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

Oleg Articles, For Buyers, For Sellers, News, Opinion 1 Comment

 

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 1 Comment

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.

Property Assessments grew by 16% in 2016

Oleg Articles, News, Opinion, Statistics 0 Comment

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Within the next few days owners of more than 500,000 residences in Greater Vancouver will be receiving their 2016 Annual BC Property Assessments in the mail. These assessments will reflect property values as July 1, 2015.

What are property assessments and why are they important? Well, property assessments is an estimated value of your house or a condo by a government agency – BC Assessments. Based on this calculated value the annual property taxes are paid. The higher the BC Assessments value is, the higher annual property taxes are.

There is another important function BC Assessments serve – determining property’s value. Often times when the listing agent tries to determine a listing price of a property he or she will take BC Assessments value into the consideration (not always as each agent has a different way of determining a listing price).  Other times potential buyers will look to BC Assessments or Tax value and try to determine a fair price for a property (that seems not to apply to a current real estate market).

What can owners expect to see this year in their property BC Assessments? Based on the released BC Assessment for this year an increase of 15-20 percent will be typical for a single-family homes in Vancouver, North Vancouver, West Vancouver, Burnaby, Tri-Cities, New Westminster and Squamish (See chart below of a complete breakdown). Don’t be surprised if your home BC Assessments value comes with an increase of 25%.

Overall, Greater Vancouver’s region total assessments increased from $546.7 billion in 2015 to $636.2 billion in 2016. A total increase of about 16% in one year. Almost $8.3 billion of that increase is due to new construction, subdivision and reasoning of properties. Take a drive down Cambie Street and you can witness rezoning of properties working at its finest.

All of this is good news for homeowners who are planning to sell their properties in a near future. However, many homeowners who were not planning to sell this year might be forced to do so because of the high property taxes. At least their properties have gone up in value.

If you are a property owner and need more information or have additional questions you can visit www.bcassessment.ca website for all of that.

Here is an example table showing some of the increases for single-family homes and residential strata units for sample Greater Vancouver communities.

BC Assessments Data for 2016
Image: BC Assessment

What do you think about the increase of BC Assessments? Leave your comments below.

New suggested “real estate speculation tax” in Vancouver [OPINION]

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New suggested “real estate speculation tax” in Vancouver [OPINION]

 

You might have heard about the new suggested “real estate speculation tax” in Vancouver BC. Here is how it all started. Greater Vancouver has a very strong real estate market. Prices are steadily going up by 5-10 per-cent every year.  More in the recent years. People have always complained that Vancouver real estate prices are too high. Lately the complaints have been getting louder and louder as most of Metro Vancouver has shifted into sellers market.

Our mayor, Gregor Robinson, thought it would be a good idea to suggest a new “speculation real estate tax” to help drive the real estate prices down. Here is how the tax would work. If you buy a property and sell it within 1 or 2 years (exact details weren’t made clear) another 1-3% real estate speculation tax will apply. Sounds pretty good? According to Mr. Robinson this tax would keep all these evil developers in their place and somehow drive the real estate prices down. Again the details weren’t clear.

My opinion is that this tax is absolutely unnecessary and would work opposite of it’s original intent. Here is why: Vancouver real estate market is already one of the highest taxed in the world. We have: property transfer taxes (don’t get me started on these), annual property taxes and GST for new properties, we don’t need another tax layer.

Adding another tax layer to already very heavily taxed real estate market will only make the prices of real estate go up. One thing we learned from capitalistic system is that the extra cost gets passed down to the consumer, most of the time. In other words buyers will be the ones paying for additional real estate taxes.  Speculation tax would drive the real estate prices in Vancouver up not down.

Luckily premier Christy Clark has shut down the suggestion of this ridiculous tax.  For above state reasons and the fact the most people living in British Columbia own a property. Can you imagine how angry the home owners would get if this tax would actually be introduced?

In my opinion Gregor Robinson was not really intending to introduce this tax but rather was paying political games. Showing people that he’s the “good guy” and that he’s “doing something” to bring the real estate prices down.

What do you think?

Again, in this article I am simply expressing my opinion and not supporting or disapproving of any political figures. I stay out of politics and do what I do best – sell properties.

June 2015 Real Estate Update

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June 2015 Real Estate Update

Metro Vancouver home sales set record pace in June

The REBGV reports that residential property sales in Metro Vancouver* reached 4,375 on the Multiple Listing Service® (MLS®) in June 2015. This represents a 28.4 per cent increase compared to the 3,406 sales recorded in June 2014, and an increase of 7.9 per cent compared to the 4,056 sales in May 2015.

