DATE

Vancouver home for sale
Steve Saretsky -

Detached Sales in Vancouver Plummet to Record Lows in January There’s nothing I love more than debating the impact of foreign capital distorting the Vancouver real estate market. Not that more evidence was needed, but recent changes in the Vancouver real estate market highlight some eye opening January stats. Recently China implemented new capital controls forbidding citizens from exporting cash to purchase international real estate. (The Chokehold). The timing could not have come at a worse time as sales were already slowing from a 15% foreign buyers tax. So what happens when you turn off the tap? In January, Richmond detached sales fell 66% year over year, Vancouver West fell 72%, while West Vancouver sales fell 74%. For Vancouver West and West Vancouver it was the worst January on record. It was the second worst January for Richmond sales, trailing only January 2009 (Financial crisis). Make no mistake this is not a return to normal from a hot 2016. As seen in the chart above, Vancouver West detached sales fell 61% below the 10 year average, West Vancouver fell 51% below the 10 year average, and Richmond dropped 46%. With the benchmark price of homes in these areas so incredibly

Steve Saretsky -

Christy Clark Reverses Foreign Buyers Tax for Foreigners with Work Permits Late last night Christy Clark announced she would be reversing the 15% foreign buyers tax for foreign workers who work, live and pay taxes in Metro Vancouver. To little surprise it caused a basket of mixed emotions. Many are concerned this could create loopholes for wealthy foreign investors to re enter the market and inflate prices once again. My thoughts echo those of UBC Economist Tom Davidoff’s who welcomed the province tying the tax exemption to someone’s work permit – a federal document that is hard to forge. But he worried there could be a massive loophole if foreign buyers were allowed to duck the tax by paying nominal amounts of provincial income tax on their global wealth. He added that the new exemption should not lead to a new spike in foreigners buying in Metro Vancouver’s lagging market because relatively few people are on work permits. So, will this leniency create more tax loopholes? For example, international student work permits allow students to only work 20 hours per week. Will an international student use the work permit to skirt the 15% tax and use foreign capital from Mom &

Steve Saretsky -

Condo’s Now Driving Metro Vancouver’s Real Estate Market I’ve been highlighting for quite some time just how segmented the market really is. It’s why it bothers me when some real estate reports group all three markets (Single family, townhouse, and condos) and spew out one single number. The reality is that the detached market has taken the brunt of the correction. I’ve also argued in a previous post (Are we in Denial?) that there is a strong likelihood the correction will eventually trickle it’s way through the market as it did previously on the way up. Perhaps that’s all speculation at this point but the sales numbers indicate no market segment is going untouched. Regardless, as it stands right now, there’s a new conductor of the real estate gravy train. The condo market has taken over and is pushing full steam ahead in an effort to keep this train rolling. Below you’ll see a breakdown of sales composition by segment. Back in January, 2016 condo and single family homes had an equal share of the market at 43% of total sales across REBGV. By December 2016 condos were responsible for 54% of all sales, while single family homes plopped to

Steve Saretsky -

CMHC Highlights Shifting Market Conditions in Vancouver Today the boys over at CMHC (Canada Mortgage and Housing Corporation) released their first report of 2017 on the Vancouver real estate market. Full report here. To little surprise, CMHC once again declared Vancouver as overvalued. However, in the process they also announced a cooling market and no signs of overbuilding. Let’s break it down. Overheating CMHC believes there is now weak evidence of overheating in the market. REBGV detached sales were down 52% year over year in December, townhouses 40% and condos 25% so really no shock there. Meanwhile,  sales/new listings which is a key indicator of demand fell again for the second quarter. The general rule of thumb is a sales/new listings ratio above 75% puts upwards pressure on prices, while below 50% puts a downward pressure on prices. However, it’s important to note that this chart combines all three markets (detached, townhouse, condos). They are all performing differently. Much of the downfall is from the detached market. Price Acceleration The report calls for signs of moderate evidence of price acceleration. “The low supply of new and resale homes provided support to home prices. Going forward, a moderation in sales and additions

