Blog › January 2015

Prime at 2.85% - Now is the Time to Get into Vancouver Real Estate


Current cheap mortgages and basic principles of supply and demand will keep Vancouver market propped up indefinitely 

Vancouver Yaletown and Downtown skyline

We all see the headlines throughout our daily lives: "Real Estate Bubble About to Burst" or "Vancouver Second-Most Unaffordable City In The World" and so on. Many people in the city let these headlines affect their thinking and avoid property ownership. Well, I'm here to tell you that now is one of the most opportune times to get into the Vancouver real estate market.

Yes, I'm a Realtor, so what else am I going to say, right? While my profession could very well have an impact on my thinking, the stats I'm about to highlight don't lie.

The first factor is the historic low levels of interest available to mortgage consumers. With rates hovering around the 2.84 per cent level on five-year fixed terms, (when you use a  Dominion Lending mortgage broker) the market hasn't seen this level of interest since after the Second World War. But can the low rates stay here forever? Not necessarily at these historic lows, but they will remain relatively low, for a few different reasons.

Western banks are faced with an aging population that is retiring, and therefore saving in large amounts. This is reducing their appetite for high interest rates, because they would have to pay out on these large amounts. Combine this with a government in need of stimulating its economy, especially with low oil prices, and rates could very well stay low or set new records for historic lows over the coming years.

However, I do always advise my clients to err on the side of caution. Paying off your mortgage with large one-off payments or a shorter amortization is highly advisable at this time. Also resist the temptation to buy a home that is at the max of your approval limit. Calculate how much your payments would be if the rates were at 6 per cent when you renew in five years. Are you comfortable with this payment? If so, then start shopping in that price range.

The second factor that is often cited is that Vancouver is overpriced and therefore the prices are unsustainable. While the merits of interest rates can be debated, in my opinion this argument is extremely flawed. Yes, the price of land in Vancouver is very costly – there is no escaping that. And yes, the cost of buying a home on freehold land is out of the realm of possibility for most average people. But does that mean the entire market is unaffordable? Not necessarily.

Really this comes down to the economic theory of supply and demand. There is a super-high demand for land in the Lower Mainland, and Vancouver is a relatively small city in size so there is a super small supply of land to develop properties on. So while buying a single-family detached home is very difficult unless you have a high income, ownership within a strata is much more affordable and is a very conservative approach to personal financial planning. Shared ownership is much more preferable to throwing your money away on rent.

So the next time you see a headline that says “Vancouver is the second most expensive real estate market in the world”, hold your head up high. Most of you have the opportunity to own real estate in one of the safest, sought-after real estate markets on the planet earth. New York, Hong Kong, London and Vancouver are all extremely safe markets to investment in.

Outside of global economic collapse and a rapid rate of inflation that leads to a sharp increase in interest rates, there is little that can affect the Vancouver real estate market. And even if that were to happen, rest in the knowledge you’d still own in one of the top five real estate markets in the world. There would be no shortage of people lining up to buy your home if you chose to sell.

- See more at: http://www.rew.ca/news/opinion-now-is-the-time-to-get-into-vancouver-real-estate-1.1748137#sthash.4OQVGmE9.dpuf



Recently Sold Listing 1474 E 20th Ave, Vancouver, British Columbia


V1101371 - 1474 E 20th Ave, Vancouver, British Columbia, CANADAI have just recently sold this listing at 1474 E 20th Ave, Vancouver.

New Listing 1474 E 20th Ave, Vancouver, British Columbia


V1101371 - 1474 E 20th Ave, Vancouver, British Columbia, CANADAView my new listing for sale SOLD at 1474 E 20th Ave, Vancouver and currently listed at $1,150,000.SOLD

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Don’t Believe the Hype – Why Vancouver Isn’t That Unaffordable


Is affordability really as bad as the headlines make it seem? Here are three oft-overlooked reasons why not

Vancouver False Creek

It’s always a hot topic on these pages and in the media generally, but these past few weeks the issue of Vancouver’s lack of affordability has been more discussed than ever.

First, a few weeks ago, the price of a typical Greater Vancouver single-family home surpassed $1 million for the first time

On January 13, Workopolis published a survey that got picked up by mainstream media including VanCity Buzz, outlining what you need to earn to buy an average house in Canada’s cities. Needless to say, Vancouver came out worst, at $147,023 a year.

Then, on January 19, an annual survey by Demographia asserted that Vancouver was the world’s second-least affordable metropolitan region, after Hong Kong.

Even Mayor Gregor Robertson told press in response, “It’s going to take us years to start to move the needle and improve affordability as a city and across the region.”

But is it really as bad as the headlines make it seem? After all, the real estate market is hotter than ever, with home sales in 2014 up 16 per cent compared with 2013. So if Vancouver real estate is so very unaffordable, how are all those buyers, well, affording it?

And we’re not talking about overseas investors, who make up about third of the luxury market and a much smaller fraction of the market overall. We’re talking about regular folk with their average incomes, buying typical homes.

