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Buyer Demand Surges in October: Vancouver’s Real Estate Market Sees Significant Uptick

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VANCOUVER, BC – November 4, 2024 – After months of sluggish performance, Metro Vancouver’s housing market saw a sharp increase in buyer demand in October. Home sales surged by over 30% compared to the same month last year, marking a significant shift after sales had been tracking around 20% below the ten-year seasonal average.

According to the Greater Vancouver REALTORS® (GVR), 2,632 residential properties were sold in the region during October 2024, representing a 31.9% jump from the 1,996 sales recorded in October 2023. While this was still 5.5% below the ten-year seasonal average of 2,784 sales, the rebound in activity signals renewed buyer interest after a prolonged period of caution.

Mortgage Rate Cuts Spur Buyer Confidence

Andrew Lis, GVR’s Director of Economics and Data Analytics, attributed the surge in sales to recent reductions in mortgage rates. “Typically, lower mortgage rates boost demand, and the strong sales numbers for October suggest that buyers may finally be reacting to more affordable borrowing costs after sitting on the sidelines for months,” Lis explained. He added that the recovery may have come as a surprise to some market watchers, but after four consecutive rate cuts by the Bank of Canada, the rebound was “only a matter of time.”

Listings and Inventory on the Rise

New listings were also on the rise in October, with 5,452 detached, attached, and apartment properties added to the Multiple Listing Service® (MLS®) system. This represents a 16.9% increase from the 4,664 properties listed in October 2023 and is 20% higher than the ten-year seasonal average of 4,545.

In total, there were 14,477 active listings on the MLS® in Metro Vancouver, a 24.8% jump compared to the same period last year, when 11,599 properties were listed. This figure is also 26.2% higher than the ten-year average of 11,475, giving buyers more options in an increasingly active market.

Sales-to-Listings Ratio Edges Toward Seller’s Market

The sales-to-active listings ratio for October stood at 18.8%, with notable variations by property type. Detached homes had a ratio of 13.4%, while attached homes (22.5%) and apartments (22.2%) moved closer to a seller’s market. Typically, downward pressure on prices occurs when the ratio falls below 12%, while upward price pressure builds when it surpasses 20% over several months.

“Although October’s numbers are encouraging, it’s too early to call it a full-blown trend,” Lis cautioned. “Recent data suggests that the market has been balanced, with prices softening over the past few months. However, with this uptick in sales, particularly in the attached and apartment segments, we could be approaching a seller’s market across all property types. This may signal the end of the recent period of price moderation.”

Price Trends: Modest Declines in Benchmark Prices

Despite the surge in sales, prices remained relatively stable, with modest declines recorded across most property types. The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver was $1,172,200 in October 2024, a 1.9% decrease from October 2023 and a slight 0.6% decline compared to September 2024.

Detached home sales reached 724 in October 2024, a 25.5% increase from the 577 sales in the same month last year. The benchmark price for detached homes was $2,002,900, a 0.3% increase from October 2023 but a 1% drop from September 2024.

Apartment sales soared, with 1,393 units sold, a 33.4% increase year-over-year. The benchmark price for apartment homes was $757,200, down 1.6% from October 2023 and 0.6% lower than September 2024. Attached home sales also saw impressive growth, with 501 sales representing a 40.7% increase compared to October 2023. The benchmark price for townhouses was $1,108,800, a 0.4% increase year-over-year and a 0.9% rise from the previous month.

Where Are Housing Prices, Interest Rates, and the Economy Headed? Insights from Scotiabank’s Chief Economist

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If you’re like most Canadians, you’re feeling the impact of fluctuating interest rates, housing prices, and an economy that’s been anything but predictable. Scotiabank’s Chief Economist, Jean-François Perrault, recently shared his thoughts on these critical topics and offered insights into where we might be heading. Here’s what he had to say—and what it could mean for all of us.

The Interest Rate Rollercoaster: Are More Cuts Coming?

The Bank of Canada has already slashed interest rates to counter slow inflation, but is more easing on the horizon? According to Perrault, there’s a less-than-even chance of another deep cut. The recent adjustments were primarily to tackle slower inflation rather than a dire need to stimulate economic growth. Although rate cuts can provide some relief, they aren’t the cure-all, especially if inflation remains low but steady.

