Metro News and Jeff Hodson reports that the latest Royal LePage housing price survey shows a decline in housing prices in Metro Vancouver for the first quarter of the year. The reduction was not massive and is calculated as a weighted average of median home prices by the type of property. That decrease for the first quarter was 1.9 per cent.
“In a statement, Randy Ryalls, general manager of Royal LePage Stirling Realty, said the Metro Vancouver foreign buyer tax and eroding affordability cooled the market, but speculated the price drop may have bottomed out. “We are starting to see signs of a quicker-than-anticipated rebound in many regions across Greater Vancouver.”
The median price for a Metro Vancouver two-storey house was $1,503,146 down from 1,604,757 in the previous quarter. And the numbers for the City of Vancouver? “According to the survey, in the City of Vancouver, the median price of a two-storey detached home is $2,345,272; the median price of a bungalow is $1,304,675; and the median price condominium is $658,775.”
Meanwhile Joanne Lee-Young in the Vancouver Sun notes that March sales in Metro Vancouver increased by 48 per cent compared to February, suggesting that the “psychological aftermath of the foreign buyer tax” may now be over, with eager buyers back in the market. In Burnaby detached home sales increased from 47 in February to 100 in March, with apartment sales increasing from 137 to 220 units.
“It is definitely true that, outside of the top, things are very hot again,” said University of B.C. real estate finance professor Tom Davidoff, adding that aside from some initial numbers, he is also hearing chatter on the street that is reminiscent of frothier times. “I was walking around in Kits the other day and overheard a conversation: ‘it was $100K over ask, with no contingency and we still didn’t get it.’”
The snap back into the market of potential home buyers chasing fewer listings could also mean higher price increases in the next quarter of the year.
Author
Reblogged this on Sandy James Planner.
Yes, the froth is back. A Port Moody Townhouse listed at $798k last week sold for $911k… Just one example the bidding wars are back.
Froth ? Just the market, man. 1500 sq ft for less than $1M = not even $700/sq ft .. well below condo prices. This is NOT froth.
All that talk about wealthy foreign buyers being the prime cause of house price escalation. It’s been obvious to many people that this was only one influence, and not as big as portrayed in several breathless panic-driven articles and foaming comment sections.
Ordinary demand with a limited supply in the two extremes (detached and increasingly apartments), a near vacuum in anything between (ground-oriented non-stratified townhouses), a lack of courage to tackle the RS zoning bylaw in several cities where millions of m2 of land are locked up, cheap credit and a very desirable region with mild weather relative to the rest of the country are all acting in concert to push prices skyward.
I’d venture to say that a 1+% raise in interest rates will have a downward effect equal to or greater than the foreign buyer’s tax, but that won’t create new supply.
Unclear why people think there is a bubble in Vancouver (or GTA).
We have 11 or so factors converging, resulting in high demand and thus, high prices!
1) Interest rates are low low LOW .. and they will not go anywhere. They might head lower, like in Europe. A Canada 5 year bond is mid 1%, and a 10 year bond is a whooping 2% or so. Prime rate is at 0.5%. Yes, they may rise 50% .. to 1.5% and thus 5 year mortgages from 2.7 to 3.2% .. woohoo !
2) Baby boomers working longer, living longer and not moving in very large numbers to areas outside of MetroVan or GTA. Yes some folks move to the Okanagon, Sunshine Coast or Vancouver Island from Vancouver, or Barrie, Muskoka, PEI or Kingston, but it is not a very large percentage.
3) Baby boomers kids – the Gen Y folks now in their late 20’s and early 30’s – want to buy, and with mom’s and dad’s bank are flush with downpayment cash
4) Supply is non-existent except condos and far away tiny homes or townhouses. Almost no single family houses (SFHs) are developed anywhere in the MetroVan or Toronto area. Only further out, outside the greenbelt in GTA and Fraser Valley or Langely in MetroVan. A few hundred maybe. Condos remain affordable further out appeal to some but not to folks that wish to stay near the water or close to subways or downtown.
