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RBC Canadian housing affordability
Steve Saretsky -

Vancouver Remains Canada’s Most Unaffordable Housing Market RBC released it’s latest housing affordability report. To little surprise, Canadian Real Estate remains vastly unaffordable for the masses. After back to back declines, Vancouver’s affordability or rather unaffordability metric ticked upwards once again. The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities based on the average market price for a particular segment of the market. The affordability measures are based on a 25% down payment, and a 25-year mortgage loan at a five-year fixed rate. As per the graph, Vancouver condos require 46.2% of one’s pre tax income. While it requires an impossible 114.6% of your pre tax income to for a detached home. Keep in mind, this is assuming a 25% down payment which from my experience most buyers don’t have today. Vancouver remains the most unaffordable housing market across Canada, by a long shot. Requiring a staggering 80.7% of one’s pre tax income for the typical home. With rising interest rates, something tells me this might get worse before it gets better… Join My Weekly Vancouver Real Estate Newsletter

Steve Saretsky -

Buyers Paying Hefty Premiums To Lock In New Condos With Condo inventory at all time lows, and prices continuing to surge upwards, buyers are desperately leaping on pre sale developments. But it appears it’s not just the developers cashing in on this frenzy. Students and innocent bystanders are being lured by hundreds of dollars to sit in line for buyers hoping to get in on the condo mania. In an article titled ‘I was paid $400 to wait in line at condo Sale‘ Vice is reporting some hefty payouts. “It was around 4 PM on a Friday afternoon when I got the call. A friend told me her landlord, who worked in real estate, was offering $800 for two people to hold her spot in line for 15 hours at a condo presale in Port Coquitlam. As a freelance journalist, this was an offer I couldn’t refuse. “Trevor John Boorma sells cars normally, but came out for $300-a-day to stand in for another real estate agent. He estimated nearly half of the people waiting in line were proxies.” Yes the mania has indeed spread to the unsuspecting suburbs where hoards of first time homebuyers are eager to enter the market.

Steve Saretsky -

China Attempts To Reign In Property Bubble Despite various attempts to slow China’s massive real estate bubble, nothing has thwarted it to date. Desperate authorities are taking another swing this time around at what some property developers have called “the biggest bubble of all time”. As of Saturday, Property owners in Xi’an, Chongqing, Nanchang, Nanning, Changsha, Guiyang, Shijiazhuang and Wuhan must now wait two years before they can resell flats, regardless of whether they are new builds or older homes. It remains to be seen if this will have any impact on China, which has undergone the single largest credit binge in economic history. Massive amounts of leverage and build up of household debt from the property sector have become a huge concern. Spillover Effect Into Cities Like Vancouver Naturally, with an abundance of excess credit, and rising home values in China, that money has overflown into other parts of the world, in particular Vancouver. According to David Green-Morgan, global capital markets head of research at JLL the surge in outflows only took off in the past couple years. In 2007 China’s commercial property outflow was less than $1 billion. Now it exceeds $20 billion annually. At the Shenzhen Real Estate Expo, marketing

Steve Saretsky -

Luxury Home Sales Declining Year to Date, Not Rising There’s nothing worse than an industry fluff piece, no matter what the industry is. A recent report circulating through the mainstream media states Vancouver Home Sales Over $1M are rising, setting the stage for a re-vamped luxury market. However, that is simply not the case. Let’s debunk this one. Here’s what the article states. “Luxury real estate expert Sotheby’s International sees good things ahead for high-end property sales in Vancouver. Sotheby’s says sales of properties over $1 million increased five per cent in Vancouver during July and August, compared to last year, and the company predicts upscale sales will continue to climb as they recover from legislated efforts to cool the market.” My Take on Luxury Home Sales Official numbers from the Vancouver Real Estate Board state luxury homes sales have actually declined year to date. From January to August, home sales above $1M have declined by 18% this year. While sales have increased on a year over year basis in the last couple months (July & August) the numbers don’t paint the true picture. Comparing August 2016 sales, the very month a historical foreign buyers tax was introduced, will of

Steve Saretsky -

One Bedroom Condos Up Nearly 50% Year over Year In Certain Areas As i’ve been highlighting for some time now, one bedroom condos remain the hottest segment of the market. A growing choir of first time buyers experiencing a ‘just get in’ mentality are driving up prices with hopes of climbing the property ladder. First time buyers, combined with local investors seeking a secondary investment are clashing to snatch up the remaining one bedroom units. Just last month Vancouver one bedroom condo inventory plunged 53%. Recent price growth in Vancouver is well documented, but it’s actually the outlying areas experiencing the largest price growth. Here are the top three. 1. New Westminster Condos Increase by 46% With New Westminster condos nearly flat for almost a decade, prices have exploded over the past year. The average sales price of a one bedroom condo is up 46% year over year. Yes, forty-six. Interactive chart here. 2. Surrey Condos Increase by 45% Year over Year North Surrey (Whalley area) one bedroom condos increased by 45% year over year in August. You’ll notice prices were virtually flat for a long period of time before rapidly accelerating in early 2016. Interactive chart here. 3. Burnaby

