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Slow down on Vancouver Real Estate, Main drag on British Columbia’s Economy

The Federal B-20 mortgage and provincial tax measures introduced in 2018 have brought about a harsh housing reduction in the current and existing home sales market. Retrenchment has mostly been essential within larger urban markets. This will help in the decrease in new home activity in 2019. Home sales in real estate have fallen to a multi-year low pace. Credit constraints together with high-interest rates have triggered a considerable decrease in the purchasing power of buyers, hence price declines and slow activity in the sectors of the economy.

Major real estate markets in B.C.’s has felt the federal mortgage stress test. This is because of the already-high housing cost. In other highly priced markets, where buyers are already self-conscious in their buying ability, the stress test makes them come up more to get into the real estate market. Use of higher down payment is the usual way to make up the difference. In Vancouver, it might be an extra $80,000 when compared with an additional $35,000 in Winnipeg.

Credit : vancouverisawesome.com

As it’s predicted, existing home sales will turn higher by mid of 2019 hence lower prices inducing buyers to enter into the market. The downturn will be unassuming compared to other previous episodes. The Benchmark MLS prices are coming down, and the expectations are that buyers will come back. Since the economy is still sound, then there will be a return in demand. All that is needed to be looked at is about the buyers being able to get financing for their home purchases since sellers don’t have their backs, and so they don’t necessarily have to sell for a lower price.

The current slowdown being experienced in home sales might continue to pull down on the overall economy over the next coming years with the housing starts and residential investment following the decline in sales. The housing starts trail the cycle of sales and are predicted to decrease by 20 percent in this year to 32,600. The current demand down cycle results to higher inventory of new homes and reduced activity of condominium pre-sale hence forcing most developers to have construction delays or even forced to cancel projects. Multi-family housing starts will trigger most of the decline experienced and be highly concentrated in Metro Vancouver. The Government investment in real estate housing will provide some balance hence leading to a reduction in the private investment. Also, the residential investment spending declines with 8 percent this year on fewer housing starts, and a slowdown in renovation is hence spending reducing in 2020 before getting higher.

Real GDP is predicted to slow to 2.1 percent in this year before rising again to 2.4 percent in next year and 2.8 percent in 2021. A build up in significant capital project construction in both private and public sectors will be a strong hence balancing to the decline in the residential activity. Moderate population growth is also a determined source of growth whereby there will be underpinned in consumer spending.

British Columbia’s Housing Matters on Speculation and Vacancy Tax

British Columbia’s major urban centres have issues on handling the housing crisis. Prices of homes and rent have built up hence making it out of reach for many British Columbians. The key measure in solving this housing crisis is the speculation and vacancy tax. People living and working in B.C. deserve a moderate place to call home, and the provincial government is taking measures towards ensuring this. Speculation and vacancy tax is a 30-point plan of the provincial government towards having affordable housing for the people of B.C.

Areas that speculation tax applies. Image source: ctvnews.ca

There are two kinds of taxes that are subjected to Vancouver homes. These include the speculation tax levied on homes located in certain parts of the province and the vacancy tax for homes (empty home) in the city. The annual tax aims towards domestic and foreign speculators who own homes in B.C. but don’t make payments as per where they live, making changes in an empty home to have good housing for the people, and also raising revenue for the support of affordable housing. All homeowners located in B.C. where taxes are chargeable, must completely make a declaration every year. 

Vacancy tax in Vancouver was effected in 2017 and 1% is charged as an addition on homes that are not the fundamental residence of the homeowner. This applies to unoccupied homes for six months or more a year. British Columbia speculation tax, passed in the fall of 2017, also applies to Vancouver’s housing properties.

The rate in 2018 was at 0.5% of the assessed taxable property value. As stated by the legislation in 2019, foreign homeowners (satellite families), charges will be at 2% whereas Canadian nationals (Canadian permanent residents) will still remain at 0.5%, same as last year. This year’s tax will be due on July 2, 2019.

