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What effect will “empty home tax” have on Vancouver real estate market?

Oleg Articles, For Buyers, For Sellers, News, Opinion

Vancouver to implement vacancy tax on empty homes and condos

BC government has cleared the way for Vancouver to impose a vacancy tax on empty homes. Vancouver plans to impose the tax by early 2017. It will make it the first major city in Canada to implement such a penalty amid skyrocketing rents and growing concerns about foreign investment and speculation.

Mayor Robertson noted that a city study concluded there were about 10,800 empty residential units homes in the province, almost all condos, as of 2014.

Similar tax was introduced in London on ‘ghost homes’ back in 2013. As a result, one third of absentee owners began renting out their flats. However the majority of absentee owners left their flats vacant. The annual appreciation is way more than the ’empty home tax’.

So what effect will this new tax have on Vancouver’s real estate market?

In my opinion there will be no significant effect. Overseas millionaires and billionaires would not care about a couple of thousands of dollars per year in taxes. Vancouver has one of the lowest property taxes in the world. Even after additional vacancy tax it would still be quite affordable.

Empty home tax would be very hard to enforce. You could always have one of your family members “live” in the unit for a couple of weeks every year.

Other municipalities have not agreed to such tax yet. If Vancouver has an “empty home tax” a potential investor can alway buy in Burnaby, or North Vancouver, or Richmond, or… you get the idea.

In the best case scenario a small portion of the absentee owners will decide to rent out their units. Which should stimulate the rental vacancy rate. Currently the rental vacancy rate in Vancouver is 0.6 percent. Housing experts say a healthy vacancy rate is 3 per cent to 5 per cent.

In summery empty home tax will not have any significant effect on the real estate market in Vancouver. It might have a slight effect on the rental vacancy rates, but even that is questionable.

 

NOTE: This article represents my personal opinion. Do your own independent research before taking any actions. 

Summer 2016 – Vancouver Real Estate Predictions

Oleg Articles, For Buyers, For Sellers, Opinion

What to expect from the Vancouver real estate market for the summer 2016 season.

Vancouver Coal Harbour Marina

 

 

Friends, we are entering uncharted waters. The demand is at the all time high. The inventory is the at the all time low. We are having one record-breaking month after another. What’s next? Will the market crash? Will the prices go down? Will the market remain just as strong?

Short answer – “I don’t know”. In fact nobody knows, and whoever claims that they know is probably a psychic. However, as an experienced Vancouver Realtor I can make some predictions.

Real Estate Prices

We can anticipate the prices to go up slightly over the next few months in most of the Vancouver neighbourhoods. The price increase will not be as extreme as what we’ve seen in the winter and spring of 2016.

Condo prices in some Vancouver neighbourhoods might even plateau. In my opinion we will not see any price drops during summer 2016.

Buyers’ Demand

Buyers’ demand in Vancouver remains strong. However, we can already see early signs of the buyers fatigue. Properties that were receiving 8-10 offers in March and April are now getting 3-4 offers. Still a lot of demand. Perhaps people looking for properties during summer months notice a drop in the competition levels.

The market is still a very strong sellers market and will most likely remain a strong sellers markets for the summer months.

Inventory Levels/Houses or Condos for Sale

Vancouver real estate market tends to go through the seasons. Spring is generally a busy season and summer is slower.

We have seen a fifty percent drop in inventory from the previous years.  We can anticipate even lower levels of inventory during this summer season. This could be a good opportunity for potential sellers to list their home as there are less competing properties.

In summery, the Vancouver real estate market will slow down a little for the summer months.  The lower buyer demand will be balanced out by the lower inventory levels. For the most part – business as usual.

 

NOTE: This article represents my personal opinion. Do your own independent research before taking any actions. 

Spring 2016 – Vancouver Real Estate Market Update

Oleg Articles, For Buyers, For Sellers, News, Opinion

What you should know about the Vancouver real estate market in the spring 2016.

vancouver skyline

Vancouver real estate market is a topic of conversation. It’s hard to turn on the news without hearing about a tear-down that’s been sold for three hundred thousand dollars over asking price or how the last few months were record breaking for local real estate.

Here are the trends I’ve noticed over the last couple of months:

The buyers demand seems to be cooling off as we head into the summer season.