In Perrault’s view, rate cuts are more likely to happen if economic activity starts to dip unexpectedly. For now, though, he’s not forecasting drastic measures; he believes that the current rates are generally aligned with Canada’s modest economic recovery.

Housing Prices: What’s the Real Outlook?

Housing prices have been top of mind for many, especially with how volatile they’ve been in recent years. Perrault acknowledges that high interest rates have cooled the market, but he doesn’t foresee any major crashes. Instead, he expects a more balanced market as we move forward. He suggests that while we may not see another explosion of housing price growth, neither should we brace for a steep drop.

His message? Moderate growth is likely, but it’s still a tough market for first-time buyers. Many potential buyers are waiting to see if interest rates will ease further before jumping in, which has kept demand somewhat in check. This pause could maintain stability in prices, though Perrault also notes that local variations—like in Toronto and Vancouver—will likely continue as supply and demand fluctuate.

The Broader Economic Picture: Stability or More Turbulence?

On the bigger picture, Perrault believes Canada’s economy is positioned to recover gradually. He predicts modest GDP growth, between 1.3% and 2.1%, and expects inflation to remain close to the Bank of Canada’s 2% target. It’s a cautiously optimistic outlook, with the potential for steady, if unspectacular, growth.

One significant factor is Canada’s low unemployment rate, which suggests underlying resilience in the economy. While growth is slow, low unemployment can support stable consumer spending, which is essential for economic health. Perrault argues that while we might not see rapid growth, the combination of steady employment and gradual inflation control bodes well for stability.

What Does This Mean for Canadians?

For Canadians, the takeaway is to plan for a relatively stable, if slow-growing, economic landscape. Homebuyers might not see dramatic changes in prices or rates, but there could be smaller adjustments, especially if inflation nudges the Bank of Canada to reconsider rate changes. For those looking to make significant financial decisions, caution and careful planning remain key.

Perrault’s insights reflect a sense of patience—he suggests that both the housing market and the economy are likely to settle into a more predictable, if slower, pattern. For now, he sees no signs of imminent recession, which is reassuring news for those bracing for the unexpected. Instead, the outlook for Canada’s economy, interest rates, and housing market is one of cautious optimism and steady adaptation.

In short, if you’re navigating this market as a buyer, seller, or simply a concerned Canadian, Perrault’s insights offer a grounded perspective: stay aware, but don’t expect massive upheavals.

Bank of Canada’s Big Rate Cut: What It Means for Vancouver’s Housing Market

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The Bank of Canada recently announced a significant rate cut of 50 basis points, or half a percent, marking a major shift in the country’s interest rate environment. This “jumbo cut” has lowered borrowing costs substantially, prompting questions about what may lie ahead for the Vancouver real estate market.

While it’s easy to speculate on the future, my approach is to base predictions on past data, providing a more solid foundation than simply guessing. Here’s an overview of what happened the last time the Bank of Canada made a similar rate cut, followed by practical advice on what to consider if you’re thinking about entering the market now.

Historical Insight: The 2009 Rate Cut

The last major cut of this magnitude occurred in March 2009, during the global financial crisis. At that time, Canada’s economy felt the shockwaves of the U.S. housing market crash, with impacts in Vancouver’s housing market as well.

  • February 2009: Before the rate cut, interest rates were set at 1%, and market activity was already on the rise. Total sales in Greater Vancouver stood at 1,480—a 94% increase over January.
  • March 2009: Following the cut to 0.5%, sales jumped to 2,269 units, indicating a quick response to the lowered rates.
  • April–June 2009: Activity continued to surge, with April sales reaching 4,649 and remaining robust into the summer months.

However, the rising sales volume didn’t immediately translate into price increases. It wasn’t until May 2009 to May 2010 that prices began climbing significantly, illustrating a lag between rate cuts and price growth.

What This Means for Today’s Market

While there are clear similarities between 2009 and today, there are also some critical differences. Current interest rates are still much higher than they were in 2009, and we’re entering a seasonally slow period for real estate. Typically, activity tapers off in December and January, so the Bank of Canada’s rate cut may not drive a quick market surge.

Nonetheless, this cut signals the start of a potential trend, with more rate reductions anticipated over the next year. This forecast, supported by various economic reports, suggests that lower interest rates could boost the real estate market as we move into 2025.