5) No more land is created due to pressure by radical environmentalists, green movement, sheer laziness and a political class unwilling to make a bold move to create more land, say in Boundary Bay, off Delta in the Fraser River delta, off UBC even or up the mountains, say Indian Arm. GTA does some Don Lands and water front redevelopment and that is a great area to buy I think as the prices are still much lower than downtown. Check out some links on the West Don Lands, very close to downtown Toronto, for example. Vancouver could have done that with the Fasle Creek Flats, or by rezoning parts of the less desirable ALR but chose not to.
6) Property gains are untaxed if it is a personal residence, unlike any other investment that is taxed at at least capital gains rates (around 22-25% tax) or as investment income (close to 50% tax)
7) No inheritance tax in Canada, allowing cash to be gifted down the line
8) 1% or so immigration into Canada, many with cash, and the first thing folks want to acquire is a home. A higher concentration of immigrants arrive in MetroVan or GTA than say, Saskatoon, Calgary, Montreal or Yukon where housing is cheaper but climate is not as desirable.
9) foreign money is arriving in record numbers from unstable regions of the world with autocratic governments, corruption or mere undesirability. See Turkey’s election last Sunday as the latest example of many.
10) even new condo supply is getting more expensive due to more and more rules, levies or surcharges heaped onto developers. Add land scarcity and condo prices will continue to climb, albeit not as much as SFH.
11) This is not restricted to GTA or Vancouver, we see high prices in many desirable cities with decent climates and jobs: Boston, New York, Munich, Vienna, Singapore, Sydney, Auckland, Berlin, Paris, London, etc .. and $800-1000/ sq ft is not all that high compared to these cities.
Yes, we may get a speculation tax to take away some element of popular gambling with housing, and yes we may get a surcharge tax on foreigners in GTA like in BC (a good idea in my opinion), but that still leaves 9 – 10 reasons why demand is high and prices will not drop.
I noticed that none of your 11 factors is skyrocketing Vancouver incomes. So, what that leads me to believe is that no one with a normal 9-to-5 job can afford this market. We have demand, but it’s not from average, working families. And, that seems unhealthy.
I did not say it is healthy. I just said what is – and it is the same in many cities workdwide. MetroVan affordable but further out. Not Vancouver. Politicians better wise up and state the truth as no measure will bring Vancouver prices down unless they give out free land to developers, or many leave (which of course is unlikely).
@ Thomas
1. Agreed. Ultra-low Interest rates are a major factor in obtaining cheap financing (and often over-extension) for buying houses. There seems to be a lot of negative press in the Globe’s Report on Business on the effects of negative interest rates. Today’s low should be set as the floor.
2. Agreed. Boomers seem to be staying in place. But I know of several private and public organizations where retiring Boomers will create a vacuum and therefore a large succession challenge. Millennials need to be patient just a little longer. Lots of jobs will appear, and if there aren’t enough skilled workers to fill them, then wages will rise.
3. Agreed. Kirk in the comment above needs to read this point. Kids with poor Boomer parents will just keep renting and forget about buying any real estate, or at best a condo.
4. Right and wrong. Supply is very crimped in the SFH category, which everyone keeps harping on. Condos in the Metro are still pretty affordable. In Vancouver they are creeping up. According to the latest housing stats only 20% of the GTA’s developable lands bordering the greenbelt have been developed in 20 years, leaving 80% still unsuburbanized. Supply isn’t the central issue in the GTA. Too much demand and cheap credit is.
5. Utter BS. “Radical environmentalists” did not create a land shortage by maintaining extraordinarily inefficient land uses. Land supply is not an issue. Land management is.
6. Taxing primary residences at the capital gains rate would be unfair to those who inherit homes or who have deep family and personal attachments to them. This will also cause a slowdown in sales, further locking in a higher price structure related to a constrained supply of land.
7. See #6. It would be better to identify and retrieve the hundreds of billions illegally transferred secretly to offshore tax shelters by some corporations and wealthy people.
8. Immigration and higher housing prices in Vancouver and the GTA are facts of life.
9. The CRA is now closing loose ends and loopholes in reporting on the sources of foreign money. The corrupt bits will be rejected.
