As reported in Business In Vancouver by Patrick Blennerhasset, despite what you are hearing about housing sales slowing, prices being asked for houses in the region are not dropping. February sales were 41% less than in February 2016. However statistics gathered across the region show that “while home sales and listings have returned to their 10-year average, prices across the region remain high in the wake of 2016’s record-breaking year, according to new Fraser Valley Real Estate Board (FVREB) statistics.”
Townhomes and apartments also experienced marginal price increases, with one realtor stating that buyers were now turning to these housing forms. Townhomes and apartments have had a substantial increase in benchmark pricing compared to last year. People are also being a bit more cautious putting their housing on the market with new listings dropping nearly 48% from February 2016.
Realtor Daren Germyn stated “Depending on what area in Surrey and what type of property, you’re looking at very different markets regarding competition and pricing. Inventory that is more affordable, like townhomes and condominiums, is very popular right now and with the lack of new product coming in compared with what is common for this time of year, demand is outpacing supply, and it’s fuelling a fast-paced attached market.”
Surprisingly sales of houses and townhomes in White Rock/South Surrey have fallen 67% and 57% respectively. But even with few houses selling there, benchmark prices have increased dramatically, with single family homes prices increasing by nearly 24%. While housing sales are more in line with the normal historical real estate activity, the hoped for decrease in sales prices has not happened-yet.
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Reblogged this on Sandy James Planner.
When the hyperbole on Asian money in the local housing economy was aflame, I always thought there was more at play jacking the prices than just one element. Now, after eight months of the Foreign Buyer’s Tax, it’s clear the limited reduction in prices doesn’t dance in step with the rhetoric.
Now, there was a recent BC Supreme Court decision that allowed a notary to be sued for $600,000 (including damages I presume), because he failed to determine that a house seller wasn’t a “tax resident” of Canada, and therein the CRA billed the buyer for unpaid capital gains worth 25% of the profits made on the sale. The CRA is now tightening up the rules and auditing foreign income relative to home ownership status.
The province has residency and income stats as well, but it hasn’t been willing to divulge that information despite the fact they gleaned much political capital from the tax. Why does Mdm. Premier hold this info in a locked filing cabinet drawer? Could it have something to do with political donations from the same foreign non-residents?
Even with all the proper data and policies in place on housing, I still think the high prices are mostly genuine and relative to supply and demand and other factors like the quality of the city and its setting as much if not more than investment and speculation.
Now its time to address supply, and I’m not referring to towers or detached homes.
“Now its time to address supply, and I’m not referring to towers or detached homes.”
Indeed Alex, indeed.
There are many reasons why demand – and thus prices – will remain high namely:
a) baby boomers remaining in MetroVan, or merely switching from big house to smaller condo
b) their kids, flush with parents cash, or grand parents inheritance ready to buy
c) in-migration
d) low interest rates
e) high rents making a purchase more economical than renting often
f) the $25,000 gift for first time buyers by the provincial government
g) the tax free nature of any house price gain for a principal residence
h) the continued rise in values due to ever increasing regulations and land prices making a rental property or pre-sales condo lucrative enough in Metrovan
i) prices in line with (or lower than) other world cities (like Vienna, New York, Hongkong, Sydney, Munich, London, Paris …)
j) very low property taxes (as opposed to insanely high income taxes up to 50% on the last $10,000 earned) – allowing even vacant condo to make economic sense
k) the tax preferred nature of any capital gain on a rental property
l) the lack of tracking to a SIN number making tax evasion easy
This is what Tsur Somerville at UBC calls “price stickiness” in a falling market, and demonstrates that these sellers don’t have to sell — they’re speculators, or just testing the market. It’s like, I’m an artist and I have a painting that I say is worth $10,000. Nobody will buy it for that, so I hang onto it along with the idea that it’s worth that much. If I actually had to sell it, which has happened in previous real estate downturns in Vancouver, the price might drop by 25 or 50%.
There is a parallel between art and real estate in that they are not commodities. Even in Levittown, or in a condo tower, two paces east or west and the price changes. The number of factors affecting the price of a property are numerous: topography, orientation, proximity – good or bad re. traffic street, noisy school playground, graveyard … is the house a new-build, a resale, a lipstick reno, or a gut reno? The variables are endless.
Where they part company is that we need places to live. Art is a luxury.
One cannot generalize about a monolithic real estate market, even in a city like Detroit.
What you can say is that the vast majority of listings coming up for sale are tubular brown floaters – it’s not the cream rising to the top. Pick a listing. If it’s a floater, like a house on Knight St, or on one of Vancouver’s bogs, or facing the searing west sun … it will sell for close to or under assessed.
In the rare case that it’s cream, where sellers are cash-strapped and there are no heirs: big hall effect, proximity to Skytrain, view, heritage, rezoning upside … it will sell for over.
Bottom line is that people don’t sell the good stuff. Listings are a soiled deck of dreck.
These results are to be expected. When the prices of all SFH have been allowed to inflate so only offshore millionaires can buy, is it any surprise sales stall when those buyers retreat? No matter how low interest rates go, very few local earners can afford a house West of Main or in most of Richmond and Burnaby.
What’s needed is a pin to pop the expectation foreign buyers are coming back. Greedy homeowners and realtors won’t accept it otherwise. Such a pin would best come from the Feds.
To many, a house is a home, not a commodity, no matter how many times they are pinned and jabbed by critics and real estate agents.