Questions to Consider if You’re Thinking About Buying or Selling

If you’re on the fence about entering the market, here are some points to reflect on:

  1. Has the Market Bottomed Out? – Trying to “time” the market is notoriously difficult, but examining past patterns may give you an edge. Do you believe prices have reached their lowest, or do you expect further drops? Consider factors like ongoing rate cuts, immigration rates, and inventory levels.
  2. Is Now the Right Time to Buy? – With rates potentially declining further, purchasing now could lock in favorable financing options, but keep in mind that the market could still shift depending on broader economic conditions.
  3. Are You Prepared for Market Changes? – If you’re a seller, spring 2025 might see a busier market as buyers re-enter due to lower rates, potentially driving prices up. If you can afford to wait, holding off until rates stabilize further may be beneficial.

Key Takeaways for Vancouver’s Market

Lower rates tend to stimulate activity, but the pace of change varies. Sales volume might increase before prices do, as we saw in 2009. This means that if you’re aiming to purchase at a lower price, acting sooner could work in your favor before prices potentially climb. However, if your goal is to sell, waiting for rates to stabilize or drop further could lead to better offers.

For more specific guidance, consider consulting economic forecasts or staying tuned to market updates. And if you’re a first-time home buyer unsure about the process, I’ve prepared a free guide to help you understand the steps to buy in Greater Vancouver.

If you’d like tailored advice, don’t hesitate to reach out. As a Vancouver real estate agent, I’m here to help you make informed decisions in a changing market.

Cautious Buyers Mark the Start of Fall Market – October 2024 Update

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VANCOUVER, BC – October 2, 2024 – Home sales in Metro Vancouver saw a slight year-over-year decline in September, with a 3.8% decrease, indicating that recent reductions in borrowing costs have yet to significantly stimulate demand.

According to Greater Vancouver REALTORS® (GVR), residential sales totaled 1,852 in September 2024, down from 1,926 in September 2023. This figure is also 26% below the 10-year seasonal average of 2,502.

“Many in the real estate sector have been looking for signs that lower mortgage rates are reigniting demand, but the data from September isn’t showing the surge they hoped for,” said Andrew Lis, GVR’s director of economics and data analytics. “Sales continue to trend about 25% below the 10-year seasonal average, which has been the case for several years. While sales are slightly behind our projections, we remain hopeful 2024 will still outperform 2023.”

In September 2024, there were 6,144 new listings for detached, attached, and apartment properties on the Multiple Listing Service® (MLS®) in Metro Vancouver, reflecting a 12.8% increase compared to the 5,446 listings in September 2023 and a 16.7% increase above the 10-year seasonal average.

The total number of homes listed for sale in Metro Vancouver reached 14,932 in September 2024, a 31.2% increase from 11,382 the previous year, and 24.2% above the 10-year average of 12,027.

The sales-to-active listings ratio across all property types in September was 12.8%, broken down as 9.1% for detached homes, 16.9% for attached properties, and 14.6% for apartments. Historical data indicates that when this ratio falls below 12% for a prolonged period, prices face downward pressure, while a sustained ratio above 20% can lead to upward pressure on prices.

“With some buyers hesitant, inventory levels have remained high, offering more choices for those still in the market,” Lis explained. “However, with increased options, prices have stayed relatively stable over the past few months. September has now shown small declines across all segments, primarily because sales haven’t kept up with new listings, pushing the market closer to a buyer’s market. With two more policy rate decisions expected this year, and potential further reductions, demand could pick up if buyers re-enter the market later this fall.”

The MLS® Home Price Index benchmark for all residential properties in Metro Vancouver is currently $1,179,700, representing a 1.8% decrease from September 2023 and a 1.4% decrease from August 2024.

Detached home sales in September 2024 reached 516, a 9.8% decrease from the 572 sales in September 2023. The benchmark price for a detached home stands at $2,022,200, a 0.5% increase from last year but down 1.3% from August 2024.

Apartment sales totaled 940 in September, down 4.9% from 988 the previous year. The benchmark price for an apartment is now $762,000, a 0.8% decrease from both September 2023 and August 2024.

Attached home sales saw a positive trend, reaching 378 in September 2024, a 7.4% increase compared to 352 sales in September 2023. The benchmark price for townhouses stands at $1,099,200, a 0.5% increase from last year.

A Massive Interest Rate Cut is Coming in October 2024?

