CRA Takes Aim at Condo Assignments & Foreign Buyers With prices escalating out of control in recent years, it has attracted a growing herd of speculators, eager to profit on a historical bull market. And profit they did. Perhaps one of the most lucrative ways to do it is through pre sale condos. The Scheme is a speculator’s dream, allowing buyers to leverage a favourable deposit structure and a rising market to flip the contract at a higher cost before completion. These flips are incredibly difficult for CRA to track especially if the buyer is overseas. A perfect concoction to make a quick buck and dodge the tax boogeyman. Feds Take Developers to Court That dream could be coming to an end. First reported over at BIV, The federal government is taking the developers behind the Marine Gateway project on Marine Drive and the Residences at West on southeast False Creek to court, probing for information on buyers who flipped their presale contracts before construction was completed to verify compliance with the Income Tax Act. This could be the first of many shoes to drop. As many Vancouver developments are being flooded with assignments, such as Kensington Gardens, which has seen

Vancouver Real Estate Overheating Led by Condo Market CMHC has it’s eye on Vancouver once again. Canada’s National housing agency believes the Vancouver real estate market is showing signs of overheating as per their latest report. “Conditions in different segments of the Vancouver market have further diverged since the beginning of the year. The townhouse and apartment markets are currently above the threshold for overheating, leading to higher asking prices and more dwellings selling in multiple offer situations.” Of course if you’ve been reading this blog this would come as no surprise. There’s been a clear divergence between the detached market and the condo market. Both appear to be going in opposite directions. The Vancouver detached market, although having a nice recovery in the spring, has failed to climb back to peak prices. The average sales price is down 8% year over year. On the other hand, you have the Vancouver condo market which could be reaching peak insanity, the sales to actives ratio recently exceed 200% for one bedroom units. Further, the average sales price is still climbing, up 14% year over year in June. The surge in condo prices is hardly surprising after a BC Government first time

Tudor House Vancouver by Formwerks Tudor House by Formwerks Boutique Properties is a boutique development in pre-construction phase to be located at 441 W 63rd Avenue in Vancouver’s Cambie Corridor. The architecture on this 4-storey building is classic Tudor style. There will be 15 residences, including townhomes with 1, 2, and 3 bedrooms. There will be 1-bedroom and 2-bedroom garden-level suites to choose from. The 3-bedroom dwellings include an optional den. In the fashion of British rowhomes, Tudor House is designed with steeped gables, pitched roofs, and decorative timbering. Each single-family home will include roomy kitchens, full-sized appliances, walk-in closets, luxurious finishes, and other generously appointed features. Nearby amenities to this tranquil location on Vancouver’s southwest side are abundant for the future residents of Tudor House. The boutique property is near top-ranked schools, Queen Elizabeth Park, Oakridge Centre, Vancouver College, and Marine Gateway. Rapid transit could hardly be more convenient. Vancouver International Airport is a short 10 minutes away, if you ride the Canada Line at Marine Drive Station. An Overview of Tudor House, Vancouver, Features The following is a brief synopsis of information about these pre-sale townhomes: Architecture is classic Tudor style 15 residences, with options of 1-, 2-,

Vancouver Condo Price to Rent Ratios Exceeds Major US Cities There seems to be no end in sight for Vancouverites hoping for more affordable housing. Vancouver condo prices are accelerating by about 2% each month, while renting isn’t getting any cheaper. According to PadMapper Vancouver was the most expensive city to rent in Canada. In June the median rent price for one bedroom units grew by 2.5%, settling at $2,090, while the median rent price for two bedrooms increased by 2.5% to $3,230. While rent prices have been increasing, they haven’t been able to keep pace with purchase prices. Hardly surprising since you can’t take out a mortgage to pay for rent, therefor rents tend to align much closer to local incomes. Here’s how the price to rent ratio’s shake up in Vancouver compared to a couple big time US cities that Vancouverites love to compare to. One Bedroom Price to Rent Ratio [table id=40 /] Two Bedroom Price to Rent Ratio [table id=41 /] So what does this mean? Here’s how Trulia Interprets Price to Rent Ratio’s: Price-to-Rent Ratio of 15 or less: Buying a home is a better deal than renting for people planning to live in a home

