A look back at Vancouver's year in real estate – the biggest news, the way-off-the-mark predictions and the hottest trends
As we wrap up for 2015, it's time to take a look back at the year in real estate and development for the Lower Mainland. Which early predictions came true and which were wildly off the mark? And which were the real estate stories that blew everyone's mind this year. Here's a month-by-month breakdown.
In the first story of the year, a single street in Vancouver was identified as being home to three of BC’s five highest valued residential properties, according to the 2015 BC Assessment Roll released January 2.
The properties, ranked in third, fourth and fifth places on the latest property tax assessment list, are all on Belmont Avenue in Point Grey – a street commonly known to locals as Billionaires’ Row. They were valued at $50.1 million, $38.5 million and $28.1 million respectively, as of July 1, 2014
The most valuable home in BC was not on Belmont Avenue but located mere blocks away at 3085 Point Grey Road in Kitsilano. This 30,600-square-foot home belongs to Lululemon co-founder Chip Wilson and was valued at $57.6 million.
The only non-Westside property to make BC’s top five is in fact an entire private Gulf island – James Island, which was valued at $51.6 million and ranked in second place.
Also in January, home prices in Vancouver were predicted to see a modest 2.8 per cent rise in 2015, according to the Royal LePage quarterly house price survey released January 14 – a forecast that turned out to be way off the mark, with prices up 18 per cent year over year in November.
Towards the end of January, and after predictions of rate rises in 2015, the Bank of Canada surprised everyone by cutting its overnight rate to 0.75 per cent in the wake of sliding oil prices.
Premier Christy Clark made headlines in February by telling the Surrey Board of Trade that it was the Liberal BC government's long-term plan to scrap the provincial Property Transfer Tax.
"When we really start making a dent on our debt, we really want to start knocking down the Property Transfer Tax," Clark said at the event, as reported by The Surrey Leader. "It is absolutely part of our long-term plan to get rid of it."
The Globe and Mail reported that at a later news conference, Clark emphasized the “long-term” part of her previous statements, saying that in order to replace the lost revenue, “Government either needs to be a billion dollars smaller, taxes need to be a billion dollars more elsewhere, or there needs to be a billion dollars in new revenue from economic growth.”
She added, “I wouldn't characterize it as a promise. I would say it’s something that we would like to do.” There has certainly been no significant mention of the idea since.
February also saw some conflicting real estate sales forecasts for 2015, with the CMHC predicting that sales across BC would actually drop 5.8 per cent compared with 2014.
However the corporation qualified that this forecast was formed ahead of January's rate cut and acknowledged that the surprise move could mean 2015's sales would outperform the previous year.
Even RBC's much more optimistic assertion that home sales in BC would rise 10.5 per cent in 2015 versus 2014 fell short of the eventual outcome in this year's super-hot market.
One of the hottest March stories was the disappearing traditional house-price dividing line between Vancouver's east and west sides. A fascinating animated heat map by urban planner Andy Yan caused quite a stir in local media, revealing that the traditional line between high house prices of Vancouver's West Side and the lower prices of East Vancouver blurred considerably in five years.
East Vancouver's under-$1m homes decrease dramatically between 2010 and 2015, and homes below $1m all but disappear from the West Side over the same period. The longstanding dividing line of Ontario Street, where East and West sides meet, can still be seen in 2015 but to a much lesser degree than five years ago.
On the subject of prices, another big story in March was our Frank O'Brien's coverage of the disparity between prices of homes in West Vancouver and those a 35-minute ferry ride away on the Sunshine Coast. The average house in West Vancouver was selling for just over $2 million, according to March figures from the Real Estate Board of Greater Vancouver, compared with the Sunshine Coast where the average house was selling for less than $350,000.
Splashing across all the local and national media headlines in April was the assertion by the head of the world’s biggest asset management company that Vancouver condos were a “better investment than gold.”
Bloomberg reported that Laurence D. Fink, chairman of BlackRock Inc., told a conference in Singapore that there was only one better bet than condos in those three markets – and that’s contemporary art, he claimed.
“The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,” Fink told the Credit Suisse Global Megatrends ConferenceApril 21.
“And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.”
April also saw some of the key brokerages hustling to amend their earlier sales and price forecasts on the back of scorching first-quarter results – including Re/Max, which doubled its price rise forecast for Vancouver from three to six per cent annual rise in 2015. And they thought that was bullish...
A fun lookie-loo story from May was the listing of mayor Gregor Robertson's Kitsilano home for $1.8 million ahead of the open-house weekend. The lovely ocean-view duplex was marketed for $223,000 more than the mayor and his then-wife bought it for two years previously. The property is a three-bedroom-plus-den, four-bathroom duplex totalling 1,666 square feet, on a 3,500 square-foot lot, less than a block from the beach. The listing is long gone but we published a gallery of the listing photos, which speak to the stunning ocean and mountain views from the interior and the three “entertainment-sized” outdoor spaces, including a view deck and a tree-shaded patio with hot tub.
The Vancouver market heated up still further, with the latest statistics out in May showing sales up 37 per cent year over year in April and the sellers' market firmly in place.
June saw a well-read and somewhat controversial story about the British Columbia Real Estate Association's assertion that foreign buyers are having an insignificant impact on Vancouver's housing market.
The skyrocketing demand for homes and rapid price acceleration is “largely driven by land scarcity and densification policies in the Metro region,” while foreign investment is “insufficient to impact such a large and diverse market,” according to a BCREA report published June 10.
The BCREA said that although there was a scarcity of data on the topic, the available information suggests that “foreign ownership of housing is considerably less than 5 per cent of the housing stock and not more than 5 per cent of sales activity.”
Also in June was a much-publicized poll by Angus Reid, which found that just over half of Metro Vancouverites are “happy” or “comfortable” in terms of their housing and daily commuting, with the remainder “uncomfortable” or “miserable” and considering leaving the city.