Last month’s sales were 29.1 per cent above the 10-year sales average for the month. It’s the fourth straight month with over 4,000 sales, which is a first in the REBGV’s history. The previous highest number of residential home sales was 4,434, recorded in May 2005.

“Demand in our detached home market continues to drive activity across Metro Vancouver,” Darcy McLeod, REBGV president said. “There were more detached home sales in the region last month than we’ve seen during the month of June in more than 10 years.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $694,000. This represents a 10.3 per cent increase compared to June 2014.

“Housing market activity comes in cycles; we’re in an up cycle right now that looks similar to the mid-2000s,” McLeod said. “It would be easy to point to one factor that’s causing this cycle, but the truth is that it’s a number of different factors.

“Conditions today are being driven by low interest rates, a declining supply of detached homes, a growing population, a provincial economy that’s outperforming the rest of Canada, pent-up demand from previous years and, perhaps most importantly, the fact that we live in a highly desirable region,” McLeod said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,803 in June. This represents an 8.7 per cent increase compared to the 5,339 new listings reported in June 2014.

“We’re seeing a steady stream of new listings entering the market, but the overall number of homes for sale is not keeping up with buyer demand,” McLeod said.

The total number of properties currently listed for sale on the region’s MLS® is 12,181, a 23.9 per cent decline compared to June 2014 and a 1.3 per cent decline compared to May 2015. This is the lowest active listing total for June since 2006.

The sales-to-active-listings ratio in June was 35.9 per cent. This is the highest that this ratio has been in Metro Vancouver since June 2006. A seller’s market typically occurs when this ratio exceeds 20 per cent for a sustained period of time.

“The competition in today’s market means that buyers have less time to make decisions,” McLeod said. “Given this, it’s important to work with your REALTOR® to gain insight into the local market, to get quick access to new MLS® listings, to develop a buying strategy that meets your needs and risk appetite, and to receive other services and protections that come from having professional representation.”

Sales of detached properties in June 2015 reached 1,920, an increase of 31.3 per cent from the 1,462 detached sales recorded in June 2014, and a 74.2 per cent increase from the 1,102 units sold in June 2013. The benchmark price for a detached property in Metro Vancouver increased 14.8 per cent from June 2014 to $1,123,900.

Sales of apartment properties reached 1,774 in June 2015, an increase of 35.6 per cent compared to the 1,308 sales in June 2014, and an increase of 66.1 per cent compared to the 1,068 sales in June 2013. The benchmark price of an apartment property increased 5.3 per cent from June 2014 to $400,200.

Attached property sales in June 2015 totalled 681, an increase of 7.1 per cent compared to the 636 sales in June 2014, and a 44.3 per cent increase from the 472 attached properties sold in June 2013. The benchmark price of an attached unit increased 7.1 per cent between June 2014 and 2015 to $506,900.

See full report here: June 2015 Stats Package

Note: this article has been sourced from the Real Estate Board of Greater Vancouver. 

Metro Vancouver home sales surpass 4,000 for third consecutive month

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Metro Vancouver home sales surpass 4,000 for third consecutive month

VANCOUVER, B.C. – June 2, 2015 – It continues to be a competitive spring market for Metro Vancouver home buyers. This competition continues to put upward pressure on home prices, particularly in the detached home market.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Metro Vancouver reached 4,056 on the Multiple Listing Service® (MLS®) in May 2015. This represents a 23.4 per cent increase compared to the 3,286 sales recorded in May 2014, and a decrease of 2.9 per cent compared to the 4,179 sales in April 2015.
Last month’s sales were 16.7 per cent above the 10-year sales average for the month.
“We continue to see strong competition for homes that are priced right for today’s market,” Darcy McLeod, REBGV president said. “It’s important to remember that real estate is hyper local, particularly in a seller’s market. This means that conditions and prices vary depending on property type, neighbourhood, and other factors.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,641 in May. This represents a 5 per cent decrease compared to the 5,936 new listings reported in May 2014.
The total number of properties currently listed for sale on the region’s MLS® is 12,336, a 23.2 per cent decline compared to May 2014 and a 0.8 per cent decline compared to April 2015.
“While the supply of homes for sale remains below what’s typical for this time of year, our region continues to offer a diverse selection of housing options at different price points,” McLeod said. “This diversity within the housing stock is part of what’s driving today’s home sale activity.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $684,400. This represents a 9.4 per cent increase compared to May 2014.
The sales-to-active-listings ratio in May was 32.9 per cent. This is the highest that this ratio has been in Metro Vancouver since June 2007.
Sales of detached properties in May 2015 reached 1,723, an increase of 18.6 per cent from the 1,453 detached sales recorded in May 2014, and a 42.2 per cent increase from the 1,212 units sold in May 2013. The benchmark price for a detached property in Metro Vancouver increased 14.1 per cent from May 2014 to $1,104,900.
Sales of apartment properties reached 1,600 in May 2015, an increase of 24.4 per cent compared to the 1,286 sales in May 2014, and an increase of 40.8 per cent compared to the 1,136 sales in May 2013. The benchmark price of an apartment property increased 4.6 per cent from May 2014 to $396,900.
Attached property sales in May 2015 totalled 733, an increase of 34 per cent compared to the 547 sales in May 2014, and a 37.3 per cent increase from the 534 attached properties sold in May 2013. The benchmark price of an attached unit increased 6.4 per cent between May 2014 and 2015 to $501,000.