Demand For the East Side Explodes As Buyers Get Priced Out of the West As prices continue to surge, buyers are being squeezed further and further east. In fact, an incredible shift is underway, particularly amongst younger first time buyers who are desperate to enter the market.  East has become the new West, as hipsters multiply on Main Street. A great migration is underway… In June 2017, 60% of East Vancouver condos sold over asking price, that’s higher than the 53% on the West side. But even more gruesome is the sales to actives ratio in East Vancouver. It reached a mind boggling 148% in June, a new record that has never been seen before. Just for context, a sales to actives ratio of 20% is considered a sellers market. The ten year average for the month of June is 29%, so 148% last month is truly considered a blow off top. One Bedroom Condos Face Explosive Demand The demand for one bedrooms is even more fierce. One bedroom inventory has plummeted 45% year over year, pushing the sales to actives ratio to a whopping 206%. That means for every new listing there are two sales. Buyers Spend Over $96

Multiple Offers Surge for Vancouver Condos, Particularly on the East Side The Vancouver condo market continues it’s upwards surge into parabolic territory. In my Vancouver Condo Report June 2017 I highlighted that new listings fell year over year, and inventory plummeted 20% year over year. This has created a flurry of bidding wars, price discovery has been thrown out the window. Multiple Offers Increasing Multiple offers seem to be expected on just about any condo. Sales over asking price have been rising. In June, sales over asking price for Vancouver West condos hit 54%, that’s above last years 49%. Not included on this chart is the East side of Vancouver, where the madness was even more severe, 143/237 condos sold over asking price, or 60%. Sales to Actives Ratio Still Increasing The sales to actives ratio hit a whopping 82% in June which is indicative of an insanely hot sellers market. Days on Market Still at Record Low Naturally, days on market has remained low, currently sitting at 8 days. The standard procedure of listing it and giving it one week exposure before multiple offers is very prevalent. Buyers are being forced to speed up much of their due diligence

Homeowners Could Be Suppressing New Listings In Vancouver & Toronto There’s been much chatter about the apparent bursting of the Toronto real estate bubble. Home sales have plummeted 37%, meanwhile the average sales price has sunk by 14%. Sounds awfully familiar to the Vancouver real estate market after the shock of a foreign buyers tax, doesn’t it? In fact, you could argue things were even worse in Vancouver at one point. Back in January, sales in Vancouver had fallen 39% year over year, with the average sales price having plunged 24% from January 2016. Since then, Vancouver has rebounded nicely, mostly thanks to a purge of new listings. There’s been an extremely close relationship between sales and new listings in Vancouver. As sales plunged, sellers refused to sell in a falling market, slowing the bleeding. At first glance, it looks like Toronto is following a different path, sales have plunged and new listings are soaring, up 16% year over year for June… However, recent data from President of Realosophy Realty, John Pasalis, suggests new listings are now beginning to trend downwards. It begs the question, will Toronto homeowners follow in Vancouver’s footsteps and suppress new listings? Or will further policy

If you read my post the other day (What Rising Interest Rates Mean for Vancouver Real Estate) then you were fully prepared for today’s interest rate hikes. To little surprise, the Bank of Canada Governor Stephen Poloz hiked interest rates 25 basis points. Yep, the first rate hike in 7 years. A tweet storm erupted as a hawkish Poloz hinted at another potential rate hike coming in October. Here’s a roundup of commentary from the smartest minds in the biz. Mohamed A. El-Erian, New York Times best selling author and chief economic adviser at Allianz believes the move was aimed to tame Canadian real estate prices. Meanwhile, Jared Dillan, Strategist at Mauldin Economics and author of The Daily Dirtnap believes the move was targeted at investors who have been shorting the Canadian dollar. Of course the Canadian dollar surged after the rate hike to it’s highest levels since August, 2016. Benjamin Tal, the Deputy Chief Economist of CIBC downplayed the Bank of Canada’s rate hike and instead believes the latest stress testing which I discussed last week will have a more significant impact on the Canadian real estate market moving forward. To little surprise all 5 Canadian Banks also raised their

