Opinion

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

Oleg For Buyers, For Sellers, Market update, News, Opinion, Statistics, Videos


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

Oleg First time buyers, For Buyers, For Sellers, Market update, News, Opinion, Videos

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

Oleg First time buyers, For Buyers, For Sellers, Market update, News, Opinion, Statistics, Tips, Videos


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.

What You NEED To Do Before You Buy Start Looking For A Home In Vancouver!

Oleg First time buyers, For Buyers, Opinion, Tips, Videos

Navigating the Real Estate Market: A Comprehensive Guide for First-Time Home Buyers

 

Entering the real estate market for the first time can be daunting, especially with the abundance of information and the significant financial commitment involved. As a seasoned real estate agent with over a decade of experience, I’ve encountered countless first-time buyers who believe that the right time to involve a real estate agent is when they’re “ready” to buy. However, the reality is that preparation should start much earlier. This guide aims to equip you with the knowledge and strategies necessary to navigate the market effectively and make informed decisions.

1. The Importance of Early Market Research:

Many first-time buyers delay engaging with the market, often because they feel overwhelmed or believe that market conditions are unfavorable. However, one of the most crucial steps in your home-buying journey is to understand the market well before you’re ready to purchase. This involves more than just casually browsing listings; it requires a proactive approach to gathering and analyzing data.

Start by familiarizing yourself with market trends and statistics. Websites like realtor.ca or rew.ca are excellent resources for keeping track of current listings and price movements. Additionally, watching educational videos, reading articles, and staying updated on market news will give you a broader understanding of the factors influencing property prices.

2. Understanding Specific Market Conditions:

The real estate market is not monolithic; it varies significantly depending on the location, type of property, and current economic conditions. For example, buying a one-bedroom condo in Port Coquitlam is a completely different experience than purchasing a detached house in Richmond. Each area has its own market dynamics, influenced by factors such as supply and demand, local amenities, and economic developments.

To make an informed decision, it’s essential to research the specific market conditions for the type of property and location you’re interested in. Look at recent sales data, compare prices across different neighborhoods, and consider the potential for future growth in the area. By understanding these nuances, you’ll be better equipped to identify a good deal and avoid overpaying for a property.

3. Financial Preparation: Laying the Groundwork for Success

Financial readiness is a critical component of the home-buying process. While most people know they need to save for a down payment, there are several other financial considerations that can significantly impact your ability to purchase a home.

– Pay Off Debt: High levels of debt, such as credit card balances or personal loans, can negatively affect your mortgage application. Lenders assess your debt-to-income ratio to determine your borrowing capacity. Paying down your debts before applying for a mortgage not only improves your chances of approval but also may help you secure a lower interest rate.

– Avoid Major Purchases: Large purchases, especially on credit, can reduce your borrowing power. For instance, taking on a new car loan can lower the amount you’re eligible to borrow for a mortgage by tens of thousands of dollars. It’s advisable to postpone any major purchases until after you’ve secured your home.

– Improve Your Credit Score: Your credit score plays a crucial role in determining the interest rate on your mortgage and the types of loans you qualify for. Take steps to improve your credit score by paying bills on time, reducing outstanding debt, and avoiding new credit inquiries. A higher credit score can open up more favorable loan options and save you thousands in interest over the life of your mortgage.

– Get Your Taxes in Order: Up-to-date tax filings are often required when applying for a mortgage. Ensure that your taxes are filed and any outstanding tax debts are settled well before you start the home-buying process. This will prevent delays and complications when you’re ready to make an offer on a property.

4. Building a Solid Savings Plan:

In addition to saving for a down payment, it’s important to have additional funds set aside for other expenses that come with buying a home. Moving costs, new furniture, home repairs, and unforeseen expenses can add up quickly. Establishing a rainy-day fund or a dedicated moving fund can provide a financial cushion and reduce stress during the transition to your new home.

Even if you already have enough saved for a down payment, continue to build your savings in the months leading up to your purchase. This extra financial padding will not only help cover unexpected costs but also give you more flexibility in choosing the right property.

