If your New Year’s dreams include buying a home in B.C., don’t expect it to get much easier in 2018, according to one expert.

“The best guess for where prices are going to be a year from now is about where they are today,” said Tom Davidoff, associate professor at the University of B.C.’s Sauder School of Business

Davidoff says there are some changes coming that could slow things down — stricter mortgage regulations that take effect  Jan. 1, for one — but overall he predicts prices will keep climbing.

“Fifty years from now, I would be very surprised if Vancouver is anything other than an extremely, extremely difficult place to buy or to rent,” he said.

“You have to think supply is pretty constrained by geography. We can build more condos, but it’s hard to add land. We’re hemmed in by oceans and mountains and those are beautiful oceans and mountains, and rich people all over the world keep getting richer and a lot of them want to come to Canada.”

In the short run, though, Davidoff says there could be a some relief.

“There’s a lot of construction going on,” he said.

“Some people believe it’s international flippers buying these condos. They may not want to hold them once the building’s complete. If we see the flippers actually flip these new units before they’re completed, as they start to come online, that could create lower prices and lower rents as people move in.”

He argues that communities around the Lower Mainland need to maintain such construction in a variety of neighbourhoods.

“Adding more townhomes and apartments in neighbourhoods where there’s single family homes would really help in coming years,” he said.

He’d also like to see the province make more of an effort on tax reform.

​Although housing affordability was a key election issue, Premier John Horgan has admitted his new government hasn’t made much movement on this — yet.

But Horgan is promising there will be progress with the government’s budget in February.

Davidoff says the way people are taxed in B.C. needs to change if we want to become a more affordable place to live.

Property taxes are going up in Vancouver in 2018, but Davidoff says they’re still much too low.

“Our property tax rate is something like four-tenths, maybe three-tenths of a per cent in the City of Vancouver. It would not be uncommon to see one-and-a-half or even two per cent in other big North American cities,” he said.

Davidoff would like to see that reversed.

“Send the message — we want you to live and work here. So we’re going to have high property taxes, low income and sales taxes. Hopefully the NDP moves in that direction,” he said.

For any younger people considering trying to buy into the Vancouver market, Davidoff warns spending everything you have on a down payment for a highly leveraged asset is risky, but not crazy — especially if you’re very attached to the city.

“In the long run it’ll probably work out, it might even be a great idea in the short run, but there’s certainly a possibility that you’re going to feel very stupid if prices fall 20 per cent right after you’ve bought,” he said.

Still, he says, if you feel like your job prospects or quality of life might be better elsewhere, packing up might be the way to go.

“The option to leave is really an important option.”

Source: Stephanie Mercier, CBC News

http://www.cbc.ca/news/canada/british-columbia/hoping-to-buy-a-home-in-b-c-sorry-it-s-not-likely-to-get-much-cheaper-1.4457160

Despite efforts by government and regulators to curb Metro Vancouver’s hot housing market, new home prices have continued to climb in the past year.

Recently released data from Statistics Canada shows the overall price of brand new houses and townhomes in the region has soared 6.2 per cent in the 12 months since June 2016.

“Last time [the new house price index] grew larger than 6.2 per cent was in June of 2010,” said analyst Rohit Verma, adding prices rose 6.7 per cent.

The agency has numbers dating back to 1981.

Verma says the information is gathered through a monthly survey of home builders and their contractors, excluding new condominiums.

Across the country in the month of June, Metro Vancouver saw the greatest gain at 1.5 per cent overall. Ottawa-Gatineau, Ont. followed at 0.9 per cent.

Verma says the main reason cited for the increase was “improving market conditions.”

It’s more evidence of the resiliency of the region’s real estate market, despite government efforts at all levels to temper prices.

Last August, the previous Liberal government introduced a 15 per cent tax on foreign home buyers in Metro Vancouver.

Two months later, mortgage rules were tightened across Canada.

Home buyers applying for mortgages with less than a 20 per cent downpayment had to undergo a “stress test” to determine if they could afford to pay back a loan if interest rates rose.

And rates did rise.

Last month, the Bank of Canada raised its key interest rate by 0.25 percentage points — the first time it had increased it since 2010.

All of that hasn’t stopped the market from climbing or put affordable homes within the reach of most people.

