Vancouver Real Estate Market Update – December 2016

Vancouver’s High Housing Prices

This year too, Vancouver made it to the top on the list of high housing prices. In 2016, the average cost of a home in Canada climbed the peak in Metro Vancouver, at $864,556. This means that Canadian families who want to buy a home in that radius must earn nearly $140,000 per year.

According to the latest census, the median household income in Canada is $78,870. Those families who are obtaining the median income can have the wherewithal for a house priced between $460,000 and $490,000 – faintly exceeding bisection of the cost of the average housing price in Metro Vancouver.

Overview of average housing price in each major city in across Canada. Source: CTV News

Empty-Homes Tax – A Ray of Hope to Cool Off Housing Market

After public consultation, Mayor Gregor Robertson had revealed a proposal for a one percent tax on empty homes. Now, the proposal is approved by the city council, and thus, it has become the first of its kind in the country.

All non-principal houses and unoccupied residential land that are empty for the period of full six months of the year will be liable to pay one percent empty homes tax. All homeowners in the city will have to self-declare if a property is the typical place they call home, eligible for immunity or vacant.

Robertson said, “I just want to be really clear: Almost all Vancouverites will not pay the empty homes tax. This is only going to apply to those with second or third homes that are sitting empty most of the year.

Undergoing renovations, condos and townhouses that have restrictions on rentals, and homes whose owners are in medical or supportive care will be exempted from the tax.

Such a tax on empty homes can address the spinoff effects of a red hot housing market.

Solution to the Rental Housing Crisis

Vancouver is hopeful that empty homes tax will boost the city’s scanty supply of rental stock. Presently, the rental vacancy rate is 0.6 percent – ensuing in some of the maximum rents in Canada. City data puts forward that more than 10,800 homes are unoccupied and another 10,000 are left vacant for an extended span of time.

Robertson quoted, “Vancouver is in a rental-housing crisis.” “The city won’t sit on the sidelines while over 20,000 empty and under-occupied properties hold back homes from renters struggling to find an affordable and secure place to live,” he exclaimed further.

The city is of the view that the rental vacancy rate would upsurge to 3.5 percent with an upturn of 2,000 rental properties.

The empty homes tax will come into effect at the beginning of 2017. It will be based on the assessed value of the property. This means – the person owning a $1-million home would pay an extra $10,000 a year in taxes.

Vancouver Homes Selling For Less than Purchase Price

Often, Vancouver real estate is acclaimed for exceptional returns. However, recently, this blooming road took a new turn when three single family detached homes bought were listed for less than the owners paid for them. At times, benchmark prices slump due to the distribution of prices, but this isn’t the situation here since these homes were purchased just 8 months before, that owners are selling at a subordinate price.

Surely, the inflated housing market of Vancouver isn’t crashing but isn’t exactly the booming market of the previous years. Does this mean that in Vancouver real estate market, affordability is setting in? Fingers crossed! With British Columbia’s new 15% property transfer surtax on foreign nationals and foreign-controlled corporations, the house sales have become sluggish, and that, in turn, will hopefully lead to moderating prices.

November 2016 Real Estate