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Canada’s Economic Outlook: Interest Rate Cuts and Modest Growth Ahead

The debate continues over the direction of Canada’s economy, as the Bank of Canada (BoC) faces critical decisions on interest rates. With recent gross domestic product (GDP) data showing mixed results, economists and financial markets remain divided on whether the central bank will opt for a 25 or 50 basis point rate cut at its next policy meeting on October 23. Meanwhile, Deloitte Canada’s fall economic outlook predicts a steady decline in interest rates over the coming years, with the BoC’s rate falling below 3% by mid-2025.

Mixed GDP Signals and Market Reactions

Canada’s GDP expanded by 0.2% in July, exceeding expectations, but preliminary data for August shows the economy stalling. As a result, third-quarter growth is now forecasted at an annualized rate of just 1%, significantly lower than the BoC’s July forecast of 2.8%. Despite this, financial markets have given a slight edge to a 50 basis point cut, with a 52.3% probability according to LSEG data, up from earlier expectations of a smaller reduction.

The U.S. economy is also playing a role, with easing inflation in the world’s largest economy creating more room for the BoC to lower its rates without putting downward pressure on the Canadian dollar. The U.S. Federal Reserve’s next meeting in November is expected to result in a rate cut, further influencing the BoC’s decision.

Economists remain split on the size of the upcoming cut, but many are leaning towards the larger 50 basis point reduction, citing weak GDP growth and rising unemployment, which currently sits at 6.6%.

Interest Rate Path and Economic Growth Projections

In line with this uncertain economic backdrop, Deloitte Canada’s forecast for the coming years suggests that the BoC will continue to lower rates to support economic growth. Deloitte predicts the key interest rate will fall to 3.75% by the end of this year, with further reductions to 2.75% by mid-2025. This 2.75% rate is seen as neutral, meaning it neither stimulates nor restrains economic activity, and is higher than the rates seen before the COVID-19 pandemic.

Dawn Desjardins, Chief Economist at Deloitte Canada, noted that while the economy has slowed due to higher borrowing costs, the country is likely to avoid a recession. “It’s hard to argue that the economy is just skating through this period of higher interest rates,” she said, but pointed out that growth persists despite these challenges. Desjardins expects economic conditions to improve next year, as more rate cuts help to stimulate demand.

Labour Market and Inflation Considerations

Canada’s labour market has shown signs of softening, particularly as homeowners begin to face the reality of higher interest payments when refinancing their mortgages. However, Deloitte remains cautiously optimistic, suggesting that the labour market is not in crisis, even though weaker job vacancy rates and hiring challenges persist.

At the same time, inflation has fallen to 2%, reaching the BoC’s target in August. With inflation seemingly under control, the BoC has shifted its focus to economic growth risks, particularly in light of weak GDP growth. Economists from various financial institutions, including BMO, Desjardins Securities, and CIBC, generally agree that more rate cuts are likely, with many favoring 50 basis point reductions in the near term.

Looking Ahead: Risks and Opportunities

While the economy has yet to fully recover from the pandemic’s effects, key factors, such as climate change, could increase inflationary pressures down the road, warns Desjardins. These structural issues are expected to embed themselves in prices and may affect future monetary policy.

For now, the central debate revolves around whether the BoC should accelerate its rate cuts in response to economic underperformance, or if it should take a more cautious approach, given ongoing uncertainties and the potential for economic resilience in sectors like housing and household spending.

In conclusion, Canada’s economic outlook for the next several quarters hinges on the central bank’s ability to navigate slowing growth and inflation risks. With interest rates likely to decline further, both the BoC and the broader financial markets will be closely watching the data to determine the best course of action to support economic recovery and stability.

 

Sellers Await Buyers’ Return After a Quiet Summer in Vancouver’s Real Estate Market

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The real estate market in Metro Vancouver experienced a quieter-than-usual summer, with home sales on the MLS® system falling below the 10-year seasonal average in August.

According to the Greater Vancouver REALTORS® (GVR), residential sales totaled 1,904 in August 2024, marking a 17.1% decrease from the 2,296 sales recorded in the same month last year. This total was also 26% below the 10-year seasonal average of 2,572.

“Historically, August is slower than June and July, so this year’s numbers align with typical seasonal trends,” said Andrew Lis, GVR’s Director of Economics and Data Analytics. “However, sales are still about 20% below the 10-year average, signaling that buyers are feeling the strain of higher borrowing costs, despite two recent interest rate cuts this summer.”