5. Timing Your Entry into the Market:

Understanding market timing can be challenging, but being informed and prepared allows you to move quickly when the right opportunity arises. Real estate markets can change rapidly due to various factors such as economic shifts, interest rate changes, and local developments. By staying informed and financially prepared, you’ll be able to take advantage of favorable conditions when they occur.

Consider working with a real estate agent early in your process, even if you’re not ready to buy immediately. An experienced agent can provide valuable insights into market trends, help you identify emerging opportunities, and guide you through the complexities of the home-buying process.

The journey to homeownership is filled with challenges, but with the right preparation, you can navigate the market with confidence. Start by educating yourself about the market, improving your financial position, and saving diligently. By taking these proactive steps, you’ll be in a strong position to make informed decisions and secure the home that’s right for you.

If you found this guide helpful, consider sharing it with others who might benefit from this advice. For more insights and tips, subscribe to my YouTube channel or reach out directly for personalized advice tailored to your specific needs.

 

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

Oleg First time buyers, For Buyers, For Sellers, News, Opinion, Videos

 

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

Oleg First time buyers, For Buyers, For Sellers, News, Opinion, Statistics, Videos

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 Luxury Condo Prices Are Starting to Crack

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The signs of distress are everywhere. Many of Vancouver’s priciest condos are being offered at big discounts.

One downtown condo that was bought for almost $3 million is now on the market for $2.3 million. At the elite, funky Alberni, designed by starchitect Kengo Kuma, an “extremely high” inventory of 26 condos is for sale, says realtor David Hutchinson. At the similarly over-the-top Hotel Georgia, 14 units are listed. The 48th-floor penthouse was once put on sale at $35.8 million, now it’s going for $20.8 million. In the neo-futurist Vancouver House, where Hutchinson says even storage lockers have sold for $150,000, more than 30 opulent apartments are up for grabs. There have only been three sales in six months, and those are smaller units going at about 10 per cent below list price.

This inflated inventory coincides with a residential highrise construction boom in Metro Vancouver, including glamorous Westbank condos about to be finished at Oakridge Park and in downtown’s sky-high Butterfly. This isn’t to mention thousands more coming on stream in new highrise clusters in Burnaby and beyond.

Many of these condos have been aimed at the international market. Analysts point to globalization, particularly the trans-national effects of China’s depressed housing sector. China’s massive housing market is bursting after an incredible bubble. As Vancouver’s Steve Saretsky says, there has been a drastic drop in what was once an “unprecedented Chinese appetite to take capital out of the reach of the Chinese government” — mostly by investing in Western real estate.

There is no doubt values in Vancouver and Toronto, which are among the world’s most unaffordable cities, were impacted dramatically by what economists dub “China shock.” The B.C. Business Council’s David Williams and former Simon Fraser University professor Josh Gordon showed how the volume of money pouring out of China into real estate into Australia and Canada jumped by up to six times between 2016 and 2019.

David Ley, University of B.C. geography professor emeritus, describes how a decade ago large Vancouver property developers opened scores of sales offices in East Asia to serve business-class immigrants and other affluent transnationals.

At the time, the director of marketing at Westbank, Michael Braun, said: “China is now a big part of this business … right now I have a rule when we talk about projects: If the Chinese market doesn’t want it, I have no interest in it.”

Even though developers of both high- and medium-end Vancouver condos continue to market in East Asia, distributing most of their advertising in both English and Chinese languages, there are strong signs “China shock” is easing, becoming unpredictable.

As Saretsky notes, the overall price of homes in Greater Vancouver is down by just 3.6 per cent compared with two years ago (and by 7.5 per cent less in Greater Toronto). Values would be lower if not for rapid population growth through international migration. Nevertheless, Saretsky says the pounding on luxury condos is intense.

“Globalization is now reversing,” says Saretsky. “What happens if further Chinese wealth destruction necessitates Chinese liquidation of foreign housing ownership?”

Michael Peregrine of Santiago Capital says that over the last 10 years China’s property market has “fallen precipitously.” And there is “more downside to come.”

The problem has been that many real estate companies in English-speaking countries integrated East Asia’s housing boom into their profit dreams.

“The higher Chinese property prices went (valued at US$50 trillion), the more wealth was generated that could then be invested in other property markets around the world,” Peregrine writes in a 50-page report.