Steve Saretsky -

West Vancouver at The Epicentre of Housing Crisis If there was ever one area in the lower mainland that highlights the severities of the housing crisis it’s West Vancouver. Similar to Richmond, it’s known for luxury mansions, sky high prices and a dwindling sense of community, any attempt towards productive solutions have quickly been stymied. To understand the severity of West Vancouver’s housing we simply need to look at recent price growth. The MLS benchmark price of a West Vancouver detached home soared by 61% from January 2015 to the peak of the market in June 2016. So what caused a breezy 61% increase in less than two years, brining the price of a typical home to $3,365,600. Conventional wisdom believes it’s an influx of foreign capital which has also propelled Canada to become known as “the ultimate tax haven entity in the world.”  However, BCREA economist Cam Muir is not convinced foreign capital has distorted the local market. Queue the 15% foreign buyers tax. Prices instantly plopped, while sales are in total free fall mode. When comparing sales year over year, since August 2016 sales have fallen each month by an average of 66% in the detached market. But

Steve Saretsky -

Housing Epidemic Spreads Across BC This is hardly news, but yes the housing crisis indeed spread across the entire province. The epidemic that started in Vancouver went airborne and spread like a deadly virus into unsuspecting neighbourhoods. Including areas such as Chilliwack, Kamloops, The Okanagan, The Kootenays, and Vancouver Island just to name a few. Much like Vancouver, these areas appeared to be suffering similar symptoms as Metro Vancouver, a so called unprecedented “housing shortage”. But like I mentioned in a previous post, trying to remedy the epidemic with supply was treating the symptoms not the disease. Take a look at just how quickly inventory dried up in these unsuspecting areas. So are all these areas really facing a housing shortage? Unlike Vancouver these areas have always remained relatively stable and reflective of local incomes. Conventional wisdom suggests these homes should rise in line with inflation which hovered around 2% this year in British Columbia. That was not the case last year. [table id=28 /] Makes you question whether the supply myth was used to seduce unsuspecting buyers into the market… Get my best work sent to your inbox here.

Steve Saretsky -

What Does a Trump Presidency Really Mean for Canadian Real Estate? Despite all odds, The Donald is in. Let the fear mongering begin. A recent article from Money Sense titled US Interest in Canadian Real Estate Surges wasn’t about to waste any opportunities. The author, Romana King (a licensed Realtor) writes panicked Americans have upped their online search activity for Canadian real estate. For a further unbiased analysis, the article highlights a recent survey of local Realtors… “The most desirable location in this province, according to 62.5% of real estate advisors, is the Greater Toronto Area, while just over two-thirds (67.2%) pointed to the GTA as the region in which Americans purchased the most property over the same period of time. Looking ahead, 38.4% of survey respondents from Ontario expect U.S. inquiries into Canadian real estate to increase following today’s Trump inauguration. According to 32.1% of Royal LePage realtors, Victoria is the preferred location, while 25% of Royal LePage realtors cited Greater Vancouver as the top region of interest among American home-buyers considering a real estate purchase in B.C. Looking ahead to 2017, 43.6% of B.C. respondents anticipate American inquiries into Canadian real estate will increase after Donald Trump takes office.” If Americans

Steve Saretsky -

No Trickle Effect, Slumping Sales Dismissed As i’ve highlighted in every recent monthly report, sales are slumping. As of December, 2016 detached sales in Vancouver are down 50%, townhouses down 31% and condos down 25%. Now don’t get me wrong, 2016 was a record year, but even then, sales are still below 10 year averages. Recently, there seems to be some sort of denial around the slumping sales numbers. Look I don’t know where the market is going, neither does the next guy. However, some are choosing to downplay sales even though we all emphasized sales only a short year ago. The latest excuse is that slumping sales are due to low inventory levels. This seems logical since little inventory means fewer homes for buyers to choose their “dream home.” But how quickly forget we set record sales last year despite record low inventory. As an example, the peak of the market was in March 2016. Despite (at the time) record low inventories, we set a record number of sales. Just see the charts below. These charts show that despite record low inventory that didn’t stop sales from hitting record highs. To say sales are low due to low inventory