10. Utter BS. DCCs and fees are most fair and based on analysis of the actual costs and impacts of development. Further, a high percentage of the development processing delays at city halls are caused by the developers themselves who regularly supply incomplete plans or whose plans contain multiple code and bylaw violations. Some cities have gotten smart and send developers off to a developer’s school so they can learn how to quickly and efficiently move their projects to approval. Other cities also pin the onus on the developer to get it right the first time, or lose their place in the queue as well as pay the hourly staff time to reprocess their applications a second or third time. It is highly doubtful the development fees cover the actual costs of processing.
11. All you’re saying is that Vancouver is not a special case.
re 3: many baby boomer kids buy. It is just common sense to inherit $100,000 to $250,000 early and buy a condo, TH or house. Many parents or grandparents recognize that. I certainly do. Do you ?
re 5: the ALR discussion needs to happen. The flood plains of Fraser River discussion needs to happen. Richmond was a pile of mud 120+ years ago and now it is a thriving island. Venice was low bank sand bars as was South Miami or Palm Beach. Now all thriving cities. We can do far FAR more here in some ALR portions and with our low lying muddy ocean lands. Them birds, whales, salmon, eagles etc will need to be considered, of course, but they’ll adjust and it can all be done with enough political will. it is just not there. People prefer higher house prices in lieu. Taxing fofeigners will not create more land. Creating more land does !
re 7: it is very hard to track source of money. Money is very fungible. It might come into the country legit, stolen, scammed, smuggled as diamonds, wired, or in shoe boxes. Very hard to track where someone got their cash from. As such, just tax the heck out of the real estate. Better than a stupid, tough to enforce vacancy tax would be a doubling or tripling of Vancouver property taxes – the lowest in the world per $100,000 of assessed value – and rebate the increase to legit BC residents, BC tax payers or BC seniors.
re 10: building code is far too complex. Simple example of many, illegal spiral staircases to create cheap upper bedrooms in gabled roofs, here which we encountered in our http://www.oliverlanding.ca project: https://www.prestprop.com/2016/08/19/creating-affordable-housing-supply-modifying-building-code/
Mostly agreed Alex. But as a home designer I can assure you that Vancouver city has a huge problem with permit submissions and processing. I submit SF plans regularly and it is a rare exception that the building department doesn’t have a new requirement for me to meet as they turf me out the door for failing to meet it. Almost without fail there is a new document, a new process or a new drawing detail that was never required before.
And I’m not talking about building code changes and updates – just pure unadulterated bureaucracy.
There are also dozens of unwritten policies and bylaw interpretations that no designer/architect/developer could ever possibly account for in their submission package. And there’s no debate. It isn’t written anywhere but designers have to go back and rework the design because they won’t budge on a mind-bogglingly nonsensical bylaw interpretation or a policy they pull out of thin air.
I’m sure there are many incomplete and incorrect submissions. But to waste half a day at the city trying to submit plans and be sent packing because of a single missing form or dimension that wasn’t required a week ago is absurd and entirely the fault of the building department.
It absolutely has an impact on cost, At the design end it’s only thousands of dollars premium for Vancouver (and North Vancouver District). But if this carries through in the same fashion on site I can imagine tens of thousands.
It is a gong show!
Why not send a story to the V Sun ? Your story is likely echoed by hundreds of builders / planners..comment removed as per editorial policy.
The latest city hall requirements is no more gas heaters for hot water to save the planet. A costly measure to heat water with solar or electricity. http://vancouver.ca/news-calendar/clarification-of-citys-position-on-natural-gas.aspx
Any attempt to sugar coat City of Vancouver affordable housing strategy needs to be understood in this hypocritical light.
Vancouver wants to be a green eco-resort. Comment removed as per editorial policy.
[You just did.]
You can heat water economically with air-to-water heat pumps in this climate.
I have zero issue with building code upgrades for safety and energy performance.
Nine months, and over $36,000 for building permits. Michael Campbell (not an unbiased source) estimates $80,000 in DCC’s and other municipal fees for a condo in Vancouver. All added to the price you pay.
http://buildinginvancouver.com/2016/01/dealing-with-the-city-of-vancouver-part-4/
Personally, I think you can let Beyer say what he wants (don’t delete his rants). It’s good for people to see.