“The Chinese property juggernaut (bought) massive foreign housing inventory at inflated prices,” says Peregrine. “It forced locals to pay up in their own markets to compete against Chinese investors.”

Now China’s boom, which was fueled by debt, is unwinding.

“Canada will be at the forefront of Chinese selling,” Peregrine says, particularly since both the federal and provincial governments have been instituting various forms of foreign buyer restrictions and vacancy taxes, albeit with loopholes.

“Toronto condo sales,” Peregrine says, “are already down 85 per cent from their peak volume in 2022.”

Analyst John Pasalis adds that this June a record number of Toronto condos are for sale.

All this financial destruction, however, doesn’t mean the river of money from China has dried up completely. China still has by far the world’s highest number of millionaires trying to get their wealth out, with Canada showing up as the fourth most desired country for international multimillionaires ready to pay for a so-called “golden passport.”

The Canadian condo scene now comes with trans-Pacific turbulence. Hutchinson says many of the scores of pricey condos now on the Vancouver market were originally “sold in presentation centres offshore.” Most were snapped up as pre-sales designed for flipping. Now many speculators are in a bind.

While their financial pain might end up going deep, there is a chance others could benefit, with a possible trickle-down effect on prices.

Still, in Metro Vancouver we’ve learned not to hold out too much hope for real affordability.

Desperate Measures: Vancouver Developers’ Fight for Survival

Oleg Articles, First time buyers, For Buyers, Market update, Opinion, Statistics

 

In the bustling landscape of Vancouver’s real estate sector, a troubling trend is emerging. Despite the ongoing efforts of policymakers to spur development and alleviate the strain on the city’s housing market, a significant obstacle remains: a lack of interest from prospective homebuyers.

Amidst mortgage rates lingering at historic highs, developers of condominium projects find themselves grappling to ignite early enthusiasm among potential buyers, hindering the timely realization of new construction ventures. Adding to their challenges is a regulatory constraint unique to British Columbia, mandating a mere 12-month window for developers to market their projects, secure deposits, and secure the necessary financing for construction.

The pressure cooker environment has led to a flurry of requests from developers seeking extensions to these stringent deadlines, with the looming risk of forfeiting deposits should they fail to meet the prescribed timeline. Consequently, Vancouver has witnessed a decline of 20% in new home sales within the metro area, coupled with a surge in unsold inventory across various housing segments.

The predicament extends beyond the realm of developers, casting a shadow over prospective homebuyers as well. With Vancouver standing as one of the continent’s most expensive real estate markets, the dream of homeownership seems increasingly elusive for many. The scarcity of developable land, coupled with natural geographic barriers, exacerbates the city’s housing crisis, reflected in its staggering benchmark price of $1.2 million.

Renters, too, find themselves ensnared in the throes of Vancouver’s housing conundrum, grappling with vacancy rates languishing below one percent and exorbitant rental hikes. The dichotomy between stretched buyer budgets and burgeoning housing costs further compounds the challenge, rendering the 12-month marketing deadline imposed by British Columbia an additional hurdle in an already arduous journey toward homeownership.

The repercussions of this conundrum reverberate throughout the city’s landscape, evidenced by abandoned projects and returned deposits, indicative of the palpable strain gripping Vancouver’s real estate market. Efforts to address these challenges are underway, with industry stakeholders advocating for policy revisions to offer developers greater flexibility and alleviate the burden imposed by regulatory constraints.

As Vancouver contends with the complexities of its housing crisis, the need for innovative solutions and collaborative efforts becomes increasingly apparent. Whether through regulatory reforms, affordable housing initiatives, or alternative financing mechanisms, the path toward sustainable growth in Vancouver’s real estate sector necessitates proactive measures to navigate the current impasse.

In the face of mounting challenges, Vancouver stands at a pivotal juncture, poised to redefine its approach to housing development and affordability. How policymakers, developers, and stakeholders navigate these turbulent waters will shape the trajectory of Vancouver’s real estate landscape for years to come.

Canada’s Housing Market To SKYROCKET End Of 2024? Experts Predict A Price Surge!