Steve Saretsky -

BC’s Strong Economy Responsible for Record Sales Just last week the BC Real Estate Association announced 2016 was a record setting year for home sales. Sales in the province were up 9.5% from 2015, a previous record. The incredible surge in sales had little to do with foreign capital and cheap credit. BCREA’s chief economist Cameron Muir explains the record year; “Broad-based consumer demand driven by strong economic conditions, employment growth, consumer confidence and an expanding population base pushed home sales to record levels in many B.C. regions last year.  Strong economic conditions? Household debt levels have never been higher. Canadians owe $1.67 in debt for every dollar of income they earn. As house prices soar, citizens are forced to over leverage to get into the housing market. As a result, household leverage has never been higher. As household leverage hits record highs, home ownership also reaches new highs in BC, hitting a whopping 70%. With home ownership hitting new highs so too does unaffordability. Price to household income in BC takes off. Employment growth? Employment growth has taken off. There’s just one problem, it’s the wrong kind of growth. All of the jobs created in 2016 were part time

Steve Saretsky -

Early 2017 Observations in the Vancouver Real Estate Market I must admit sometimes this blog is for purely selfish reasons. I’m fascinated by the Vancouver real estate market. I’ve said it before and i’ll say it again, regardless of what happens this will be a case study in the next few years. Just when you think you know what’s going to happen next some reckless level of government hits the panic button and changes everything you thought you knew. Anyways, wild governments aside, here’s the good, the bad, and the downright ugly in early 2017. Of course depending on your stance and hopes for the market you might find the good bad, and the bad good. The Good The market hasn’t gone to complete shreds. The entry level condo market is still chugging along. Whatever entry level is for your specific area. In Vancouver that’s the sub $600,000 market, in Richmond that’s the sub $400,000 market. These markets are still relatively “affordable” and thanks to Christy Clarks brilliant first time home buyers loan, it could keep pace. I was showing condos in Richmond this weekend in the $300,000 range, open houses were busy. Affordable Richmond condos are selling quick, some

Steve Saretsky -

Vancouver Homeowners Getting Squeezed With Metro Vancouver real estate prices soaring 40% over the past two years the effects are widespread. Adding to it, BC property tax assessments released earlier this month are now factoring in an average increase of 30-50% from last year alone. It appears locals are at a boiling point as the struggle to put a roof over your head reaches dire proportions. Take for example, Sarah Wilson, a retired school teacher who just got hit with a 55% increase in her Coquitlam home assessment. Now fearing further increases in her cost of living during her retirement years. But Sarah and her little Coquitlam home aren’t the only ones, property assessments have surged across the lower mainland. As home values explode across the lower mainland and wages stagnate, property tax deferrals have become increasingly common. Property tax deferrals are an option that allows homeowners to defer paying their property taxes as long as they pay the 0.7% interest rate if you’re 55 and older, or if you have children a 2.7% interest rate applies. To little surprise, property tax deferrals have increased five fold over the past 10 years. More than $137 million in property taxes are unpaid

Steve Saretsky -

Metro Vancouver Adding Record Supply of Housing Like any housing crisis in history, we attempt to build our way out of it. It’s never been done successfully. Nonetheless, amidst a 40% price increase over the past two years, Vancouver is undergoing a massive boom in housing that will go down in the record books. A boom that has kept the BC economy propelling forward. Residential construction now equates for 7% of Canada’s entire GDP. More than the United States in 2007. Now that 2016 has come to an end, the final numbers are out. BC and Metro Vancouver both set new records for housing starts (when a project begins construction) and for new homes registered (when the building completes). Let’s break down the BC numbers. The province of BC had a total of 41,843 new units started in 2016. That’s a staggering 46% more housing starts than the four year average of 28,580 units from 2012-2015. To add to this, new housing completions were also well above average. In 2016, new housing completions were 30% above the 5 year average. Multi family completions were thrown up at an eye popping 32% above the 5 year average. So what about Metro Vancouver? Metro

