos? Let’s figure it out!
For a long time now, Vancouver’s real estate market showcases a high degree of vulnerability. Certain reports continue to signal strong evidence of staunch overvaluation as housing prices are still going north of expectations. Surveys noted that homeowners in Greater Vancouver and the Greater Toronto Area remain probably the most highly indebted in Canada, due to the speed in which their real estate market has expanded. Other measures designed to either cool down the housing market include Bank of Canada, raising key interest rates, Ontario’s Fair Housing Plan and a new mortgage stress test by Ottawa for insured mortgages. Unguaranteed mortgages remain slightly more expensive.
Condos Outpacing Detached Homes
We have found moderate evidence of price acceleration when it comes to the overall market, but it has been pointed out that low price acceleration among detached homes was causing an extremely high price growth influx among condos and townhomes. Instead of buying detached homes, families are now settling for the option of apartments and condos. The irony is that condos aren’t exactly on the cheaper side!
Renters Suffering The Biggest Blow
Renters are struggling to find homes because prices are skyrocketing and at the same time availability is rapidly declining. Vancouver’s housing market continues to overheat, as demand for multi-family units remains elevated, largely due to their relative easy affordability as compared to single-detached homes. As a result, inventories of both new and resale multi-family units are at or near all time lows. People believe that the Canadian government at one point in time was able to construct enough rental buildings annually, but after the arrival of private sector, it hasn’t been able to fulfil the rising requirements of the growing population. In turn, there has been a shortage of quality apartments and condos in Vancouver, and this has led to an enormous rise in housing rent.
So is it viable for the common people to start renting condos and apartments at over $1500 a month? No! In fact, it would be very troubling for average middle income families to invest that much money in rent alone. It was reported that last year, Canadians nearly spent more than 30% of their incomes on shelter costs, which is way beyond the line of affordability. All in all, it is becoming very difficult for families to survive, not to mention, save money with these rising costs.
The need of the hour is direct intervention from the government to help reduce proliferating housing costs.