Speculation and Vacancy Tax exemptions

According to legislation, for a homeowner to qualify for a speculation tax exemption, the purchase of the property must be on or before Oct 16, 2018. If forbidden by the development bylaws from a home being rented out, then speculation tax for 2018 and 2019 will be exempt for the homeowner. 

Similarly, the city’s Vacancy tax exemption applies. Empty housing properties for over six months due to rental restrictions will be exempt. This will happen if the bylaws were in place from Nov 16, 2016.

There will be no charge if there is no residence on the property and the buyer has a vacant on which he or she has a plan for a building.  Also, no tax will be charged on properties purchased for the current year.

Another issue that may make homeowners qualify for the exemption is an illness. There are full lists available for both the province and city. In order to claim for an exemption, properties registration by homeowners must be done by March 31, 2019. For registration purpose, it is very simple and can be done either by the use of phone or online.  In case a home is owned by different owners, or even a spouse, you must have separate declarations for each owner.

 

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2019 Vancouver Real Estate Market to Watch. Best Forecast Strategy for Vancouver Housing Price

The beauty of any city is well seen by how people would love to work and live there. Vancouver is one of the cities in Canada where the population is increasing and is ranked at the top as the most populous city in British Columbia province. The main reason behind this great milestone is the home prices that are very high. In March/April 2019, buyers might get their opportunity since the Prices are subsiding and listing growing. The rise of interest rates and mortgage stress test rules are believed to causing the flat sales and price decrease lately. This is a waiting game for almost every Canadian housing markets and hence the lowest prices expected to come in March/April.

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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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5 Reasons Why Vancouver Real Estate Prices Are So Crazy

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 and highest-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:

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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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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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Cost of Living Vancouver V.S. International Cities

“Vancouver is expensive to live” has been ring our ears for a while. We have the most expensive gas in North America (gas prices spike to $1.50CAD/Litre) , as well as high cost on housings..etc. On the other hand, we also believe that Vancouver is “very international” as we have

  • hosted at least one Olympic event (2010 Winter Olympics)
  • ranked top 3 most livable cities according to the Economist Intelligence Unit’s (EIU)
  • lots of new immigrants & speaks over 200 languages

The’s  a cost for being a “popular” city so it is expensive to live in! However, how “expensive” is Vancouver compare to other popular ones?   Let’s have a look at cost of living compared with other well-known cities around the world. Looks like we are not too bad!

Cost of Living in Vancouver V.S. other major cities such as Tokyo, New York, Shanghai and more (data April 2018 from Numbo.com)

Please include attribution to Condos in Yaletown with this graphic.

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Yaletown, Vancouver – A Real Estate Prospect Despite Current Situation

2016 – A Year of Ups & Downs for Vancouver Real Estate

At the start of 2016, Metro Vancouver had been a real estate Eldorado, witnessing record-smashing numbers in housing sales and listings. With every passing month since early spring, housing numbers continued the trend of dwarfing the preceding months’ and years’ records. Yaletown was no exception to this, being one of Metro Vancouver’s most desired locations to live in.

A significant contribution to this trend in Metro Vancouver was the investment by foreign buyers, both businessmen and immigrants, in one of Canada’s fastest-growing metros. 2016, particularly, saw a huge surge in the number of foreigners that were migrating to the city. The Metro Vancouver real estate was booming and was at its peak. But so were the prices of listings. Housing rates were at its all-time highest, and it was beginning to concern the city’s officials.

vancouver-supply-demand-real-estate
There’s been an increase in unit listed (supply) and huge drop on the unit sold (demand). This gives a strong signal of buyer’s market. Source: Real Estate Board of Greater Vancouver

In August of this year, the City of Vancouver passed a new tax law on foreigners who wanted to buy into the city’s real estate market. The Foreign Buyers’ Tax was a 15 percent levy that was introduced to thwart off the increasing number of foreign buyers who were significantly responsible for the massive housing rates in Vancouver.

What followed was entirely unprecedented. As expected, the number of sales naturally dropped down drastically in the same month that the levy was implemented. But, in a surprising turn of events, the average housing rates did not budge at all. In fact, many areas including Yaletown, saw housing prices go up despite the fact that there was a lower demand.