Sales in July were 0.7 per cent above the 10-year sales average for the month, according to the BC. Real Estate Association.

The Multiple Listing Service Home Price Index composite benchmark price for all residential properties in Metro Vancouver is $1,019,400 — an 8.7 per cent increase compared to July 2016.

Source: Lien Yeung, CBC News

http://www.cbc.ca/news/canada/british-columbia/increase-in-new-home-prices-reaches-7-year-high-in-metro-vancouver-1.4244437

The slowdown of Vancouver home sales has helped affordability a bit, but we’re still the country’s costliest market by far.

Royal Bank research shows “Housing affordability improved in the Vancouver area for the first time in almost three years” during the fourth quarter of 2016. It says the slowdown in home resales that began last spring had a “cooling effect” on prices for single-detached homes by late in the year. The bank’s economists say the affordability of houses improved the most since the first quarter of 2009 when Canada was in a recession due to the financial crisis.

Nonetheless, RBC says it takes 84.8 per cent of the median household income to pay the costs of owning the average detached bungalow in Vancouver.

Condos are a different story, with RBC saying “No such affordability relief took place.” Its measure of condo affordability worsened slightly for the seventh quarter in a row. Condos costs are at 46.1 per cent of household income.

RBC also says there are signs that “affordability stress” is spreading to regions near Vancouver and Toronto, including Victoria which the bank says “has experienced booming demand in the past year which has propelled prices significantly higher,” pushing its afforability measure “well above its long-term average.”

Source: Richard Dettman, News 1130
http://www.news1130.com/2017/03/30/vancouver-still-number-one-unaffordable-homes-rbc/

Sales fell 26 per cent last month in Greater Vancouver’s real estate market while prices hit new highs or stayed near records in the wake of a new tax on foreign buyers in the region.

There were 2,489 detached houses, condos and town homes in the region that sold in August, compared with 3,362 properties in the same month of 2015, the Real Estate Board of Greater Vancouver said Friday.

Industry observers had predicted a slowdown in transactions after the introduction of a new 15-per-cent tax on foreign buyers that took effect on Aug. 2 for purchases registered with the province’s land title office. The B.C. government announced the change on July 25 to the province’s property transfer tax, affecting foreign buyers who acquire homes in the political entity known as Metro Vancouver.

In Greater Vancouver, which covers a large portion of Metro Vancouver, the benchmark price of detached houses, condos and town homes reached a record $933,100, up 31.4 per cent from a year earlier and an increase of 0.3 per cent from July.

The benchmark price is a representation of the typical property sold in an area, excluding the most expensive transactions on the Multiple Listing Service.

Home sales in the region were already beginning to slow this summer after a record-breaking spring.

Sales of detached houses, condos and town homes in Greater Vancouver fell 18.9 per cent in July from a year earlier. The drop was concentrated among sales of detached properties, which declined 30.9 per cent from July last year, following an 18.6 per cent annualized drop in June.

March, April and May are traditionally the busiest months for sales of existing properties, with activity slowing from June until mid-September.

The number of new listings has been on the rise since February, although the market has remained tight because of strong sales activity.

While the focus has been on an influx of buyers from China into several neighbourhoods on Vancouver’s west side, some industry observers say there are other contributing factors such as low interest rates, population growth and limited housing supply.

Source: Brent Jang and Tamsin McMahon, Globe and Mail
http://www.theglobeandmail.com/real-estate/the-market/vancouver-sales-dropped-26-in-wake-of-foreign-buyers-tax/article31688214/

More than 90 per cent of all detached homes in Vancouver are now worth more than $1 million, up from just 19 per cent a decade ago, a new study by a local urban planner has found, showing how rapidly housing prices have escalated in the Canadian city.

The biggest jump came in the last two years, with the proportion of million-dollar homes in the city climbing to 91 per cent in 2016 from just 59 per cent in 2014, according to the study by Andy Yan, acting director of Simon Fraser University’s City Program.

“This shows how what used to be the earnest product of a lifetime of local work is perhaps quickly becoming a leveraged and luxurious global commodity,” said Yan.

The median household income in Vancouver, meanwhile, rose just 8.6 per cent between 2009 to 2013, according to the most recent data from Statistics Canada. Adjusted for inflation, it would be about $77,000 a year in 2016.