Read more here! 

Home buyer demand outpacing supply across the Metro Vancouver housing market

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Home buyer demand outpacing supply across the Metro Vancouver housing market

Strong home buyer demand coupled with below average home listing activity has created seller’s market conditions within the Metro Vancouver* housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Metro Vancouver reached 4,179 on the Multiple Listing Service® (MLS®) in April 2015. This represents a 37 per cent increase compared to the 3,050 sales recorded in April 2014, and a 2.9 per cent increase compared to the 4,060 sales in March 2015.

Last month’s sales were 29.3 per cent above the 10-year sales average for the month.

“The supply of homes for sale today in the region is not meeting the demand we’re seeing from home buyers. This is putting upward pressure on prices, particularly in the detached home market,” Darcy McLeod, REBGV president said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,897 in April. This represents a 0.9 per cent decrease compared to the 5,950 new listings reported in April 2014.

The total number of properties currently listed for sale on the region’s MLS® is 12,436, a 19.8 per cent decline compared to April 2014 and an increase of 0.5 per cent compared to March 2015.

“It’s a competitive and fast-moving market today that is tilted in favour of home sellers. To be competitive, it’s important to connect with a local REALTOR® who can help you develop a strategy to meet your home buying or selling needs,” McLeod said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $673,000. This represents an 8.5 per cent increase compared to April 2014.

The sales-to-active-listings ratio in April was 33.6 per cent. This is the highest that this ratio has been in Metro Vancouver since June 2007.

Sales of detached properties in April 2015 reached 1,815, an increase of 35.9 per cent from the 1,336 detached sales recorded in April 2014, and a 70.6 per cent increase from the 1,064 units sold in April 2013. The benchmark price for a detached property in Metro Vancouver increased 12.5 per cent from April 2014 to $1,078,900.

Sales of apartment properties reached 1,579 in April 2015, an increase of 34.7 per cent compared to the 1,172 sales in April 2014, and an increase of 50.1 per cent compared to the 1,052 sales in April 2013. The benchmark price of an apartment property increased 4.4 per cent from April 2014 to $394,200.

Attached property sales in April 2015 totalled 785, an increase of 44.8 per cent compared to the 542 sales in April 2014, and a 53.6 per cent increase from the 511 attached properties sold in April 2013. The benchmark price of an attached unit increased 5.7 per cent between April 2014 and 2015 to $493,300.

Download the April 2015 stats package 

*Editor’s Note:  Areas covered by Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, New Westminster, Pitt Meadows, Maple Ridge, and South Delta.

The real estate industry is a key economic driver in British Columbia. In 2014, 33,116 homes changed ownership in the Board’s area, generating $2.136 billion in economic spin-off activity and an estimated 16,227 jobs. The total dollar value of residential sales transacted through the MLS® system in Metro Vancouver totalled $27.3 billion in 2014. The Real Estate Board of Greater Vancouver is an association representing nearly 12,000 REALTORS® and their companies. The Board provides a variety of member services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.rebgv.org. 

– See more at: http://www.rebgv.org/news-statistics/home-buyer-demand-outpacing-supply-across-metro-vancouver-housing-market#sthash.tGdZxn4I.dpuf

Home buyers remain active despite reduced selection

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Home buyers remain active despite reduced selection

rebgvcolour

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 1,913 on the Multiple Listing Service® (MLS®) in January 2015. This represents an 8.7 per cent increase compared to the 1,760 sales recorded in January 2014, and a 9.6 per cent decline compared to the 2,116 sales in December 2014.

Last month’s sales were 14.9 per cent above the 10-year sales average for the month.

“While demand remains steady, we’re seeing fewer homes for sale at the moment,” Ray Harris, REBGV president, said. “This is creating greater competition amongst buyers, particularly in the detached home market. The number of detached homes listed for sale today is the second lowest we’ve seen in four years.”