In August 2024, 4,109 new detached, attached, and apartment properties were listed for sale, representing a 4.2% increase compared to August 2023. However, this total was 1.7% below the 10-year average. Overall, the total number of listings on the MLS® system in Metro Vancouver reached 13,812, up by 37% from the same month last year, and 20.8% higher than the 10-year average.

The sales-to-active listings ratio in August 2024 stood at 14.3%, broken down by property type as follows: 9.6% for detached homes, 18% for attached, and 17.2% for apartments. Historically, when this ratio dips below 12% for an extended period, it can create downward pressure on home prices. Conversely, a ratio above 20% over several months tends to drive prices upward.

“Buyers remain hesitant to enter the market, while seller activity is in line with historical averages. This has caused inventory to build, placing the market in a balanced state,” Lis noted. “With the Bank of Canada reducing interest rates again today and September historically seeing a rise in sales, we’ll be closely monitoring whether more buyers re-enter the market this fall.”

The benchmark price for all residential properties in Metro Vancouver is currently $1,195,900, a slight 0.9% decline from August 2023, and a marginal 0.13% decrease from July 2024.

Sales of detached homes fell to 509 in August 2024, a 13.9% decrease from the 591 sales seen in August 2023. The benchmark price of a detached home is $2,048,400, which represents a 1.8% increase from last year, but a slight 0.1% dip compared to July 2024.

Apartment sales took the hardest hit, dropping by 20.3% year-over-year, with 1,012 units sold in August 2024, compared to 1,270 in August 2023. The benchmark price for apartments stands at $768,200, a 0.1% decrease from last year, unchanged from July 2024.

Townhome sales also declined, with 370 transactions recorded in August 2024, down 12.3% from the 422 sales recorded in the same month last year. The benchmark price for townhomes is $1,119,300, a 0.8% increase from August 2023 but a 0.5% dip from the previous month.

Housing Construction Slows Down in Vancouver: New Reports Highlight Growing Concerns

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Vancouver is facing a significant slowdown in housing construction, according to new data that confirms the fears of many industry observers. Despite a strong demand for housing and a unified push from all levels of government to boost supply, factors such as high interest rates, rising construction costs, and permitting delays are stalling new developments. This decline in construction activity raises serious concerns about the city’s ability to address its housing shortage.

Significant Drop in Housing Starts

The latest figures from the Canada Mortgage and Housing Corporation (CMHC) reveal that new housing starts in Metro Vancouver fell by 15% in July 2024 compared to the same month last year. This drop contrasts with an 8% increase in housing starts across other Canadian cities with populations over 10,000. While 2023 saw a record 33,200 housing units started in Greater Vancouver, the Conference Board of Canada predicts a decline to 28,800 units in 2024 and around 26,000 units annually over the next few years.

This slowdown is alarming given the city’s growing population and persistent housing demand. “It confirms what we feared,” said Mike Moffatt, an Ontario-based economist and senior director of the Smart Prosperity Institute. “Despite a growing population, the conditions for building new homes are not improving.”

A Perfect Storm of Challenges

The construction slowdown is attributed to several factors that have converged to create a “perfect storm” for developers. High interest rates, which have risen sharply over the past two years, are a major hurdle. These rates have increased borrowing costs, making it more expensive for developers to finance new projects. Additionally, rising construction costs, driven by supply chain disruptions and labor shortages, have further strained budgets.

Permitting delays also contribute to the slowdown. While governments at the municipal, provincial, and federal levels have expressed a commitment to increasing housing supply, the process of securing necessary permits remains slow and cumbersome. This bureaucratic bottleneck is a significant barrier to ramping up construction.

Even with a potential rebound in developer activity in the coming years, some experts worry it may not be enough to meet the housing demand in Vancouver and other major Canadian cities. “We’re basically treading water,” Moffatt said. “Even if interest rates fall and activity picks up, we’re not building nearly enough to address the shortage.”

The Broader Implications

The slowdown in housing construction has broader implications for the Vancouver housing market. In 2022, the CMHC estimated that Canada would need 5.8 million new homes by 2030 to restore affordability, requiring an additional 3.5 million units beyond the 2.3 million currently projected. Given this context, the current decline in housing starts is particularly concerning.