That puts typical incomes well below the threshold needed to purchase million-dollar homes, said Yan, noting other factors must be driving the sharp increase in home values in Vancouver.

“It’s global cash, meeting cheap money, meeting limited supply,” he said, adding that all three factors are working to “magnify each other” and drive further speculation.

Foreign investment has long been blamed for soaring housing prices in Vancouver, with the most recent wave of offshore cash coming mostly from mainland China.

A widespread corruption crackdown launched by Chinese president Xi Jinping in late 2012 has led to massive currency outflows, which have coincided with a sharp jump in housing prices in Vancouver’s prime neighborhoods.

The new data comes as Canadian Prime Minister Justin Trudeau is in Vancouver for a two-day visit. Trudeau on Thursday said that his government needs to take measures to ensure residents of cities like Vancouver and Toronto can afford housing.

Yan’s study looked at provincial assessment data, which lags sales data by several months, and was focused exclusively on the roughly 67,000 detached homes in the City of Vancouver. All values were adjusted for inflation.

Region-wide, the price of a detached home soared 130 per cent over the last 10 years to hit $1.5 million in May, according to the local real estate board. Adding in apartments and townhomes, the typical home in Greater Vancouver now costs $889,100.

Source: Julie Gordon, Reuters
http://business.financialpost.com/personal-finance/mortgages-real-estate/nine-out-of-10-vancouver-houses-now-worth-more-than-1-million-study-finds

Home sales in Greater Vancouver are on a hot streak, and the professional association representing all the real estate boards in the province is bumping up its forecast for 2016, predicting escalating prices and a jump in the number of homes sold.

The British Columbia Real Estate Association forecasts unit sales in the Greater Vancouver region will increase 8.9% in 2016, from 43,145 homes sold in 2015 to 47,000 this year.

For B.C. as a whole, unit sales are forecast to increase 12.3% to 115,200 units, breaking the previous record of 106,310 units sold in 2005.

“Robust employment growth and a marked increase in migration from other provinces is buoying consumer confidence and housing demand in most regions of the province,” said BCREA chief economist Cameron Muir.

“Record housing demand has depleted inventories in many urban areas, and the resulting imbalance between supply and demand has pushed home prices considerably higher.”

The average sales price for homes in Greater Vancouver is expected to reach $1.125 million this year, up 24.6% from $902,801 in 2015. Across the province, the average price is forecast to increase 20.4% this year, from $636,600 last year to $766,600 in 2016.

This latest forecast is in sharp contrast to the BCREA’s previous release, in which it had predicted an 8.2% drop in unit sales across Greater Vancouver and a 6.2% decline across the province as a whole.

The BCREA had previously said home sales would fall because of a lack of supply. It now says a jump in new home construction is set to help meet demand.

“Waning inventories of newly completed and unoccupied units are being offset by a market increase in the number of homes under construction,” the BCREA said in a news release.

“Total housing starts in the province are forecast to climb 20% to 37,800 units this year, before edging back to 34,200 units in 2017.”

Source: Emma Crawford Hampel, Business in Vancouver
https://www.biv.com/article/2016/6/greater-vancouver-home-sales-and-prices-soar-2016-/

Real estate prices in key global cities are rising at a slow, moderate pace, particularly in Europe.

According to new research published by international real estate consultant Knight Frank, 35 of the world’s most important cities saw an average price increase of 3.6% in the year to March 2016.

“Since 2014 the index has consistently seen annual growth of 3-4%, with no city recording double-digit annual price declines since the second quarter of 2015,” notes Kate Everett-Allen of Knight Frank, who carried out the study.

However, Everett-Allen found some notable differences both between regions and within them. In North America, for example, New York, Miami and Los Angeles grew by 2.3%, 3.8% and 5.1% respectively but Vancouver saw a spectacular 26% rise in real estate prices — despite a 1% increase in land transfer tax on purchases above CAD2M.

Australasia was more homogeneous, with both Sydney and Melbourne posting a 12% rise. The two African hubs were also in positive territory, albeit with some difference between the two—Cape Town went up 6.9% and Nairobi up 3.3%. Asia was rather more of a mixed bill, with excellent growth in Shanghai (to the tune of 20%) but sizeable drops in Hong Kong and Taipei (down 6.4% and 7.6% respectively.

