Foreign Buyers Remain Scarce Since Tax Hard to believe we had to debate the impact of foreign money just a few short months ago. The profits before people real estate cartel beat home the message loud and clear, no foreign buyers, BUILD MORE!!! MORE!!! So we obeyed Bob the Builder. More and more pre sale developments came on to the market only to be sold to VIP buyers for record prices. To the cartels dismay Christy Clark and Shrimp De Jong introduced the foreign buyers tax. The results, staggering. The stats solidified what most of us with two eyes could see. Foreign buyers accounted for 13.2% of sales across Metro Vancouver, 24% in Burnaby, and a staggering 25% in Richmond. Since the tax, foreign buyers now make up just 3% of total transactions across Metro Vancouver, 5.9% in Burnaby, and 6.7% in Richmond. Foreign buyers have virtually disappeared. It seems only the desperate remain. Willing to pay any obscene amount to claim their stake. Despite foreign buyers out spending us by $242,476 on average, sales have dropped 37% in Burnaby and 33% in Richmond. Prices are now on the move, especially at the high end. So who will buy all

Newton Area Ravaged by Cheap Credit and Massive Debt There’s an outstanding book i’m reading called House of Debt. It’s been referenced by Evan Siddall the CEO of CMHC several times over the past few months so I was inclined to pick it up. Siddall has been critical of Canadian debt levels and elevated house prices and much of the recent lending polices introduced have likely been influenced by this book. Authors Atif Mian and Amir Sufi explain the direct correlation to private debt levels, elevated house prices and impending financial crises. Siddall most recently quoted the book in a piece by the Globe & Mail “economic disasters are almost always preceded by a large increase in household debt. In fact, the correlation is so robust that it is close to an empirical law as it gets in macroeconomics.” The authors go on to explain “a close relationship has existed between the build up of credit during an expansion and the severity of the subsequent recession..We show that the economic costs of financial crises can vary considerably depending on the leverage incurred during the previous expansion phase.” So what does this mean? The authors illustrate in almost every housing boom

Real Estate Bulls in Full Force Perhaps the most entertaining part about this Vancouver real estate bubble are all the crazy narratives and wildly different opinions floating around out there. Perhaps no more evident than in a recent article from the bullish Real Estate Weekly newspaper titled Eleven Ideas How the Fed can Improve Housing Affordability. This report comes from none other than the Canadian Home Builders Association. Asking a Barber If You Need a Haircut The Canadian Home Builders Association denies any kind of rumours about a Canadian Housing Bubble. “Do we have a housing bubble? No,” the report states. It adds, “There has been a lot of confused speculation about a Canadian housing bubble, fuelled largely by international economists who don’t understand the Canadian market. Talk of overvaluation in hot markets like Toronto and Vancouver does not consider underlying new fundamentals of supply and demand. High house prices do not necessarily reflect overvaluation if they are supported by fundamentals.” Well there you have it. New fundamentals, oh and because we are polite Canadians this could never happen to us. The Irony Despite The Home Builders Association saying there is no bubble, housing starts fell 52% year over year

Permits & Housing Starts Plummeting in Vancouver Despite rumours that new developments are flying off the shelf the numbers seem to paint a different picture. A recent report from Real Estate Weekly also shows new home sales are slowing similar to the resale market. It seems developers are being very cautious and holding off on starting new projects. Do the developers know something we don’t? For the month of October Vancouver building permits were down 21.7% year over year. But more importantly, new home starts dropped 52%. Perhaps even more startling was that new home starts were 35% below the 10 year average for October. The slowdown doesn’t stop with Vancouver. Residential construction across BC plummeted. New home starts dropped 25% year over year. Yet permits were only down 1.6%. Does this imply that despite projects being given the green light developers are choosing a wait and see approach? The writing is on the wall. New construction sales are plummeting along with new construction starts. Recent stats from Urban Development Institute show concrete condo sales are down 21% year over year, while wood frame condo sales are down 44%. New townhouse sales also sunk by 28%. Buyers appear hesitant to

Stats Show Alarming Number of Vacant Homes Just last week our beloved mayor Gregor Robertson introduced a vacant homes tax in Vancouver. The tax will penalize owners who leave a secondary home vacant for more than 180 days of the year. Offenders will have to declare it on their tax returns and will be hit with a 1% tax of the assessed value. False declarations will be whacked by a $10,000 daily fine. So just how big of an issue are empty homes in Vancouver and across the lower mainland? It seems there’s no clear answer. Some studies reveal there are roughly 10,000 vacant condos in Vancouver. Meanwhile, a recent study by Andy Yan, director at the SFU City Program found that over 22,000 homes are vacant. Regardless of the number we look at, the city is undoubtedly plagued by a sea of investors who could care less about the 0.5% vacancy rate. But I guess that’s capitalism. Perhaps an issue we can all agree on is the number of empty homes never lived in. A recent report from Better Dwelling highlights 10% of homes being resold in Vancouver have never been lived in.  Like this one at 1235 West

99 W Pender Street by Bing Thom Architects A new condo development is coming to Downtown Vancouver. 99 Pender by Bing Thom Architects, also known as the butterfly building. Located at the cross streets of West Pender and Abbott directly across from International Village mall. This mixed-use building has a podium containing retail and office uses and is topped by a sculptural residential tower. The residential tower is designed with open corridors facilitating cross ventilation in all units. The development is still awaiting final approval. Stay tuned.