Properties that used to receive 8-10 offers now receive 3-4 offers. Real Estate market activity usually goes though seasonal cycles. There are high activity seasons such as spring and fall, and lower activity seasons such as summer and winter.

A cool-off in real estate activity is natural as we enter summer season. But this could also be an early sign of over-all cool down of the hyper-active Vancouver real estate market. It is still too early to tell which one is it.

The prices are still remaining high and show no signs of going down.

Even though the buyers demand is cooling-off the real estate market still remains a very strong sellers’ market.

Real estate prices continue climbing up but perhaps not as fast as they did at the end of winter/early spring 2016. As we head into the summer season, we can anticipate real estate prices to slow down.  More on this in my article –  “Summer 2016 – Vancouver Real Estate Predictions”.

Inventory is still at the all time low.

We have seen a fifty percent drop in inventory from the previous years. This lack of available properties for sale is one of the most important components fuelling such strong seller market.

We can expect even less inventory being available for the upcoming summer season, which will balance out the lower buyer demand and continue current real estate climate.

In summery, Vancouver real estate market remains a very strong sellers market with roughly 3-4 buyers for every property for sale. Until we solve the demand issue in Vancouver or there is a major change effecting real estate market (ex. increase in the interests rates) we will continue seeing a version of the current market climate for the foreseeable future.

 

NOTE: This article represents my personal opinion. Do your own independent research before taking any actions. 

Vancouver’s proposed affordable ownership program

Oleg Articles, For Buyers, News, Opinion
Vancouver skyline / new affordability program
JENNIFER GAUTHIER/METRO

Earlier this week City of Vancouver announced that it plans to create new affordability program for local residents. The purpose of the program is to address unaffordability issues in Vancouver BC. Specifically, Vancouver’s residents not being able to afford to purchase their first home due to rapid increase in the real estate prices.

If you feel skeptical about such program, you’re not alone. However, there are similar programs already in place in Calgary, Toronto and United Kingdom.

Don’t get too excited about the program just yet. To implement this program the city needs to secure permission from the province to change the Vancouver Charter. The Charter doesn’t necessarily prevent city from having a shared homeownership program. But the council is sticking with the motto – “better safe than sorry”.

How would the program work?

Details aren’t finalized, but the program would involve the city purchasing about 20 per cent of a units in a new development so the buyer – who would be subject to numerous restrictions – wouldn’t have as high of a down payment or mortgage payments. If the value of the property goes up upon sale of one of the unit in the “affordability program” City of Vancouver would receive it’s share of profits. If there are any remaining profits, these would be shared with the homeowner. It’s a win-win situation.

Who would qualify for the program?

  • Must be a resident of the city for a minimum of five years
  • Must be a permanent resident or citizen
  • Must never have owned property before (first time buyer)
  • Must be employed in Vancouver
  • Earn less than $67,540 per year for one-bedroom units (as a household)
  • Earn less than $96,170 per year for two and three bedroom units for people with children (as a household)
  • Must complete a home buyer education course

How many units will be available in the program?

The city aims to create 300 affordable units within the next 3 years. At least half the the available units will have two to three bedrooms. City officials said they might create a lottery system to see who gets to buy in. There are estimated 30,000 qualified households in Vancouver at the moment.

In my opinion it is fantastic the City of Vancouver is creating such programs. It is no secret that there are a lot of people that can’t afford to purchase their first condo in the city. With such programs we boost economy and help first time buyers. That’s why I love Canada, more specifically Vancouver! Where else will you find government care so much about people’s well being (outside of Toronto, Calgary and United Kingdom lol)?

Vancouver developer offers to sell condos with 0% downpayment

Oleg Articles, For Buyers, News
Image from: http://www.townline.ca/
Image from: http://www.townline.ca/

A local developer Townline Homes has made some headlines in the last couple of weeks. This Vancouver development company wants to sell condos in their new development – The Strand, in Port Moody with a 0% downpayment.  This proposal has been already accepted by BC Housing. However, Canadian Mortgage and Housing Corporation (CMHC) has not approved the proposal yet.

How does the program work? 

The price of the condos will be discounted for a minimum of 8% (as recognized by CMHC). This discount will act as a downpayment. The buyer then mortgages the entire remaining amount. This program will require no vendor take back mortgage or a second mortgage. You will have to own the property for a minimum of 2 years before selling to keep 100% of the profits (including the developer discount).