In Europe, real estate growth was modest and fairly consistent across the majority of cities, with prices either remaining flat or recording small rises of less than 3%. Only Moscow, Paris, Milan and Monaco bucked the trend. The first three saw dips (of 5.9%, 2.7% and 1.2% respectively) while Monaco recorded a 4.9% rise.

However, says Everett-Allen, some of these numbers need to be analysed in the context of past performance. Prices in London, for example, only grew by 0.8% in the year to March, the lowest figure since October 2009
 — but the British capital had experienced a period of exceptional growth in earlier years so a slowdown was natural.

Interestingly, the Knight Frank study also showed that, across the world, the impact of new transparency rules, new taxes or fees for foreign buyers—all of which are seeing a surge in global hubs—varies hugely depending on the pre-existing fundamentals and market cycles.

Thus, the land transfer tax rise had no depressive effect in Vancouver, nor did new transparency rules for cash buyers affect the New York and Miami markets. In London, by contrast, a series of changes to stamp duty land tax and to purchases by non-domiciled residents, have amplified the market cycle and helped slow down price growth.

Source: Carla Passino, Forbes http://www.forbes.com/sites/carlapassino/2016/05/19/slow-and-steady-real-estate-growth-in-world-cities-is-an-exercise-in-moderation/#108e2b7349c6

Strong demand in Metro Vancouver – Canada’s hottest real estate region – has pushed typical detached home prices past the $1-million mark, with February sales well above average.

Who is purchasing the homes, and how can they afford them? Offshore buyers are stepping up, as are people capitalizing on low interest rates and renting out suites, according to Ray Harris, president of the Real Estate Board of Greater Vancouver.

The benchmark price for a single family home in Metro Vancouver is now $1,026,300, up 9.7 per cent over February 2014, according to the real estate board.

Benchmark properties represent a typical residential home in a given market, and in Richmond, Burnaby, Vancouver and North Vancouver, single-family benchmark homes now exceed $1 million.

Several other Lower Mainland municipalities are creeping up to the million-dollar mark, including Port Moody at more than $900,000, and Coquitlam at more than $800,000.

Despite the hefty increases, the real estate board says buyer and seller activity was strong in February, with home sale and listing totals beating the region’s 10-year average for the month by 20 per cent.

“It’s an active and competitive marketplace today. Buyers are motivated and homes that are priced competitively are selling at a brisk pace,” Harris said.

He attributed the growth in sales to offshore buyers, Vancouver residents moving out of the core and record low interest rates. Buyers are now taking out larger mortgages and covering them by renting out suites in their houses, he said.

“How can people afford a million-dollar home? Well if they have an income of $3,200 from two suites, all of a sudden it’s more affordable,” he said. “You are going to see a lot more suites and sharing of the costs.”

Andrey Pavlov, a professor of finance at Simon Fraser University’s Beedie School of Business, sounded a cautionary note, describing the boom as “of great concern.”

“People are clearly using the (tiny) drop in interest rates to over-extend themselves even more,” he wrote in an email, adding that he saw the drop in interest rates and sharp decline of the dollar as “symptoms of a very weak Canadian economy.”

Residential property sales in the region reached 3,061 on the Multiple Listing Service — a 21 per cent increase over the same month last year and a 60 per cent increase over January 2014. The benchmark price for all Metro Vancouver residential properties rose to $649,700, 6.4 per cent above February 2014.

Even the recently stale condominium market is gaining traction, with recent price increases above the rate of inflation — something that hasn’t been seen for several years, said Cameron Muir, chief economist at the B.C. Real Estate Association.

Muir said home sales should continue to increase, though record sales levels are unlikely this year or next. The sales figures, while strong, were beating averages that had been depressed for a few years, he said.

“Sales will be above your longer-term averages. We’re kind of ratcheted up to another level that we haven’t seen in a number of years, and that’s being backed by some pretty solid economic fundamentals,” he said, including low interest rates, a strong economy and low gas prices that help to raise confidence.

New listings for detached, attached and apartment properties in the region totalled 5,425 in February, a 15.4 per cent increase compared to the 4,700 new listings reported in February 2014.

The sales-to-listings ratio was 25.7 per cent, the highest since March 2011, according to the board.

