Month: February 2023

3 ways to make money in the current slow real estate market in Vancouver.

Oleg Articles, For Buyers, For Sellers, Tips

The Vancouver real estate market has been experiencing a slowdown in recent years due to high interest rates. However, smart investors are taking advantage of these conditions to make strategic investments and maximize their returns. In this article, we’ll explore three ways that smart investors are taking advantage of the slow Vancouver real estate market conditions due to high interest rates.

  1. Buying pre-sale properties

One way smart investors can take advantage of the slow Vancouver real estate market conditions due to high interest rates is by purchasing pre-sale properties. Developers are often willing to offer pre-sale properties at a discounted rate during slow market conditions, which can provide an opportunity for investors to secure a property at a lower price.

By purchasing a pre-sale property, investors are also hopping for a lower interest rate in future. This can be particularly advantageous during a slow market when interest rates are high, making it difficult to qualify for a mortgage or afford a mortgage payment.

Investors should be aware of the risks associated with pre-sale properties, including potential delays in construction or changes in the real estate market. Thorough research and due diligence are essential before making a pre-sale property investment.

  1. Upsizing

Another strategy smart investors are using in the slow Vancouver real estate market conditions. By purchasing a larger property and selling their smaller one, investors can take advantage of the equity built in the current property as well as lower prices on the bigger property.

For example, you own a townhouse and would like to upgrade to a house. On average detached properties in Vancouver have seen a bigger depreciation as opposed to townhomes. If you were thinking of upsizing already then upsizing in the slow market can be a great opportunity to do so.

Investors should carefully consider the costs associated with upsizing, such as higher property taxes, property transfer taxes, maintenance costs, and potential renovation expenses. Thorough research and due diligence are essential before making an upsizing investment.

  1. Rental properties for long-term investment

Finally, smart investors are taking advantage of the slow Vancouver real estate market conditions due to high interest rates by investing in rental properties for long-term investment. High interest rates can make it difficult for some people to qualify for a mortgage, leading to increased demand for rental properties.

By purchasing a rental property in a slow market, investors can take advantage of lower property prices and potentially higher rental income. Over time, as interest rates decrease and property values increase, investors can realize significant profits from their rental property investment.

Investors should be aware of the risks associated with rental properties, including maintenance costs, tenant turnover, and potential vacancies. Hiring a property manager to handle day-to-day management tasks can help to mitigate some of these risks.

In conclusion, the slow Vancouver real estate market conditions due to high interest rates are providing opportunities for smart investors to make strategic investments and maximize their returns. By purchasing pre-sale properties, upsizing their properties, or investing in rental properties for long-term investment, investors can build long-term wealth. However, as with any investment, thorough research and due diligence are essential to avoid potential pitfalls. Working with a knowledgeable investment advisor can help to ensure that investors make informed decisions and maximize their returns in the slow Vancouver real estate market conditions.

What you NEED to know about Vancouver’s real estate market in February 2023

Oleg For Buyers, For Sellers, Market update, Statistics

 

Over the past year, interest rates have surged significantly, and the average 5-year variable rate is now around 6.45%. In comparison, just a year ago, the rate was at 1.6%. The increase in interest rates has led to a considerable increase in monthly mortgage payments, where on a $400,000 mortgage, the payment has increased from $1,617 to around $2,667. As a result, the real estate market has been slowed down considerably.

In January 2023, the real estate market witnessed 55.3% fewer transactions compared to January 2022. The market was so slow that it was 42.9% slower than the ten-year average for January, which is typically a slow month for real estate transactions. The increase in interest rates has led to a considerable rise in monthly mortgage payments, making it challenging for buyers to afford new properties.

Despite the market slowdown, prices have not dropped as much as anticipated. Detached houses have seen a 9.1% decrease from January 2022, while apartments have only decreased by 1.1% since last year. More surprisingly, apartments have gone up by 1% in the last month, and there are differing opinions on what may have caused this phenomenon.

Rentals.ca reports that Vancouver remains the most expensive city in Canada for rent. The average cost of a one-bedroom unit is $2596 per month, and a two-bedroom unit rents for an average of $3562. Given these high rental prices, it is unsurprising that many people prefer to invest in the real estate market, despite the high interest rates.

Looking ahead, the Bank of Canada may be ready to pause further interest rate increases. If this happens, and the interest rate stabilizes, we might see a lot of activity in the real estate market in the spring. As a result, if you have been considering purchasing a property, this could be a good time to make a move.

In conclusion, the rise in interest rates has had a significant impact on the real estate market, slowing it down considerably. Nevertheless, it is not clear whether this trend will continue, and the market may pick up in the coming months. As a result, it is crucial to keep a close eye on the market and make informed decisions before making any significant purchases.