Bob Ransford, vice-president of development for Century Group, a Vancouver-based builder, remains cautiously optimistic. He believes that once interest rates stabilize, development will resume at a faster pace. “I’ve been through downturns before, and I’ve seen deeper ones than this,” Ransford said. “This is a pause driven primarily by interest rate movements.”

However, even if market conditions improve and government policies successfully encourage more development, another challenge looms: labor shortages. The B.C. Construction Association has long warned of a shortage of skilled workers in the province. Earlier this year, it estimated that by 2033, there will be 6,600 unfilled construction jobs in B.C. “We’re going from one problem to the next,” said Tony Letvinchuk, managing director of Macdonald Commercial Real Estate Services in Vancouver. “Even if we solve the market issues, we still need to find qualified workers to build the homes.”

Looking Ahead

While some industry experts remain hopeful that the housing market will recover in the next few years, the current slowdown highlights the challenges facing Vancouver’s housing sector. The decline in new housing starts is a setback in the city’s efforts to address its housing shortage and restore affordability.

The housing market in Vancouver is at a critical juncture. With population growth continuing and housing demand remaining strong, the need for new homes is more urgent than ever. However, unless the factors currently hindering construction are addressed, the city may struggle to meet this demand, prolonging the housing crisis and further straining affordability for residents.

In summary, the slowdown in housing construction in Vancouver is a troubling development that underscores the complexities of the city’s housing market. High interest rates, rising construction costs, permitting delays, and labor shortages are all contributing to a challenging environment for developers. While there is hope for a rebound in the future, the current situation suggests that Vancouver’s housing shortage may persist for some time.

BC Landlord Wins Approval for 23.5% Rent Increase Due to Financial Losses from Variable Mortgage Rate

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In a decision that could set a significant precedent for rental markets in British Columbia, the Residential Tenancy Branch (RTB) approved a landlord’s request to increase rent by 23.5% over two years at a fourplex property. The ruling has sparked debate on whether rising interest rates justify such substantial rent increases, as landlords and tenants face the effects of economic turbulence.

The Situation: Financial Strain from Rising Interest Rates

The landlords purchased their fourplex in October 2021, securing a variable mortgage with a favorable rate of 1.9%. For years, variable mortgage rates had remained relatively stable, making this financing option attractive. However, beginning in 2022, the global economic landscape changed drastically due to the COVID-19 pandemic’s aftershocks, leading to soaring interest rates. By July 2023, the mortgage rate had ballooned to 6.65%, significantly impacting the landlords’ ability to manage their property.

According to the RTB’s ruling, the landlords experienced an unexpected financial burden as their mortgage payments more than tripled. Despite having a financial cushion for potential rate increases, the rapid and substantial rise in interest rates left them unable to maintain the property under the current rental income. They argued that without a rent increase, they would continue to incur financial losses, making the situation unsustainable.

The RTB’s Decision

In light of these circumstances, the landlords applied to the RTB for an extraordinary rent increase beyond the annual allowable limit, which was set at 3.5% for 2024. Under British Columbia’s Residential Tenancy Act, landlords can request additional rent increases if they can prove financial losses that could not have been reasonably foreseen when purchasing the property. The RTB agreed that the landlords had met this burden of proof.

“I find the landlords have been successful. They have proven, on a balance of probabilities, all the elements required to impose an additional rent increase for a financial loss for financing costs of purchasing the residential property under section 23 of the Regulation,” the ruling stated. The decision was made based on the landlords’ demonstration that the extreme rise in interest rates was not foreseeable, even with their careful financial planning.

The RTB approved a phased rent increase: 15.5% in the first year (3.5% annual allowable increase plus an additional 12%) and the remaining 8% in the second year, adjusted to align with the provincial maximum for that year. Even with this increase, the landlords admitted they would still struggle to break even, highlighting the severity of their financial situation.

The Tenants’ Response

The tenants, understandably, were not pleased with the ruling. They argued that the financial risks associated with a variable mortgage were well-known and that the landlords should have been prepared for rate fluctuations. They felt that the landlords were attempting to pass on the consequences of their investment decisions to the tenants, many of whom faced their own financial challenges.