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Royal LePage’s latest market forecast paints a vivid picture of Canada’s real estate landscape, predicting a significant 9% year-over-year increase in home prices by the fourth quarter of 2024. This upward revision stems from a robust first quarter, with strong price appreciation expected through the second and third quarters before tapering off towards year-end, aligning with seasonal trends.

The forecast highlights notable upgrades in major markets, particularly the Greater Toronto Area (GTA), where prices are anticipated to surge by 10%, surpassing the national average. Montreal follows closely behind with an 8.5% projected increase, while Calgary, Quebec City, and Greater Vancouver are forecasted to experience respective jumps of 8%, 8%, and 5.5%.

Royal LePage President Phil Soper attributes the current modest price rises to consumers, particularly first-time buyers, adapting to higher borrowing costs. However, he anticipates a steeper appreciation curve once the central bank enacts anticipated rate cuts, drawing in rate-focused buyers.

While easing rates will influence price upticks, the fundamental driver remains the severe housing shortage across the country. Soper warns of an intensifying seller’s market, foretelling a busy spring and fall for Canadian buyers and sellers alike.

Looking ahead, Royal LePage’s forecast suggests that by the end of 2026, the majority of mortgages will have transitioned into an elevated borrowing rate environment. Yet, this is not expected to significantly dampen the housing market’s resilience. Soper points to Canadians meeting their mortgage obligations amid record-low default rates and income growth offsetting increased mortgage costs. However, he anticipates a pullback in discretionary spending as individuals prioritize maintaining homeownership.

In summary, Royal LePage’s forecast outlines a dynamic Canadian housing market characterized by soaring prices, driven by a combination of factors including adapting consumer behavior, impending rate cuts, and the persistent housing shortage. Despite looming challenges, the market remains robust, with buyers and sellers navigating towards a seller-centric environment amidst projections of continued price appreciation.

3 strategies smart investors use to win in a slower real estate market in Vancouver

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The Greater Vancouver real estate market has been experiencing a slowdown in recent times. However, experienced investors understand that a slower market presents unique opportunities that can be harnessed for greater returns. Here are three ways smart real estate investors take advantage of a slower real estate market in Greater Vancouver:

  1. Upsizing:

One way smart real estate investors take advantage of a slower market is by upsizing their real estate portfolio. In a slow market, the more expensive properties tend to drop in price more, which presents a perfect opportunity for investors to acquire larger and more valuable properties. For instance, an investor who wants to move from a condo to a single-family home can leverage the slowdown to acquire a bigger and more luxurious property at a lower price than would be possible in a hot market.

The key is to identify properties that are likely to retain their value in the long term. This means focusing on properties with excellent location, good amenities, and good resale potential. An experienced real estate agent can help investors identify such properties and guide them through the upsizing process.

  1. Buying pre-sale properties from developers:

Another way smart real estate investors take advantage of a slower market is by buying pre-sale properties from developers. During a slow market, developers are often eager to move their inventory and may offer attractive incentives to buyers. In addition, interest rates are expected to go down in the future, which makes buying pre-sale properties an even more attractive option.

Investors can leverage this opportunity by identifying pre-sale properties with excellent potential for capital appreciation. This means focusing on properties in areas with good growth potential, excellent amenities, and strong demand. Additionally, investors should work with reputable developers with a track record of delivering quality properties on time.

  1. Buying long-term investment properties:

A slower real estate market presents a perfect opportunity for investors to acquire long-term investment properties. The rental market in Greater Vancouver is still very strong, which means that investors can acquire properties and generate steady rental income over the long term.

Smart investors focus on properties that have good rental potential, such as those in areas with high demand, excellent amenities, and good transportation links. Additionally, investors should focus on properties with good long-term growth potential, such as those in areas with strong job growth and population growth.

Investors should also consider the potential for future development, such as adding additional rental units to the property or converting the property to other uses. This can help to increase the property’s value over time and generate even greater returns.

In conclusion, a slower real estate market in Greater Vancouver presents unique opportunities for smart real estate investors. By upsizing their portfolio, buying pre-sale properties from developers, and acquiring long-term investment properties, investors can take advantage of the slowdown to generate greater returns over the long term. However, it’s important to work with experienced real estate professionals who can help identify the best opportunities and guide investors through the process of acquiring and managing real estate assets.