Here’s how. There are three major, often-overlooked reasons why families and individuals continue to be able to afford real estate in a supposedly unaffordable market.

1) Most People Have Existing Equity

Around 70 per cent of all real-estate purchases are made by non-first-time buyers. That is, people who are selling a home to buy the next, and therefore already have equity to offset against the cost of their new mortgage.

A typical family buying that typical million-dollar single-family home has probably been in the market for around 10 or 15 years: first buying a condo as a couple, then moving to a townhome or duplex when the kids are small, and then finding their “forever” home to grow into. It’s not as though they are taking out a full million-dollar mortgage and having to pay that off with their average household income.

This family has been able to take full advantage of the rising house prices in selling their previous homes, so the sharp rise in prices has worked as much for them as it has against them.

This means that the income-to-mortgage ratios of surveys like those by Demographia and Workopolis simply do not apply in the real world, especially when you factor in reason #2 below. (And by the way, Demographia also chose not to include many developed countries such as France, Germany and Russia, so its numbers should be taken with a pinch of salt in general.)

And what about first-time buyers who do not have any equity? They need to follow the same process as our family above, like everybody else. And if they want to live in downtown Vancouver but can’t even afford a one-bedroom condo (Vancouver’s 10 most-affordable condos listed here) then why not build up equity by buying in an up-and-coming outlying area, rent it out and carry on renting downtown (more on that here)? Or just live in it and work your way up the ladder back to your desired area. The sense of entitlement felt by so many that they should be able to afford to buy a home in whichever desirable area they choose is, frankly, outdated and naïve in a city such as ours.

2) Income-to-Price Ratio Skewed

There is a fundamental flaw in the methodology of comparing average household incomes with average house prices in Vancouver.

Let’s take the Demographia survey as an example. It cited a median price (mid-point of all sales prices) of $704,800 and a median household income of $66,400.

This median price factors in all those super-luxury homes generally bought by rich overseas investors, as well as the regular homes more generally bought by locals. But if you are factoring in homes bought by the super-rich from overseas, then you need to factor their income into the average household income of the “buying public” – not just Vancouver residents.

Either that, or strip the super-luxury market from the equation entirely – bringing the median price down considerably. But don't compare apples with oranges.

3) Interest Rates at Historic Lows

On January 22, at the Urban Development Institute 2015 Luncheon, Neil Chrystal of Polygon Homes presented the below slide and made a crucial point.

5-Year Fixed Mortgage Rates

He observed that because of the current historically low interest rates, the mortgage payments on a typical home in 2014 were only slightly higher than those made on a home in the late 80s and early 90s. Allowing for the increase in average annual income in that time, and it is now probably cheaper to pay a mortgage on a typical home than it was back then. Of course, Chrystal is in the business of getting people to buy homes, but his point is nevertheless valid.

Now that interest rates have just dropped even further, this is truer than ever. Of course, all home buyers must be careful to allow for future rate increases, but we are extremely unlikely to see the highs of the early 90s any time soon.

Overall, the message is that aspiring homeowners must not be alarmed by the headlines, and should find out for themselves what they are able to buy. There is a multitude of very affordable homes in the Greater Vancouver region for people to get onto that property ladder and start being on the right end of those price increases. The last thing they should do is be disheartened by unaffordability hype and continue to rent long-term, locking themselves out of the market permanently.

This train ain't stopping – so get on board.

- See more at: http://www.rew.ca/news/editorial-don-t-believe-the-hype-why-vancouver-isn-t-that-unaffordable-1.1741028#sthash.z0eKPwU3.dpuf

By
Joannah Connolly REW.ca
January 23, 2015

 



2014 a Banner Year for BC Home Sales, Up 15%


Home for sale sold

A total of 84,049 home sales were recorded by the Multiple Listing Service (MLS) in 2014, up 15.2 per cent from 2013, according to a British Columbia Real Estate Association (BCREA) report issued January 13.

The report, compiled from the combined monthly reports of the province’s 12 real estate boards, said that after lagging for several years, BC home sales “eclipsed” the 10-year average of 82,000 units and even surpassed the 15-year average of 83,600 units.

Transaction dollar volume was $47.8 billion in 2014, an increase of 21.9 per cent from 2013. The average MLS residential price in BC rose to $568,405, up 5.8 per cent from the previous year.

“BC experienced a significant increase in housing demand last year,” said Cameron Muir, BCREA chief economist. “Not since the post-recession rebound of 2009 has the market posted such a turnaround."

Unit sales climbed 8 to 25 per cent in all BC real estate boards, except Kamloops where the number of transactions fell nearly 5 per cent, said the report.

In December, sales dollar volume was up 18.2 per cent to $2.97 billion, compared with December 2013. Residential unit sales were up 14.7 per cent to 4,426 units, while the average resale home price was up 3 per cent to $585,718.