Indeed Chris. Facts matter. Partial facts matters. Absolute truth doesn’t exist in complex societies as it is a continuum. Opinions on both sides of an issue – or all along this continuum – matter. Why have a blog otherwise ?
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Thomas:
re: 3 – Largely agree, but that level of inheritance is so far beyond my experience that I can’t relate.
re: 5 – The “ALR discussion” happened 44 years ago when it was created. It is an accepted fact of life by every government that affects land use in a province with only 4% of its land area that is arable. Ontario has a lot more arable land and also a land bank buffer at the greenbelt periphery set aside for development, and only 1/5th of it has been used in the last 20 years. BC has very little room left on the borders of the ALR to sacrifice to such poor land urban land use as subdivisions.
Land is “created” through thousands of years of natural processes. You are talking about taking fill from one site to another and depositing it in unacceptable locations to create development sites for subdivisions. If you prefer that level of interference then you can always move to Dubai. BTW, Abu Dhabi, the far more mature elder sister to the rather immature Dubai, isn’t “creating” artificial islands for such poor land uses like subdivisions. It is protecting the marine and estuarine green zones and moving toward public transit. They are also building a solar city at its periphery.
re: 7 – Point conceded. However, money exiting the country CAN be traced through accounts and consultant’s records. The CRA no doubt has some very keen forensic accountants itching to audit firms with a lot of offshore money traffic. Even the Swiss are owning up t criminal wealth in their banks.
re: 10 – The building code is the bible of human safety. As Ron alluded, there are local and individual interpretations that can lead to frustration. Still, electrical circuits need to be grounded, and human ergonomics dictates that stair risers shouldn’t be 30 cm tall unless you are the jolly green giant.
The ALR discussion needs to happen as 44 years ago BC was a different planet. I am not advocating a wholesome change, but sensible adjustments. Ditto with new land. Plenty of options that should be looked at. Ditto with building code. Almost all of the high land & construction/regulatory price, i.e. high house and condo prices are policy made, i.e. can be corrected.
Inheritances at present are going to Baby boomers – not young people. As lifespans continue to get longer, this problem will likely get worse, and inheritances will be diminished, as more money is needed to sustain people for longer periods of retirement. Pretty straightforward math really. Surprising anyone would suggest there’s much of an avenue for average people to finance homeownership in this fashion. All signs point to ‘No’ to quote the magic 8 ball.
http://www.huffingtonpost.ca/2014/07/09/inheritance-canada-bmo-study_n_5570144.html
Baby boomers live longer so they need to live somewhere longer, and not all of them depart to cheaper places like Okanagan, V Island or Sunshine Coast from Vancouver. Many stay, most perhaps. Many buy a second home somewhere. So you will have 90 year old living in W Van with their kids in their 60’s, and their grandkids in their 30s all looking for a condo or house.deleted as per editorial policy Affluent Albertans move to BC for sunnier and warmer climate, some full-time and many more part-time.
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Taxing real estate – instead of incomes make far more sense in this scenario indeed. The issue is very low property taxes in Vancouver, one of the lowest in the world per $100,000 of assessed value. Why not double or better, triple it, and reduce income taxes and give seniors and BC resident income tax payers a corresponding rebate ?
Foreign, stolen, smuggled, corrupt and illegal money is very hard to track. Therefore, this money invested into real estate is monetized properly. Don’t ban foreign $s, monetize them better – far far better for societal benefits !
I can’t tell if you didn’t read the accompanying link at all – which shows that access to inheritance as a down-payment for younger people is highly unlikely — or have chosen to simply ignore it because it doesn’t fit your reality. Productive dialogue is nearly impossible in either instance.