New listings for detached, attached and apartment properties in Metro Vancouver1 totalled 4,737 in January. This represents an 11.4 per cent decline compared to the 5,345 new listings reported in January 2014.

 

DOWNLOAD FULL REPORT HERE >> REBGV Stats Package, January 2015

 

Last month’s new listing count was 1.2 per cent higher than the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the REBGV MLS® is 10,811, a 14.2 per cent decline compared to January 2014 and a 4.8 per cent increase compared to December 2014.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $641,60022. This represents a 5.5 per cent increase compared to January 2014.

With the sales-to-active-listings ratio at 17.7 per cent, the region remains in balanced market territory.

“The Bank of Canada’s recent announcement to lower its benchmark interest rate is an important one for home buyers, sellers and owners to note,” Harris said. “A reduced rate could allow you to pay down your mortgage a little faster, save some money on your monthly payments, or change the amount you qualify for. It’s important that you do your homework and understand how these announcements impact your situation.”

Sales of detached properties in January 2015 reached 781, an increase of 7.3 per cent from the 728 detached sales recorded in January 2014, and a 44.1 per cent increase from the 542 units sold in January 2013. The benchmark price for a detached property in Metro Vancouver increased 8.4 per cent from January 2014 to $1,010,000.

Sales of apartment properties reached 809 in January 2015, an increase of 7.4 per cent compared to the 753 sales in January 2014, and an increase of 40.5 per cent compared to the 576 sales in January 2013. The benchmark price of an apartment property increased 2.5 per cent from January 2014 to $382,800.

Attached property sales in January 2015 totalled 323, an increase of 15.8 per cent compared to the 279 sales in January 2014, and a 38.6 per cent increase from the 233 attached properties sold in January 2013. The benchmark price of an attached unit increased 4.3 per cent between January 2014 and 2015 to $479,600.

– See more at: http://www.rebgv.org/news-statistics/home-buyers-remain-active-despite-reduced-selection#sthash.WcmQet3e.dpuf

Home sale and listing activity reach historical norms in 2014

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Home sale and listing activity reach historical norms in 2014

The region’s home sale and listing totals for 2014 both rank fifth when compared against the past 10 years of activity, while home prices increased.

The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2014 reached 33,116, a 16.1 per cent increase from the 28,524 sales recorded in 2013, and a 32.3 per cent increase over the 25,032 residential sales in 2012.

The number of residential properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver increased 2.4 per cent in 2014 to 56,066 compared to the 54,742 properties listed in 2013. Looking back further, last year’s total represents a four per cent decline compared to the 58,379 residential properties listed for sale in 2012.

“While home buyer and seller activity created balanced market conditions within the region, we also experienced some upward pressure on home prices over the course of the year,” Ray Harris, REBGV president said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver ends the year at $638,500. This represents a 5.8 per cent increase compared to December 2013.

“Detached homes continue to be the most sought after property type in our market,” Harris, said. “Detached homes in Metro Vancouver have increased 8.1 per cent in value over the last 12 months while townhome and condominium properties have increased 4.5 and 3.5 per cent over the same period.”

December summary

Residential property sales in Greater Vancouver totalled 2,116 in December 2014, an increase of 8.3 per cent from the 1,953 sales recorded in December 2013 and a 15.9 per cent decline compared to November 2014 when 2,516 home sales occurred.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,888 in December 2014. This represents a 1.7 per cent increase compared to the 1,856 units listed in December 2013 and a 37.4 per cent decline compared to November 2014 when 3,016 properties were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 10,320, a 10.7 per cent decline compared to December 2013 and a 17.8 per cent decrease compared to November 2014.

Sales of detached properties in December 2014 reached 833, an increase of 9.3 per cent from the 762 detached sales recorded in December 2013. The benchmark price for detached properties increased 8.1 per cent from December 2013 to $1,002,200.

Sales of apartment properties reached 912 in December 2014, an increase of 7.3 per cent compared to the 850 sales in December 2013.The benchmark price of an apartment property increased 3.5 per cent from December 2013 to $380,700.

Attached property sales in December 2014 totalled 371, an increase of 8.8 per cent compared to the 341 sales in December 2013. The benchmark price of an attached unit increased 4.5 per cent between December 2013 and 2014 to $476,800.

Click here to download the complete statistics package

The Real Estate Board of Greater Vancouver is an association representing more than 11,000 REALTORS® and their companies. The Board provides a variety of member services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.rebgv.org.

– See more at: http://www.rebgv.org/news-statistics/home-sale-and-listing-activity-reach-historical-norms-2014#sthash.mEWwLy1O.dpuf