1121 Seymour + Davie by Wall Financial A rare collection of 38 homes are coming to 1121 Seymour Street. A 9 storey boutique building in the heart of Yaletown. The new development by Wall Financial will consist of a mix of studios, 1 bedrooms, 2 bedrooms, and one single detached townhouse. Just across from Emery Barnes Park & the new 8x on the Park building. Walk to everything Yaletown has to offer, including a plethora of restaurants and nightlife. Sales for the building are expected to start in early 2017. You can register on their site here. 

Average & Median Prices Down Year over Year Lately the average sales price has been dismissed by the real estate industry. Which is funny considering it was frequently mentioned on the way up. Of course now that the average sales price has collapsed we have decided to ignore it. The typical response in the industry is that it fluctuates too much and can vary depending on what type of inventory is sold that month. While this is 100% true, ignoring the average sales price altogether is completely irresponsible. Ultimately, the average sales price shows the amount of capital flowing into Vancouver real estate. The capital flowing into Vancouver real estate has evaporated. Average sales price shows that 2015 price gains have been erased. Let’s look at all of REBGV first and then break it down into further sub areas. For all property types from October 2014 to October 2015 the average sales price was up 16%. From October 2015 to October 2016 it’s now down 5.2% year over year. This decline is even more dramatic when you look at the average price peaking in March 2016 and has since fallen 18%. Vancouver East Vancouver East average sales price is still

1335 Howe Street by Onni Condo developper Onni will be redeveloping 1335 Howe Street. The former Quality Inn hotel will be transformed into a 40 storey condo tower consisting of 120 residences. Nestled in the heart of Vancouver’s Beach district and just steps to the False Creek waterfront. The project will consist of 2, 3 and 4 bedroom homes ranging in size from 1100-5600 square feet. The development will also consist of an additional 109 secured market rental homes and 430 total parking spots. You can register for the project on Onni’s website here. 

Vancouver Real Estate Mid November Market Update Following up on my October Detached Market Report and my October Condo/Townhouse Market Report this is the Mid November market update which covers the first 15 days of the month. In a fast changing market it’s vital to stay on top of things. I don’t expect the market to change much during the slow winter months. It seems sellers are holding off on selling and hoping for a turnaround in the spring, while buyers appear hesitant to pull the trigger. Many sellers seem stuck on past prices so not much is getting done right now. The market appears to be chugging along in uncertainty at a very slow pace. REBGV Detached The detached market continues to be sluggish. October marked the third consecutive buyers market, it appears that won’t change in November. As of the first half of the month new listings are 5.2% below the 10 year average (Nov. 1-15) while sales are 36% below the 10 year average. REBGV Townhouse Townhouses sales are 12% below normal levels despite inventory being 16.3% below normal levels. An uptick in inventory will be needed to continue a downwards pressure on prices. REBGV Condo REBGV condo

New Era of Higher Mortgage Rates Ahead The brakes have been slammed on the Canadian real estate market. Back in October the Canadian Government announced they would be implementing new mortgage stress tests rules requiring insured mortgages to qualify at the posted rate of 4.64%. It was widely believed these changes to the mortgage industry would have an impact on future rates. Sure enough those predictions are coming to fruition. Just a few weeks ago TD Bank announced it was going to increase it’s mortgage prime rate to 2.85%. This meant a 0.15 increase for every customer holding a variable rate mortgage. Today, RBC announced they are increasing their fixed term mortgage rates. Rates went up by as much as 40 basis points on their 5 year fixed term rates. Perhaps this doesn’t sound significant, but it is. A mortgage with a 30 year amortization is now 3.04%. On an average Vancouver house, assuming you put 20% down, this would add an extra $260.33 to your mortgage. Doesn’t sound like much until you sadly realize Canadians are $200 away from being overwhelmed by debt according to recent surveys. Canadians going to renew their mortgages will be under further stress. The average

Avenue One by Concord Pacific 201 W 2nd Ave, Vancouver, BC V5Y 3V5 Avenue One is pre construction condo development by Concord Pacific. Located in False Creek, just minutes to downtown Vancouver. Avenue One will have park front/water views. The residential building will provide a range of condo units consisting of 139 one bedroom, 96 two bedroom, and 12 lofts/3-bedroom homes. This 17 floor residential building will also have a total of 249 parking stalls, and bicycle lockers. Concord Pacific has teamed up with GBL Architects. The building is slated for completion in 2019. It’s believed prices will range from $550,000-$1,138,000. Deposit structure of 10,10, 5, for a total of 25% down payment is required.