One tenant reported that the landlords initially approached them in April 2023, requesting a $500 monthly increase to cope with their rising costs. The tenants declined, leading to the formal application to the RTB. Some tenants pointed out that despite the landlords’ current financial strain, the property itself was likely to appreciate significantly over time, suggesting that the situation might not be as dire as presented.

“The landlords should enter these kinds of financing circumstances with a cushion to absorb the rate variability,” argued the tenants. They also expressed concern that this ruling could open the floodgates for other landlords to seek similar rent increases, further exacerbating the affordability crisis in BC.

Industry and Government Reactions

The decision has ignited a broader conversation about the impacts of rising interest rates on the rental market and the potential for more landlords to apply for rent increases. David Hutniak, CEO of LandlordBC, expressed understanding of the challenges faced by the landlords in this case, noting that many in the sector are grappling with escalating operational costs, including taxes, insurance, utilities, and now interest rates. He highlighted that while this specific decision might be unique, it reflects the broader difficulties faced by rental housing providers across the province.

“High interest rates have exacerbated an already bad situation. Furthermore, a steady stream of regulation, layered upon layer, with rent control being the most notable, are pushing more and more rental housing providers to abandon the sector,” Hutniak stated. Although he had not reviewed the specifics of this case, he noted that the financial pressures described are widespread among landlords.

Minister of Housing Ravi Kahlon also weighed in, acknowledging the ruling’s significance. He emphasized that while the provincial government has kept rent increases at or below inflation since 2018, the policy allowing for extraordinary rent increases due to financing losses predates the current administration. Kahlon stated that this is the first time such an application has been granted since the province began collecting data in 2021. He has directed his staff to review the policy in light of this decision, signaling potential changes to protect tenants from similar rent hikes in the future.

A Precedent for Future Cases?

The RTB’s decision raises important questions about how landlords and tenants can navigate the economic challenges brought on by high interest rates. For landlords, it underscores the risks of relying on variable-rate mortgages, especially during periods of economic uncertainty. For tenants, it highlights the potential vulnerability to rent increases if landlords face financial difficulties.

As the housing affordability crisis continues to deepen in British Columbia, this ruling may lead to more landlords seeking similar rent increases, particularly if interest rates remain high. The outcome could have widespread implications for both the rental market and the broader housing sector.

At the same time, the government’s response to this case could influence future policy changes. If Minister Kahlon’s review leads to revisions in the regulations governing rent increases, it might provide additional protections for tenants while balancing the financial realities faced by landlords.

For now, tenants at the fourplex will have to prepare for a significant rent hike, while other landlords and tenants across the province watch closely to see what this decision could mean for them.

BC’s Ban on AirBnB Rentals Doesn’t Solve Anything – New Stats

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A recent Statistics Canada (StatCan) report reveals that short-term rentals, which could be repurposed as long-term housing, make up only a small fraction of the total housing stock in British Columbia. Despite efforts to regulate these rentals, their impact on overall housing availability remains minimal.

According to the report, the proportion of short-term rentals in B.C. that could be converted into long-term housing nearly doubled between 2017 and 2023, surpassing rates seen anywhere else in Canada. However, these “potential long-term dwellings” still account for less than 1% of all available housing units.

“In the housing market, short-term rentals still represent a small share of the total housing units,” the report’s authors noted.

This analysis coincides with the introduction of stricter regulations in B.C. designed to curtail the number of short-term rentals and boost housing supply. As of May 1, new rules restrict short-term rentals to homeowners’ principal residences, including basement suites or laneway homes on the same property.

Premier David Eby defended the legislation, stating, “The number of short-term rentals in B.C. has skyrocketed, removing thousands of long-term homes from the market. We’re taking strong action to rein in profit-driven mini-hotel operators, create new enforcement tools, and return homes to the people who need them.”

Despite these measures, StatCan’s data shows that short-term rentals eligible for long-term use comprised less than 0.5% of housing units in Canada’s five largest metro regions in 2021, with Metro Vancouver recording the highest rate at 0.45%.

These findings align with a 2023 report from the Conference Board of Canada, which concluded that Airbnb activity in most cities is too small to significantly affect rental prices.

“The short-term rental market simply isn’t large enough to influence rental prices meaningfully,” said Tony Bonen, an executive director at the Conference Board of Canada. He described the impact of short-term rentals on the housing supply as “a drop in the bucket.”

