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Renting Vancover Condos : What is the Return on Investment (ROI)?

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.

Thanks to the latest information from rentboard.ca and zolo.ca. Below is the calculation:

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Vancouver Real Estate: Buy Now or Wait for Stability?

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.

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Metro Vancouver Home Sale Supply Reaches Three-Year High

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.”

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2018 Real Estate Pricing 10-Year Overview

Vancouver obscure a Major Market Correction

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.

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Vancouver Housing Market Just Had Its Cruelest April In the past Decade

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.

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Housing Sales In Vancouver Going Sour

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!

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Vancouver’s Housing-Affordability Enigma

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.

 

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Vancouver Real Estate March 2018 Update

Main Highlights

 

Vancouver Real Estate News - March 2018 Update
Vancouver Real Estate News – March 2018 Update

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Did You Hit the Jackpot on Vancouver Real Estate?

Were you part of this “WAVE”?

There isn’t an easy-to-read chart out there so we have decided to come out with an overview of how greater Vancouver & Fraser Valley Real Estate has grown in the past 10 years. Information is compiled from Real Estate Board of Greater Vancouver and Fraser Valley Real Estate Board

Looks like everyone is a WINNER if you have purchased at least a piece of property in the past 10 years.

greater Vancouver and Fraser Valley Real Estate
Greater Vancouver and Fraser Valley Real Estate – home pricing 10 years comparison

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