“Total homes for sale on the marketplace has really steadily declined … and as a result we’ve seen marketplace conditions go from buyer’s market conditions in 2012 to now cusping on that seller’s market territory in 2015,” Muir said.

Meanwhile, sales of all property types were up by 21 per cent in the Fraser Valley, according to the Fraser Valley Real Estate Board.

Board president Jorda Maisey said it was the busiest February since 2007, with 1,337 homes sold in the Fraser Valley — compared to 1,102 the year before. The number of new listings declined by four per cent.

The benchmark price of a single-family detached home in Abbotsford in February was $450,200, 3.9 per cent higher than in February 2014. The price of a townhouse was $228,600. The benchmark detached home price in Langley was $585,900 and it was $945,300 in White Rock-South Surrey.

Source: Tiffany Crawford and Matthew Robinson, Vancouver Sun

That view, expressed recently by Business Council of B.C. executive vice-president Jock Ferguson, reflects the sentiments of many.

However, similar observations have been made in the past. Still, the cost of housing in the Vancouver area has kept climbing. It is impossible to predict when the pricing peak truly will be reached.

Greater Vancouver’s January home price index for a single detached home hit a record $1,010,000, up 8.4 per cent from one year earlier.

The rental market is equally daunting, with a low vacancy rate and hefty rents, especially for condo units.

Behind the problem of unaffordability is, and always has been, the law of supply and demand. There is no indication this force soon will be diminishing.

Greater Vancouver is attracting tens of thousands of newcomers a year, both from other countries and provinces.

For wealthy foreign migrants, the housing situation likely poses no obstacle. But most local buyers and renters, and migrants from other provinces, are not in a position to pay high rents or $1 million-plus to purchase.

Influential architect Michael Geller recently played host to a Simon Fraser University lecture, titled: 12 Affordable Housing Ideas For Vancouver. Unsurprisingly, it was so well attended that many would-be registrants were turned away.

Geller is calling for a two-pronged approach that would:

• have those wishing to live here reducing expectations about the size of housing they require and their need for two-car garages and granite countertops;

• have city planners become more creative and flexible with zoning, and building rules and regulations.

Specifically, Geller wants Vancouver-area planning departments to permit designs that maximize land use and have been tried successfully elsewhere.

Designs would, for example, allow construction of a cluster of small cottage-like homes on a single large residential lot; and designs that would extend construction of a house or apartment buildings right to side-lot property lines, as in dense European urban cores. Municipalities could more liberally permit construction and sale of micro suites of 300 to 400 square feet, laneway and coach houses and allow townhouses and duplexes to accommodate basements, which then could be rented as crucial mortgage helpers.

The city of Vancouver is well aware it has a severe housing affordability problem, having established an arm’s length affordable housing agency in 2014 to find ways of supplying more housing at more reasonable prices.

But the agency has yet to launch a much-needed public discussion about innovative proposals such as Geller’s. The public deserves a chance to digest the prospect of further densification.

Early action clearly is needed in the face of the ever-escalating property prices.

Source: Editorial, The Vancouver Sun

The Real Estate Board of Greater Vancouver released new figures yesterday that showed the typical detached property in the area increased 8.4 per cent from January 2014 to $1,010,000. The benchmark price for all residential properties in Metro Vancouver is $641,600.

It also showed the number of home sales in Greater Vancouver was higher last month than the average over the past decade. While the number of sales increased nearly 15 per cent for the month of January, there are fewer homes for sale.

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

The Bank of Canada lowered the benchmark interest rate from one per cent to 0.75 per cent on Jan. 21 to lessen the blow of dropping oil prices.

This rate cut by the central bank likely means lower interest rates for variable rate mortgages, lines of credit and other loans based on the prime rate, and will likely boost consumer spending.

“A reduced rate could allow you to pay down your mortgage a little faster, save some money on your monthly payments, or change the amount you qualify for,” Harris said. “It’s important that you do your homework and understand how these announcements impact your situation.”

Apartment property sales in January went up 7.4 per cent from the same month last year, and jumped 40.5 per cent from January 2013.

The Real Estate Board defines the benchmark price as one designed to represent a typical residential property in a particular housing market.

Source: CTV Vancouver with files from the Canadian Press