Bonen emphasized that the number of short-term rentals is too small to bring about widespread changes in rental prices. “If the goal is to reduce short-term rentals to lower rental prices across the market, it’s just not going to happen,” he added.

The StatCan report concentrated on short-term rentals that could be converted into long-term housing, specifically units listed for more than 180 days a year. Vacation properties like cottages and dedicated vacation homes were excluded. The report also acknowledged that housing affordability is influenced by many complex factors, including multiple-property ownership, population growth, and interest rates.

In Vancouver, around 2,400 short-term rental units in 2021 could have been used as long-term housing, representing 0.8% of all housing in the city. This was the highest rate in Metro Vancouver, but cities like Kamloops, Kelowna, and Victoria had even higher rates—1.4% in Kamloops and 0.9% in Kelowna and Victoria.

Tourist destinations such as Whistler, Sun Peaks, and Tofino had much higher rates, ranging between 20% and 40%. These areas are exempt from B.C.’s short-term rental regulations due to their importance in supporting tourism and stimulating the local economy.

Bonen noted that the remote locations and limited accommodation options in some of B.C.’s resort towns likely contributed to the higher proportion of short-term rentals suitable for long-term use. “Short-term rentals have filled a gap in some of these harder-to-reach areas,” he said, emphasizing the need for a balanced approach in resort communities.

“The major challenge remains making rent affordable for Canadians,” Bonen concluded. “While regulating short-term rentals can be part of the solution, it’s not going to have a substantial impact on its own.”

Vancouver Real Estate Market Update – August 2024

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Metro Vancouver’s housing market is experiencing a surge in newly listed properties, with inventory rising nearly 20% year-over-year in July. Despite this increase, the number of transactions has not kept pace, highlighting a disconnect between supply and demand.

According to the Greater Vancouver REALTORS® (GVR), residential sales in the region totaled 2,333 in July 2024, a 5% decrease from the 2,455 sales recorded in July 2023. This figure is 17.6% below the 10-year seasonal average of 2,831, suggesting that buyers remain cautious despite favorable market conditions.

“The trend of buyer hesitation that began a few months ago persisted in July, even after the Bank of Canada reduced the policy rate by a quarter percentage point,” said Andrew Lis, GVR’s director of economics and data analytics. “Given the recent half-point decline in the policy rate and the abundance of inventory, it’s surprising that transaction levels are still below historical norms as we reach the mid-summer point.”

In July 2024, there were 5,597 newly listed detached, attached, and apartment properties on the MLS® in Metro Vancouver. This represents a 20.4% increase from the 4,649 properties listed in July 2023 and is 12.7% above the 10-year seasonal average of 4,968.

The total number of properties currently listed for sale on the MLS® in Metro Vancouver is 14,326, a 39.1% increase from July 2023, when there were 10,301 listings. This is also 21.5% above the 10-year seasonal average of 11,788.

The sales-to-active listings ratio for July 2024 across all property types is 16.9%. For detached homes, the ratio is 12.8%; for attached homes, it is 20.1%; and for apartments, it is 19.3%. Historical data suggests that home prices face downward pressure when the ratio stays below 12% for a sustained period, while upward pressure occurs when it exceeds 20% over several months.

“The market is experiencing balanced conditions, with inventory levels not seen in years,” said Lis. “Price trends across all segments have leveled out, with modest declines month over month. While it’s uncertain if softening prices and improved borrowing costs will encourage buyers as we approach the fall market, it’s worth noting that it can take time for better borrowing conditions to translate into increased transactions. We will be monitoring the market for signs of increased activity in the coming months.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,197,700. This represents a 0.8% decrease from July 2023 and a 0.8% decrease compared to June 2024.

Detached home sales in July 2024 reached 688, a 1% increase from the 681 detached sales recorded in July 2023. The benchmark price for a detached home is $2,049,000, representing a 2.1% increase from July 2023 and a 0.6% decrease compared to June 2024.

Sales of apartment homes totaled 1,192 in July 2024, a 6.9% decrease from the 1,281 sales in July 2023. The benchmark price for an apartment home is $768,200, which is a 0.3% decrease from July 2023 and a 0.7% decrease compared to June 2024.

Attached home sales in July 2024 amounted to 437, a 6.2% decrease from the 466 sales in July 2023. The benchmark price for a townhouse is $1,124,700, representing a 1.4% increase from July 2023 and a 1.2% decrease compared to June 2024.