Who can qualify for the program? 

This program was designed for lower income families who can not afford the cash downpayment required for most purchases. In order to qualify for the program you must be making under $65,000 (as a household) for a one bedroom condo, and under $92,000 (as a household) for a one bedroom plus a den condo.  This regulation is put in place to prevent wealthy investors taking advantage of the program.

ST-I
1 bedroom + den + workstation floor plan

Why was this program proposed? 

The program is proposed to help lower income families get into the real estate market. It is a noble cause. Although, the developer might have another reason – PR! It makes them look good and brings a lot of attention to the development. It is worth mentioning that only a small percentage of units in the development are dedicated to the affordability program. The rest of the development is sold as usual.

It’s a win-win situation for the development company. If CMHC approves their proposal, it makes them look awesome. Selling these affordable units will be very easy. If CMHC does not approve their proposal, the developer still comes up on top. Hey, at least they tried to do something.

But lets dismiss this program as a PR stunt; it is a great initiative. It will help some young people get into the real estate market. It is a true win-win situation. The buyers get to buy a brand new condo with 0% downpayment and the developer gets some pretty good exposure.

In my opinion we will see more affordability programs like this one in the upcoming years.

Should you hire an inspector for a walk-through of your new property?

Oleg Articles, For Buyers, Opinion, Tips

Inspection-Passed

As real estate professional I get asked a lot of questions. “Should I get an inspection done, when I buy a property?” is among the most frequently asked questions. Here is a simple answer – YES! YOU SHOULD GET AN INPECTION DONE WHEN BUYING  REAL ESTATE! But what about brand new properties? Should you still get an inspection for brand new properties? If so, when should you do it?

The answer is YES! Even for the brand new house or a condo you should still hire an inspector. I am not some crazy “inspector employment advocate”. Experienced inspectors will be able to find hidden issues that might need attention, even in the brand new properties. If they don’t find anything, at least you will sleep better at night. That’s a scientific fact.

The question of “IF you should get an inspection?”, becomes “WHEN should you get an inspection?”.  Brand new properties can be either move-in ready, under construction or in the development stages. 

If the house or a condo is under construction or in the development stages the only time you will be able to hire an inspector is for the final deficiency report (also referred to as “walk-through”).

The deficiency report or the final walk-through is 1-3 hours inspection booked off for you and the developer to walk through the property and look for deficiencies. This date is usually set about a month prior to the completion date. All of the deficiencies found should be fixed before the completion date at the expense of the builder/developer. Ask your real estate agent about appropriate subjects to include in your contract. Feel free to contact me as well.

The walk-through is a great time to hire an inspector. He or she will be able to point out hidden deficiencies and save you time and money in the long run. As a curtesy let the developer (or selling agent) know that you will be hiring an inspector for a final walk through.

If the new property is move-in ready, I suggest adding an inspection clause into your offer, if possible. This way you will have 5-10 days to schedule the inspection and make sure that there are no hidden problems with the property before committing to the purchase. Ask your real estate agent about “the inspection subject”.

If the inspection is not possible before subjects’ removal (or you don’t inspection subject in your offer), you can still hire an inspector for the final walk-through. The same rules apply as before.

When buying real estate, it is always better to be safe than sorry. Always hire a professional inspector even when buying brand new construction.

Will the new mortgage regulations effect Vancouver real estate market? [OPINION]

Oleg Articles, For Buyers, For Sellers, News, Opinion

 

Quick recap: New Canadian mortgage regulations will now require a minimum down payment of 10% for properties priced over $500,000 (but under $1,000,000).  The new regulations apply to all Canadian mortgages insured by the government. See full article here: link to the article.

The new down payment rules have gotten a lot of people talking. Many experts believe that these changes will have a significant effect on the real estate markets all around Canada.

I am here to offer my opinion on the subject. Keep in mind, it’s my personal opinion based on my experience and should be viewed as such.  I am an expert Metro Vancouver REALTOR®, and can only comment on the local market.

I don’t think that new mortgage regulations will have any significant effect on the Greater Vancouver real estate market.

It is true that a lot of Vancouver properties are priced over $500,000. It is also true that more properties will be reaching that price mark in the near future. In my estimate 90% of all one bedroom condos in downtown Vancouver will cost over $500,000 within the next 5 years.