Bank of Canada Expected to Hike Interest Rates This Week Markets appear to be pricing in an imminent Bank of Canada rate hike on Wednesday. Here’s why Maclean’s believes interest rates are going up. Should Stephen Poloz and the Bank of Canada follow through with an expected 25 basis point increase it will likely have a few impacts on Vancouver Real Estate. Changing of the Guard First, it has the potential to create a psychological change or a shift in the market. The real estate market has gotten comfortable with historically low interest rates, the first rate hike in over a decade should signal to the market that borrowing money is about to get more expensive, and ultimately buyers purchasing power will be lowered. Could this trigger sellers to cash in now? With condo inventory at a decade low it would certainly be a welcoming change. HELOC Debt Will Rise Canadians owe $211 Billion on Home Equity Lines of credit. With real estate prices rising, more and more Canadians have been using their homes as ATM’s. With the average balance of a HELOC around $70,000 and nearly 40% of people with HELOC’s not making regular payments against the principal, rate

Cambie Gardens Vancouver by Onni Group Cambie Gardens by Onni is an ambitious new development coming soon to the Cambie corridor in Vancouver. This impressive master-planned community is located at 650 W 57th Avenue, which is at the corner of 57th and Cambie. It will consist of 2,160 residential condos spanning a 25.4-acre site. This remarkable project will include a 2.5-acre park and a health centre, as well as commercial and retail space. Onni is also set to privately-fund a new Canada Line transit station. Additional amenities include a YWCA, social and recreational opportunities, and an urban farm. In addition,  25-metre swimming pool and therapeutic pool and a 69-space childcare centre are planned. There will be a multitude of shops and restaurants in this redeveloped space. The assortment of separate structures range from 3 to 28 storeys high. Storage will be available for residents. Details of parking have not been completed. Floor plans are not finalized as yet, either, but a wide range of unit options can be expected. Onni promises that the community will reflect flawless harmony of green space, connectivity, and architecture. The development is an expertly planned community based on the City of Vancouver’s objectives for economic,

OSFI Calls for Stress Tests on Uninsured Mortgages In a potential landslide move, OSFI (Office of the Superintendent of Financial Institutions) released draft changes to the Residential Mortgage Underwriting Practices and Procedures, which included a stress test for uninsured mortgages & a ban on bundled mortgages. The proposed changes to Canadian mortgages include: Requiring a qualifying stress test for all uninsured mortgages; Requiring that Loan-to-Value (LTV) measurements remain dynamic and adjust for local market conditions where they are used as a risk control, such as for qualifying borrowers; Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements. So what does this all mean? It means all mortgages including those which have a down payment with 20% or more will be required to pass a stress test. The stress test would likely include an additional 2% rate on top of the borrowers proposed mortgage rate. This means borrowers will likely qualify for less. Further, the proposed ban on bundled mortgages targets mortgage providers teaming up with unregulated rivals to circumvent rules limiting how much they can lend against a property. This will hurt alternative lenders like Equitable Group where 10% of the company’s new mortgage originations

MLS Benchmark Jumps 3% Month Over Month in Vancouver The latest June data has been released and If you haven’t already read my Vancouver Real Estate Detached Report June 2017 or the Vancouver Condo Report June 2017 some of these numbers may surprise you. The MLS Benchmark price for Vancouver jumped nearly 3% month over month to $1,233,200. Full disclosure, this includes all three market segments (detached, condo, and townhouse). Vancouver MLS Benchmark For those who might be mystified by this price acceleration it’s important to also factor in real time price movements, which I find are best noted using the average sales price. As you will see below, the average sales price paints a slightly different picture. The average sales price indicates prices actually fell month over month, and have been treading water for the past year. The average sales price is up 0.3% year over year. Now this is not to say the MLS benchmark is not accurate, it just tends to lag, and does not show larger price fluctuations in a more volatile market. So how does one interpret this all? Here’s my take. The detached market appears to have flatlined, according to the average sales price