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“The age at which British adults received an inheritance was rapidly approaching 60, analysis of official data for The Telegraph found.”
http://www.telegraph.co.uk/finance/personalfinance/tax/11144362/Why-inheritance-is-dead-for-a-generation-in-middle-age.html
“CIBC says there are currently about 2.5 million Canadians over the age of 75 with a total net worth of $900-billion or more, and the beneficiaries will be mainly Canadians currently aged between 50 and 75 years.”
http://www.theglobeandmail.com/globe-investor/retirement/retire-family/bequest-boom-will-see-750-billion-inherited-by-boomers-over-next-decade-cibc/article30283057/
“Figures compiled by credit monitor Equifax, meanwhile, suggest the average person aged 56-65 is carrying $27,000 in consumer debt, such as credit cards and car loans. They’re going to need cash to maintain their standard of living, say experts, and their desperation is starting to show. Court files are replete with challenges to wills involving claimants nearing retirement age, while the sheer nastiness of family battles is on the rise. ”
http://www.macleans.ca/society/life/the-inheritance-wars/
Anyone taking seriously the opinions of those who need the housing market to never face correction will likely regret trusting the fact-averse.
So, even if the 90 year old granny dies and passes $1M to her 60 year old kids, they will pass the money on to their 30 year old kids, or upgrade the condo or not move to a cheaper place. In any case it will result in very high house & condo prices in desirable places to live.
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Please read the links I took the time to find for you. People have less money to pass on as they live longer. There is a consumer debt issue for many people — making it harder to pass along inheritances to young people. This is all coming to a head at a time when work is ever more precarious.
You’ve got it good. We get it. You had countless forms of assistance from society, from free education, to working for a major corporation with massive gov’t infusions of money through contracts. You came to Canada when immigration for white people was largely a rubber-stamp process. You got into real estate at the right time. Most of these privileges are harder to find for people in this region at present. That’s why your hand-waving assertions that Grandma will buy us all a house are rooted in misinformation. You quite simply appear to have not taken the time to understand what’s going on in the world. Life in a bubble.
It’s frustrating to have an exchange of ideas with people who mistake their flukey luck and fortuitous timing for a clear understanding of economic reality and an ability to predict the future. There are countless idiot millionaires. It means nothing with regard to the job and housing prospects of working people.
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@Chris: don’t bemoan he fact that MANY immigrants work very hard, many without money and many more with, and make a success out of themselves here.
I heard the term “bubble” when I first moved here in 1988, when HongKong was about to separate from UK and loads of HongKong money flooded into Vancouver after Expo 86, driving prices up 50% in 2-3 years. The Burnaby bungalow moved from $150,000 to $250,000. “Wow, must be a bubble .. who can afford that kind of price .. must be a bubble .. bla bla bla ..” That same bungalow is now well over $1.2 to $1.5M and soon over $2M.
Why don’t you buy one ? It is NOT getting any cheaper ! Don;t whine about it – join the party !!
Anyone reading my comments can see that I am not whining about anything, unlike those who bemoan people earning a decent wage for necessary work. I state what is, and often what is, ain’t pretty.
I am pointing out your opinions are not based on facts. That’s why they fall short almost without fail.
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The facts that are referenced in the links I provided were sourced by the respective reporters from BMO, AVIVA, CIBC, and Equifax.
Or we could rely on the assurances of a real estate developer that real estate is a sure thing.
Plus ca change….
“How did we do it? My in-laws helped with part of the down payment. My parents helped. And we had mortgages. We paid $12,000 for our first home and my mother lived with us.
House prices can go down
When we finally sold, we sold for $1,000 less after about four years. I think we’re the only ones who ever lost money on real estate but we bought another house for $18,000 with a tremendously large mortgage. I took two jobs and my wife went to work, too.
All the economists say it’s best to rent and it was for us too, but there is the theory you will make the landlord rich by paying off his property when you could be paying off your own. We fell for the propaganda.
House prices can go down. I’ve gone through a period where people bought their house and lost their homes, a lot of them. We see it now, prices are going up and jobs are going down. Sometimes something can give.”
http://business.financialpost.com/features/boom-and-bust
Yes house prices can go down for a short period of time. On average, they ALWAYS go up, since we have inflation and ever more people. The only reason we will see a sustained prolonged downwards price in MetroVan is one of three events:
A) a major implosion of population deleted as per editorial policy
B) a change of government policy
C) major safety concerns
While those are possible, I’d say they are highly unlikely. Barring those three I see no reason whatsoever, none, why real estate in major urban centers anywhere with desirable universities, jobs, housing, eateries, safety, culture & scenery are going down in vale !
