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

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

 

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

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

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

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

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

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

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

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

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

 

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

New 2016 Canadian Mortgage Regulations [EXPLAINED]

Oleg Articles, For Buyers, News

Mortgage-home-loan

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

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

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

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

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

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

 

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

Should Trump Tower Vancouver change the name? [OPINION]

Oleg Articles, Opinion
Image from: www.trumpvancouver.com/
Image from: www.trumpvancouver.com/

You have most likely heard about Donald Trump running for the President of United States of America. Donald is a bit of a character and likes to say/do a lot of controversial “stuff”. His racist and sexist remarks offended thousands if not millions of people. Among the offend people are many Vancouverites.

Trump happen to have his name on one of the tallest (second tallest after Shangri-La) buildings in Vancouver. “Some” Vancouver residents (at least 50,000 singed online petition) including former city planner Brent Toderian and Vancouver Mayor Gregor Robertson are against having Trump name as part of the Vancouver skyline.

Vancouver Mayor even wrote a letter to Holborn Group (more about them later) expressing his opinion and asking them to change the name of the building.

“As mayor, I’m proud that Vancouver is known throughout the world for our steadfast commitment to diversity, equality and freedom from discrimination and hatred,” he wrote.

“In contrast, Donald Trump’s hateful positions and commentary remind us all of much darker times in our world’s past — and it is incumbent on all of us to forcefully challenge hatred in all of the ways it confronts us.”

So should the name of the tower be changed? In ideal world the answer is – YES! Of course, it should be changed. Unfortunately, we don’t live in an ideal world. Changing the name of this tower is not that simple.

Holborn Group is the owner and the developer for The Trump tower. They have licensed “Trump” name from Donal Trump. Plus Trump Organization was chosen to operate the hotel inside of the tower. Holborn Group and Trump Organization have strong contractual ties. Not to mention the fact that a majority of 217 condos have already been sold. I would imagine that some of these buyers purchased their condos based on what Trump’s name represents in the world of real estate luxury. Not based on his personal political views.

Here is what Joo Kim Tiah, CEO of Holborn Group had to say on the matter.

“While Holborn Group owns Trump Vancouver, we have contractual obligations to the Trump Organization, banks, purchasers, consultants, trades and business partners. These legally-binding contracts cannot be altered,”

In my opinion, the name of the tower should definitely change. It will probably change in the years to come. One thing is certain – there are a lot of angry buyers who want their money back.

Property Assessments grew by 16% in 2016

Oleg Articles, News, Opinion, Statistics

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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.

3 Tips for selling your home or a condo in a “HOT” Vancouver market

Oleg Articles, For Sellers, Opinion, Tips

Miniature house with sold sign

Greater Vancouver market continues to be very active late into the fall of 2015. Metro Vancouver has a very strong sellers market, for the most part . That’s great news if you are planning to sell your house or a condo.

To find out if your neighbourhood and a property are in a sellers’ market you can contact me (or your real estate agent) directly or check the statistics here – the latest real estate market statistics for September 2015 from the Greater Vancouver Real Estate Board. If your home is in fact in a “HOT” sellers’ market what is the best way of selling it and making sure that you don’t leave any money on the table?

  1. Price is everything.  One of the main services that your real estate agent provides is figuring out the exact value of your property. To figure out the value (price) of the property recent sales, available inventory and even tax assessments are all taken into account. Every agent has a different strategy to find the value of the property. I will share mine in another blog post. After the value of your property is established; take away 3-5% and that should be your listing price.  Listing your property 3-5% below market value is very important step. This will generate a lot of buyer interest.
  2. “Hold” your property for at least 5-7 days on the market. In a hot sellers’ market you will be receiving offers on the very first day your property is being listed. Accepting an offer on the first or second day of your property being listed is a mistake and will most likely cost you thousands of dollars. It is very important to hold off all offers for at least 5-7 days. This way your property will get appropriate market exposure.  Set a date for the offer presentation. More often than not your will have a bidding war. Buyers will be lining up to present their offers.
  3.  Do Friday showings and an open house on the weekend. There are circumstances where open houses are not an option. For example it’s against the strata bylaws. In these instances regular showings should be scheduled for the weekend.  Assuming you are able to host an open house you should definitely do it.  Friday showings will be mostly for the agents and for the buyers who can’t make it to the open houses on the weekend. The weekend open houses are what really sells the property. If you followed tip #1. You will have people lining up outside of your front door to view the property. More people = urgency = higher offers.

Ideally, you would want to follow this timeline in listing and selling your property for best results in a sellers’ market. Monday or Tuesday your property is live on MLS (with pictures and full description). Make sure that it’s priced 3-5% under the “market value”. No showings throughout the week until Friday. Friday, Saturday and Sunday showings and an open house. Create urgency and drive as many people to the open house as possible. Monday or Tuesday evening offers presentation. Have at least 3 offers and accept the most favorable one. Sounds easy right? The whole process is of course a little bit more complicated but this should give you a pretty good idea.

Make sure to consult with your real estate professional or call me directly 604-565-7052 before implementing any of the steps. Happy selling:)

Market statistics for September in Greater Vancouver

Oleg For Buyers, For Sellers, Statistics

rebgvcolour

Metro Vancouver home buyers compete for fewer home listings

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

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

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

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

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

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

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

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

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

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

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

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

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

3 tips for buying real estate in a sellers’ market

Oleg For Buyers, Opinion, Tips

BuyingYourHomeinaSellersMarket

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

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

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

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

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

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

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

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

Oleg Articles, News , , , , ,
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!