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Detached Sales in Vancouver Plummet to Record Lows in January There’s nothing I love more than debating the impact of foreign capital distorting the Vancouver real estate market. Not that more evidence was needed, but recent changes in the Vancouver real estate market highlight some eye opening January stats. Recently...

Steve Saretsky -

Christy Clark Reverses Foreign Buyers Tax for Foreigners with Work Permits Late last night Christy Clark announced she would be reversing the 15% foreign buyers tax for foreign workers who work, live and pay taxes in Metro Vancouver. To little surprise it caused a basket of mixed emotions. Many are...

Steve Saretsky -

Condo’s Now Driving Metro Vancouver’s Real Estate Market I’ve been highlighting for quite some time just how segmented the market really is. It’s why it bothers me when some real estate reports group all three markets (Single family, townhouse, and condos) and spew out one single number. The reality is...

Steve Saretsky -

CMHC Highlights Shifting Market Conditions in Vancouver Today the boys over at CMHC (Canada Mortgage and Housing Corporation) released their first report of 2017 on the Vancouver real estate market. Full report here. To little surprise, CMHC once again declared Vancouver as overvalued. However, in the process they also announced...

Steve Saretsky -

West Vancouver at The Epicentre of Housing Crisis If there was ever one area in the lower mainland that highlights the severities of the housing crisis it’s West Vancouver. Similar to Richmond, it’s known for luxury mansions, sky high prices and a dwindling sense of community, any attempt towards productive...

Steve Saretsky -

Housing Epidemic Spreads Across BC This is hardly news, but yes the housing crisis indeed spread across the entire province. The epidemic that started in Vancouver went airborne and spread like a deadly virus into unsuspecting neighbourhoods. Including areas such as Chilliwack, Kamloops, The Okanagan, The Kootenays, and Vancouver Island...

Steve Saretsky -

What Does a Trump Presidency Really Mean for Canadian Real Estate? Despite all odds, The Donald is in. Let the fear mongering begin. A recent article from Money Sense titled US Interest in Canadian Real Estate Surges wasn’t about to waste any opportunities. The author, Romana King (a licensed Realtor) writes panicked...

Steve Saretsky -

No Trickle Effect, Slumping Sales Dismissed As i’ve highlighted in every recent monthly report, sales are slumping. As of December, 2016 detached sales in Vancouver are down 50%, townhouses down 31% and condos down 25%. Now don’t get me wrong, 2016 was a record year, but even then, sales are...

Steve Saretsky -

BC’s Strong Economy Responsible for Record Sales Just last week the BC Real Estate Association announced 2016 was a record setting year for home sales. Sales in the province were up 9.5% from 2015, a previous record. The incredible surge in sales had little to do with foreign capital and...

Steve Saretsky -

Early 2017 Observations in the Vancouver Real Estate Market I must admit sometimes this blog is for purely selfish reasons. I’m fascinated by the Vancouver real estate market. I’ve said it before and i’ll say it again, regardless of what happens this will be a case study in the next...

Steve Saretsky -

Vancouver Homeowners Getting Squeezed With Metro Vancouver real estate prices soaring 40% over the past two years the effects are widespread. Adding to it, BC property tax assessments released earlier this month are now factoring in an average increase of 30-50% from last year alone. It appears locals are at...

Steve Saretsky -

Metro Vancouver Adding Record Supply of Housing Like any housing crisis in history, we attempt to build our way out of it. It’s never been done successfully. Nonetheless, amidst a 40% price increase over the past two years, Vancouver is undergoing a massive boom in housing that will go down...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022