So why do I say that this rules change will have no significant effect on the local real estate market? In my experience most people buying properties over $500,000 have at least 20-25% down payments. Let me explain…

  • Usually, the buyers of five hundred thousand dollar properties are upsizing from smaller cheaper condos or townhouses. They have gained some equity in their starter home and are ready to move into something larger and more expensive. More often than not, “upsizers” have enough equity in their home for at least 15-20% down payment for the new house.
  • Most first time home buyers will not qualify for a $475,000 mortgage with a 5% down payment. The first time buyers who buy condos or houses over $500,000 have their families help with a portion or the entire amount of a down payment. Most of the time these down payments are well over 10% mark (closer to 20-25%).
  • International buyers and new-comers to Canada will rarely qualify for a mortgage in Canada. And if they do, it’s usually for a special “new-comers to Canada” program. Most of these programs require a minimum of 35% down payment.
  • Of course there are exceptions. Some people will be effected by the change. Young professionals trying to buy their first house or a condo. Families who want to get their starter home. And migrants from other Canadian provinces starting their lives in Vancouver.

From my experience the percentage of the Vancouver buyers that will be effected by this change is very small. This small percentage will not have a substantial impact on the overall Vancouver real estate market.

In my opinion, there will be no real estate crash and no major changes to the market activity in Vancouver. Business as usual! The best advice I can give to someone who is looking to buy their first home or a condo – start saving your money for a down payment today and buy it as soon as you can. The prices are not likely to go down.

 

DISCLAIMER: I am not a licensed mortgage broker. This article expresses my personal opinion only! Do your own independent research before making any real estate decisions.

New 2016 Canadian Mortgage Regulations [EXPLAINED]

Oleg Articles, For Buyers, News

Mortgage-home-loan

There was a lot of fuss about the new mortgage regulations back in December of 2015. A lot of people seemed to worry over the new rules. So what happened and what are the new Canadian mortgage regulations?

On December 11, 2015, the Canadian Department of Finance, the Office of the Superintendent of Financial Institutions (OSFI) and the Canada Mortgage Housing Corporation (CMHC) announced the forthcoming changes to existing federal rules for government-backed mortgage insurance, capital requirements for residential mortgages. In short government agencies decided to change some mortgage rules.

All properties priced over $500,000 (but under $1,000,000) will now require a minimum of 10% down payment. Before this change the minimum down payment was set at 5%. Starting February 2016, when you buy a property for $500,000 you will need to have a down payment of at least $50,000 (10%) instead of $25,000 (5%).

Buyers of properties under $500,000 can still get away with a minimum down payments of only five percent.

The change has occurred to decrease the risk associated with high ratio government insured mortgages. This was a predictable change as federal government has made several changes to the Canadian mortgage regulations since 2008.

News of the new Canadian mortgage regulations has made some people very upset. New rules will force a lot of Canadians save up twice as much money for the down payment.

 

DISCLAIMER: I am not a licensed mortgage broker. This article is for informational purpose only. Consult with your licensed mortgage broker or financial institution before making any decisions.

Market statistics for September in Greater Vancouver

Oleg For Buyers, For Sellers, Statistics

rebgvcolour

Metro Vancouver home buyers compete for fewer home listings

Download real estate statistics here – REBGV-Stats-Package-for-Media-revised

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Metro Vancouver reached 3,345 on the Multiple Listing Service® (MLS®) in September 2015. This represents a 14.5 per cent increase compared to the 2,922 sales recorded in September 2014, and a 0.5 per cent decrease compared to the 3,362 sales in August 2015.

Last month’s sales were 32.9 per cent above the 10-year sales average for the month.

“Residential home sales have been trending at 25 to 30 per cent above the ten-year sales average for most of the year. The number of homes listed for sale hasn’t been keeping up with the demand,” Darcy McLeod, REBGV president said. “It’s this dynamic that’s placing upward pressure on home prices, particularly in the detached home market.”

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,846 in September. This represents a 7.9 per cent decline compared to the 5,259 new listings reported in September 2014.

The total number of properties listed for sale on the real estate board’s MLS® is 10,805, a 27 per cent decline compared to September 2014 and a 0.8 per cent decline compared to August 2015.