Beyer:
You made a claim that inheritances were financing house purchases. At best, arguable, and as the links demonstrated, more likely to be very wrong. That is the point, nothing more. Your digressions into wealth building via real estate development, unasked for advice and insults, and earth-shattering conclusions that real estate increases in price over time (glad I was sitting down for that revelation!!!) are simply diversions from the central point you attempted to make:
“Baby boomers kids – the Gen Y folks now in their late 20’s and early 30’s – want to buy, and with mom’s and dad’s bank are flush with downpayment cash”
It doesn’t take more than a brief examination of the real world, to see how this assumption doesn’t stand up to scrutiny.
Enough already. Do your homework please.
FALSE CREEK flats . West End style residential density would have huge impact on supply & prices .Parking stalls would not be needed with a new skytrain station a 5 minute walk for all.
@ Ron, I agree that Vancouver seems to have created an onerous development processing atmosphere with too many individual interpretations. You are not the only one who has complained. I am also aware that that a couple of other cities have the same level of development with a fraction of the staff to process it compared to Vancouver.
I hear literally every working day about the frustrations of Planning and Building staff in dealing with developers, builders, owners and consultants who are in violation of the most basic codes, who have encroached onto public land or a neighbour’s site, who are trying to mask illegal uses (e.g. a rented residence is a “barn”, a rowdy bar and party place as an “office”), who submit plans indicating seriously revised FAR and parking counts well after approval and without prior notice, who try to slip a mezzanine in where none were previously none indicated, etc. etc.
Some fly by night architectural consultants are clearly ripping off their clients (usually small owners who don’t know any better) by submitting and resubmitting incomplete plans they know will be sent back and charging extra fees accordingly. Meanwhile staff are so overwhelmed with multiple 50-storey towers and 50-acre multi-family developments that they give up caring.
It sometimes takes years for even big development firms to learn that they’ll get through city hall faster, move onto the next project quicker and make more money by not having every Dick and Jane not worthy of being mass-labeled as Vice Presidents of Development call six times a day to harass staff about the status of their projects, as if they are paid by the phone call and not by properly overseeing the production of drawings.
I sense that you are conscientious and can understand your frustrations. Several of my neighbours have similar experiences with Vancouver city hall. But I cannot accept the Beyer and Ransford blanket condemnations of “overpaid” public servants all over the Metro with the direct knowledge of the other side of the story I alluded to above.
There’s a book in this one day. I’ll probably have to change the names to avoid getting sued by the guilty.
There’s lots of things that could be simplified and streamlined though. If the city is having trouble keeping up to demand, then rationalising the development process is what’s ordered. For example:
Why are CACs negotiated on an individual basis for instance? That’s labour intensive on both sides of the bargaining table.
Why on earth is Vancouver the only BC city with it’s own building code? Our climate is hardly different than Burnaby’s.
Why is the city relying on spot zoning. Again labour intensive on both sides and encouraging rampant speculation.
I’m not intimately familiar with the details and histories of those 3 examples, but none of those pass the sniff test at a distance from my perspective as an engineer (involved in infrastructure, not buildings).
As much as Vancouver has major building department problems and frustrations I’m happy they have their own building code. Vancouver is setting the pace for energy efficiency and we desperately need leaders in this area. We’ve seen the speed at which the province lumbers along. Vancouver makes it easier for the rest of the province to catch up.
The energy efficiency of our buildings is a sad joke, especially during a building boom that is locking that deficiency in for decades. We need to move much more quickly to get them closer to European standards. Vancouver is taking those steps.
It still seems pretty kludgy to me. Why spend the extra on 2×8 framing for instance?
The energy efficiency could be better address with less prescriptive methods. Use of better insulation, or using walls with two 2×4 studs and a spacer would be much more economical…
LEED also seems like a stupid requirement to have. Points instead of results are prioritised. Meanwhile, some of the key assumptions related to environmental impacts of concrete production have been way overblown.
2×8 isn’t a requirement. You can meet (or exceed) R22 effective in many different ways including a double row of 2×4 studs.
The city is also recognizing the limitations of LEED and encouraging Passive House as an option.