The figures come a week after reports from the Real Estate Board of Greater Vancouver and the Fraser Valley Real Estate Board revealed similarly strong growth in December and 2014 as a whole.

UPDATE: Home sales activity in December across Canada rose 7.9 per cent year over year, according to Canadian Real Estate Association (CREA) figures released January 14.

Sales for the month were up from year-ago levels in about two-thirds of all local markets, led by Greater Vancouver and the Fraser Valley, the Greater Toronto Area and Montreal.

The national MLS house price index rose by 5.38 per cent on a year-over-year basis in December. As in recent months, Calgary (+8.80 per cent), Greater Toronto (+7.89 per cent) and Greater Vancouver (+5.82 per cent) posted the biggest year-over-year increases.

- See more at: http://www.rew.ca/news/market/2014-a-banner-year-for-bc-home-sales-up-15-bcrea-1.1729302#sthash.54OwAll8.dpuf



New Listing 1201 - 1252 Hornby Street, Vancouver, British Columbia


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Recently Sold Listing # 602 1155 SEYMOUR ST, Vancouver, British Columbia


V1085162 - # 602 1155 SEYMOUR ST, Vancouver, British Columbia, CANADAI have just recently sold this listing at # 602 1155 SEYMOUR ST, Vancouver.

Price of New Homes Falls Again in Vancouver and Across BC


new homesDespite resale property prices on a seemingly unending upward trend, the price of a new home in Vancouver fell 0.2 per cent month-over-month in November 2014 – the first monthly price drop since July, according to Statistics Canada figures released January 8.

November’s new home price index also dropped 0.6 per cent year over year, as builders reported a decrease in negotiated selling prices in Vancouver, which was one of only seven cities to post a decline. The drop was attributed entirely to a fall in the property values, which fell 1.1 per cent, while land values stayed flat.

Victoria saw the country’s second-largest annual drop in its new home index (after Charlottetown), falling 1.1 per cent year over year.

Across BC, the new home price index also fell, dropping 0.7 per cent year over year.

Nationwide it was a different story, as the average cost of a new home in Canada increased 1.7 per cent year over year to November.

Calgary again saw the largest uptick in new home prices, rising 6.5 per cent year over year.

The index tracks the price of new single-family detached homes, townhouses and duplexes, but does not factor in new condo selling prices.

To see Statistics Canada’s interactive chart, click here.

- See more at: http://www.rew.ca/news/price-of-new-homes-falls-again-in-vancouver-and-across-bc-statcan-1.1724652#sthash.i15iQuzZ.dpuf



Recently Sold Listing 1964 W 33RD AV, Vancouver, British Columbia


V1085438 - 1964 W 33RD AV, Vancouver, British Columbia, CANADAI have just recently sold this listing at 1964 W 33RD AV, Vancouver.

New Listing 102 - 7800 St. Albans Road, Richmond, British Columbia


V1099390 - 102 - 7800 St. Albans Road, Richmond, British Columbia, CANADAView my new listing for sale SOLD at 102 - 7800 St. Albans Road, Richmond and currently listed at $255,000.SOLD

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Vancouver’s Total Home Values Up 9.5% Year Over Year: BC Assessment


The value of residential real estate in Vancouver has risen by 9.48 per cent over the past 12 months – the second largest increase of any area in the province, according to the 2015 BC Assessment Roll released January 2.

The total value of homes in the city rose $18,080,317,824 to $208,883,582,499 in the latest property tax assessment figures.

Elsewhere in the province, Northwest BC saw by far the largest increase in total residential property values, rising 20.73 per cent year over year.

The only area in BC to register a decrease in residential values was Nelson/Trail, where assessment values have dropped 0.2 per cent.

All other areas of the Lower Mainland saw strong increases in BC Assessment values for residential properties, with the North Shore/Squamish Valley area rising 6.7 per cent, North Fraser 6.6 per cent, Richmond/Delta 5.7 per cent, Surrey/White Rock 4.9 per cent and the Fraser Valley 4 per cent.

In terms of what this means for property taxes, most home owners in what BC Assessment defines as the Vancouver Sea-to-Sky region (Vancouver, North and West Vancouver, Squamish, Whistler, Pemberton, Bowen Island and the Sunshine Coast) can expect increases in 2015.

“Most homes in the Vancouver Sea to Sky region are worth more in value compared to last year’s assessment roll,” said Dharmesh Sisodraker, deputy assessor at BC Assessment. “Most home owners in Vancouver Sea to Sky region will see changes up to +15%.”

The City of Surrey has already announced a $162 property tax increase for an average home, and Vancouver is looking at a similar increase, according to a Canadian Taxpayers’ Federation statement released December 29.

Homeowners can expect to receive their property tax notices in the next few days, if they have not received them already.

Sisodraker added, “Property owners who feel that their property assessment does not reflect market value as of July 1, 2014, or see incorrect information on their notice should contact BC Assessment as indicated on their notice as soon as possible in January.”

More information on the 2015 BC Assessment Roll can be found here