“At no point this year has the number of homes listed for sale exceeded 14,000, which is the first time this has occurred in the region since 2007,” McLeod said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $722,300. This represents a 13.7 per cent increase compared to September 2014.

The sales-to-active-listings ratio in September was 31 per cent. Generally, analysts say that downward pressure on home prices occurs when the ratio declines below the 12 per cent mark, while home prices often experience upward pressure when it reaches 20 per cent, or higher, in a particular community for a sustained period of time.

Sales of detached properties in September 2015 reached 1,272, an increase of 0.2 per cent from the 1,270 detached sales recorded in September 2014, and a 24.3 per cent increase from the 1,023 units sold in September 2013. The benchmark price for a detached property in Metro Vancouver increased 18.9 per cent from September 2014 to $1,179,700.

Sales of apartment properties reached 1,529 in September 2015, an increase of 28.7 per cent compared to the 1,188 sales in September 2014, and an increase of 50.2 per cent compared to the 1,018 sales in September 2013. The benchmark price of an apartment property increased nine per cent from September 2014 to $415,100.

Attached property sales in September 2015 totalled 544, an increase of 17.2 per cent compared to the 464 sales in September 2014, and a 23.1 per cent increase from the 442 attached properties sold in September 2013. The benchmark price of an attached unit increased 8.1 per cent between September 2014 and 2015 to $518,600.

– Source: http://www.rebgv.org/news-statistics/metro-vancouver-home-buyers-compete-fewer-home-listings#sthash.CSolRqiQ.dpuf

3 tips for buying real estate in a sellers’ market

Oleg For Buyers, Opinion, Tips

BuyingYourHomeinaSellersMarket

Vancouver has a very strong sellers’ market at the moment. Houses (pretty much in every Vancouver neighbouhood) and condos in Downtown and the Olympic Village area are selling within days. Other Lower Mainland cities such as: Burnaby, Coquitlam, Port Coquitlam, some parts of Richmond, some parts of Surrey (Fraser Valley), North and West Vancouver have incredibly strong sellers’ markets as well. It isn’t uncommon for properties to have multiple offers and to sell over the asking price.

Some people argue that Vancouver is a real estate bubble. I am not going to argue that point. Although, my personal opinion is that we aren’t in a housing bubble. In fact I believe that the market has still quite a bit of room to come up before a small correction. More on that subject in another blog post.

So what defies a strong sellers’ market? Basically, if the sales ration (number of properties sold vs the number of properties listings) is over 20% we have a sellers’ market. According to the latest real estate statistics current sales ratio in Greater Vancouver is around 31%. The are a lot of buyers on the market “fighting” over a limited number of available properties.

It is certainly very frustrating to be a buyer in such market conditions. All of the power is in the hands of sellers. Here are my top 3 tips on deal with sellers’ market (as a buyer):

  1. Find a good real estate agent. It is a good idea to have a real estate agent representing your interests in any market condition.  Sellers’ market makes working with a realtor much more important. Real estate agents have access to listings 2-3 days before general public.  A good real estate agent will be able to tell you how much the property is worth (it’s very easy to overpay in a sellers’ market). Most importantly a good realtor will be able to guide you though each offer presentation. Be prepared to “lose” some multiple offer “bidding wars”.
  2. Get pre-approved. I usually advice my clients not to get pre-approved. However, searching for properties in a sellers’ market with a mortgage pre-approval is a good idea. First off, you will know your exact budget. Being pre-approved takes away a certain amount of stress. And lastly, you could always play the “no subjects offer” card. Although, you should be very careful with strategy. Make sure to talk to your agent about making offers without subjects. If you don’t have an agent feel free to call me 604 565 7052.
  3. Look at as many properties as possible. In the sellers’ market there isn’t a lot of inventory to preview. That makes looking at as many properties as possible even more important. Looking at many different houses or condos will get you familiar with the market. It will also make you more confident about making an offer on the property that you do like.

I hope you find these tips useful in your home search. Drink a cup of tea, take a deep breath and relax. Buying a property is a little stressful, sellers’ market adds a little to that stress. Be prepared for multiple offers. Be prepared to make offers on multiple properties. And be prepared to let some properties go. It is all part of the real estate buying process.

For more real estate related content follow me on social or check back on this blog. Please, share this with people that you think might find it useful. For real estate advice email me at [email protected] or call 604-565-7052.