The worrying situation failed to improve as September came around. The conditions reflected on a report released by UBS Switzerland on September 27th, declaring Metro Vancouver as the “World’s Highest Bubble Risk.”

Despite these rough waves that have been hitting Vancouver recently, many experts believe that Vancouver’s real estate will continue to remain healthy. A forecast by Central 1 Credit Union predicts B.C.’s hot real estate market will remain healthy for the next two years. Senior economist, Brian Yu believes that slower growth is healthier for the market because sky-rocketing Greater Vancouver prices seen during what he described as “spring fever” were unsustainable, in the early part of 2016.

A Healthier Future for Yaletown

At the hub of Metro Vancouver’s Downtown area, and situated in one of its prime locations, is Yaletown. Its distinct location makes Yaletown one of the most desirable places to live in the city. This automatically results in a higher demand for housing, and ultimately, makes the area one of Vancouver’s most expensive.

Given the recent fluctuating situation and rough sailing real estate boat of Metro Vancouver, Yaletown has been at the thick and thin of it all. With every crest and trough that the city has undergone, it has been directly reflected on Yaletown too.

As the number of listings continues to stack up, the number of housing sales has failed to show any signs of picking up pace anytime soon. Despite this, the rates of listings have not eased. On the contrary, it has gone up over the past couple of months.

Average housing prices currently, at an average, stands at $1,538,349, including detached and attached homes, and apartments. The highest price stands at over a staggering $8 million.

Despite all the inflation within Yaletown’s property prices, Yu’s prediction indicates a promising and healthy future for Yaletown. The popularity of the prime Vancouver region is expected to remain positive.

Dealing with the housing prices in Yaletown can be tricky but promising. Yaletown Condo Listing can help guide you if you want to buy a house in Yaletown, Vancouver.

Home Price Index for Greater Vancouver, Sep 2016 – Detached Home

Area Benchmark Price Index 1 Month +/- 6 Month +/- 1 Year +/- 3 Year +/- 5 Year +/-
Greater Vancouver $1,567,500 289.1 -0.6 16.8 32.7 69.5 66.3
Bowen Island $796,500 172.7 -0.2 21.9 23.8 38.0 31.9
Burnaby East $1,228,500 274.7 -2.6 12.4 29.7 64.5 70.8
Burnaby North $1,564,700 302.6 -2.0 15.1 29.2 66.3 72.3
Burnaby South $1,689,400 323.4 -0.6 21.1 36.5 73.9 75.0
Coquitlam $1,210,600 268.6 -1.5 15.7 34.2 71.7 75.9
Ladner $1,064,800 256.7 3.3 16.2 36.0 70.6 69.9
Lower Mainland $1,252,800 266.1 -0.9 17.1 33.9 65.2 65.2
Maple Ridge $717,400 204.4 0.7 19.1 36.5 55.8 55.1
New Westminster $1,086,000 269.4 -1.6 14.2 31.0 63.8 64.5
North Vancouver $1,663,500 264.8 -1.6 16.9 37.2 74.1 81.7
Pitt Meadows $793,200 223.5 1.2 19.8 34.9 56.7 62.2
Port Coquitlam $888,500 237.0 -2.1 10.4 27.8 61.8 61.7
Port Moody $1,381,900 255.2 -0.9 14.1 30.9 62.3 70.5
Richmond $1,684,800 337.9 -1.1 19.2 39.2 79.5 66.9
Squamish $788,300 209.6 -1.5 19.7 29.1 59.0 58.9
Sunshine Coast $479,800 168.1 0.9 16.7 25.4 40.8 26.4
Tsawwassen $1,269,700 273.4 1.8 14.3 36.6 77.8 78.2
Vancouver East $1,537,300 339.8 0.2 19.3 32.4 80.9 86.8
Vancouver West $3,623,300 372.0 0.2 17.9 32.1 73.2 62.0
West Vancouver $3,361,600 319.6 0.1 20.1 36.4 81.0 89.1
Whistler $1,301,800 180.2 -1.6 15.5 22.5 48.3 38.6