The poll, which surveyed 821 randomized Metro Vancouver residents on their housing attitudes and commuting habits, divided its respondents based on their answers and placed them into four groups, which Angus Reid dubbed as “happy” (21 per cent), “comfortable” (34 per cent), “uncomfortable” (27 per cent) and “miserable” (18 per cent).
Older generations dominated 55 per cent of respondents making up the “happy” and “comfortable.” Most of the respondents in those two groups are homeowners who purchased property before 2000, and fewer of these people have above-30-minute commutes compared with those who were placed in the “uncomfortable” and “miserable” categories.
Reflecting the hot summer weather, statistics released in early July revealed June 2015 as the hottest June for real estate sales on record. That was the second-highest sales volume ever recorded, beaten only by May 2005. Prices continued to break records, as they have every month this year, rising in June more than 10 per cent year over year.
Also in July, the year's second (albeit more anticipated) interest rate cut by the Bank of Canada dominated the headlines. REW.ca published a popular story in which finance expert Penelope Graham of RateSupermarket.ca explained what this meant for the economy and the housing market. She also offered a word of caution to consumers and mortgage applicants tempted to borrow more money because of the record-low rates.
The industry also expressed alarm in July at rumours of an increase in the minimum down payment, prompting a well-read editorial on the dangers of such a move. (As of early December, these rumours have proven to be true, although the new plan mitigated many of these fears - see December.)
With many alarmed at the seeming unsustainability of Vancouver real estate price rises, the industry seemed to scramble in August to make reassurances that the market is stable. The Canada Mortgage and Housing Corporation's August Housing Now report said that Vancouver, Victoria and Canada as a whole all remain at low risk of the kind of overvaluation that could cause a significant price correction.
And RBC issued a report that forecast prices in BC to keep rising across the rest of 2015 and into 2016, but at a slower rate. The report said that average BC home prices in 2015 would be 7.8 per cent higher than 2014ls average, and in 2016 would be 4.9 per cent higher still. This prediction aligned with a forecast made by TD Bank July 30, which said Vancouver home prices were likely to see a "soft landing". However, as of early December, there has been no sign of price growth rates slowing...
Another hot August story was REW.ca's feature on families who decided to make the most of Vancouver's high prices by cashing out of their city homes to move permanently to their vacation cabin.
September saw the much-publicized results of the REW.ca reader survey, which was picked up by multiple local TV and radio news shows. One key headline figure was that the Bank of Mom and Dad was enabling 75 per cent of young home buyer respondents with at least some of their down payment to help get them into the Vancouver real estate market. It also found that even in the 41-50 age group, 64 per cent of would-be buyers are expecting some form of financial help from family for their move-up home aspirations.
In September, the Canadian Real Estate Association predicted that, by the end of the year, BC would see by far the country's biggest rise in home sales for the whole of 2015. And a much-hyped report by a CIBC economist asserted that Vancouver was seeing Canada's “most asymmetrical” price rises, with the prices of detached homes rising at a much faster rate compared with condos than other cities – a factor that was hindering move-up buyers.
The big news of October was of course the election of the new Liberal federal government under Justin Trudeau. The most-read news story of the month was the editorial on what the new government would mean for home owners and real estate, examining the Liberals' housing policies and how these could affect the Vancouver housing market and affordability.
Another well-read story covered the record-priced sale of the first market-listed home in BC built to passive house standards (although not certified as such). The state-of-the-art, one-of-a-kind East Vancouver home, displayed on a bike tour of passive house projects with Mayor Gregor Robertson just days previously, was sold in a single day before it could hit the market. Although the sale price was not permitted to be published, the home was sold at a record price for a single-family home on a 33-foot lot in East Vancouver’s Renfrew neighbourhood, according to Ashley Smith, one of the listing agents with the Klein Group.
Another irresistible looky-loo story, and by far November's most read REW.ca article, was a photo gallery story showcasing the listing of a luxury West Side home for $12.8 million. REW.ca was given a tour of this magnificent home by the developer Tavan Group, and we just had to share the photos to show you exactly what just shy of $13 million can buy you (hint: downstairs has its very own private pub).
If those kinds of prices have you convinced that the market is overvalued, a report published in November might make you think otherwise. According to a report by Central 1 Credit Union's chief economist Helmut Pastrick, Vancouver’s housing market is not at risk of collapse because of its record prices. A much greater risk is a recession, asserted Pastrick, and he suggested the city look to Calgary for warning signs of an economic collapse.
Right at the end of November, local mortgage broker and finance expert Peter Kinch told REW.ca that ahead of the anticipated US Fed interest rate rise on December 16, Canadian banks have been quietly raising the rates on new variable-rate mortgages. Speaking to REW.ca editor Joannah Connolly live on her Real Estate Therapist Show on Roundhouse Radio 98.3FM, Kinch explained that new applicants for variable-rate mortgages are now getting a 0.5 per cent poorer deal than they were in August, despite the prime rate staying steady.
In early December, the most read story has been staggering monthly statistics coming out of the Fraser Valley – and mirrored in Greater Vancouver – that November saw the highest sales activity for the month in 26 years. Not since 1989 have either of the two boards seen so many sales in the month of November – usually a quiet month for real estate.
REW.ca took a tongue-in-cheek approach to the hype about the sale of singer-actress Selena Gomez's California mansion by suggesting what she could buy in Vancouver with the $6 million in proceeds.
But the big news of the month was that of the Liberal government raising the minimum down payment – thankfully on a sliding scale so that those buying under $500,000 still only need to put down a minimum of five per cent.
- See more at: http://www.rew.ca/news/2015-year-in-review-1.2135329#sthash.I2veJIUK.dpuf