Steve Saretsky -

Median Family Income In Metro Vancouver Just $72,000 As first reported in the Vancouver Sun, new census data highlights just how out of whack housing prices have become from local incomes. The median total income for households in Metro Vancouver was a paltry $72,662. Despite Vancouver having the priciest real estate by a long shot, incomes were only the 15th highest across the country. Median Income In Downtown Vancouver $89,825.53 Using an interactive chart via Better Dwelling, the median household income in the Downtown peninsula was $89,825.53. Still a stretch considering the median condo price this year sits at $749,500. Costing you an average of $1051.41/ per square foot. Here’s how it looks from a monthly carrying costs perspective. Assuming a 20% down payment, with a 3% mortgage interest rate over 25 years. [table id=42 /] Therefor based on today’s incomes it would cost about 44% of your pre tax income for a Downtown Vancouver condo. Keep in mind this does not included maintenance or extra insurance. As per CMHC, they quantify affordable housing as no more than 33% of your pre tax income. There’s no doubt Vancouver is an equity driven market, with local incomes having been detached from house

Steve Saretsky -

Inventory for One Bedroom Vancouver Condos Sinks 53% Year over Year A great purge of condo inventory is under way, particularly in the one bedroom segment. With the market flooded with first time buyers coupled with investors looking to add to their investment portfolio, one bedroom units have become a rare commodity. Vancouver condo inventory for one bedroom units has plummeted by 53% year over year, hitting a 12 year low. This historic drop is most prominent at the one bedroom level as it’s essentially the entry point for most buyers. With two bedroom inventory not far behind, and also scrapping a 12 year low. To highlight just how dire a situation the Vancouver condo market is in, the sales to actives ratio for one bedroom units is still a mind blowing 107%. A number that has never been seen recent history. A speculative mania has buyers bidding up condos at a rapid pace with little signs of slowing down (average price per square foot up 19% this year). The question now becomes how much higher can it go? Will a hawkish Bank of Canada and rising interest rate be enough to douse the flames? Surely one has to think.

Steve Saretsky -

Vancouver Detached Market Softens, Attached Prices Push Forward If you read either of my latest Vancouver Detached Report or Vancouver condo Report you’d already know these two markets are going in very opposite directions. Unfortunately there’s a lot of stats out there confusing a mass of Vancouverites. With the latest August headlines proclaiming a rebound in sales and prices what they fail to take into account is we are comparing August 2017 to August 2016, the same month a once in a lifetime foreign buyers tax was introduced. A policy which instantly halted activity and sent sales and prices plunging. To get a more accurate picture, I have taken a year to date approach. Comparing January 01 to August 31, each year, for the past 7 years. That’s a full 8 months worth of data to look at, not just one month. Here’s how the market shapes up. Vancouver Detached Average Sales Price Down 9% For January 01- August 31, 2016 the average sales price of a detached home in Vancouver was $2,864,520.00. Comparing the same time frame this year, the average sales price was $2,607,377.00. That’s a 9% drop. The median sales price dropped even further, from $2,339,000 to $1,980,000, a 15%

Steve Saretsky -

Bank of Canada Hikes Interest Rates Again, Mortgage Costs on the Rise The Bank of Canada announced another interest rate increase today, increasing the overnight rate by 0.25 basis points in a move that mostly surprised markets. Although I mentioned the strong possibility of it last week. The move may also come as a surprise to many homeowners or potential buyers as borrowing costs are on the upswing. Not good news for Canadians who have now secured a record number of loans against Canadian Real Estate, up 11% this year alone. Mortgage Costs Many of the big banks today also increased their prime rate from 2.95% to 3.2%. So If you’re carrying a variable rate mortgage expect to be paying an extra 0.25 basis points moving forward. 5 Year Fixed Mortgage Costs are also trending up, with Scotia Bank increasing their rate today to 3.29%, while BMO increased theirs to 3.19% just last week. If you want to get a better sense of where the fixed term mortgage rates are going then watch the 5 year Canadian Government bond yield which has now jumped 82% (+75bps) in the past 90 days. Of course this also means your HELOC will interest

Steve Saretsky -

Vancouver Condo Prices Jump Another 1.5% in August The Vancouver condo market continues to defy logic, as the average price per square foot jumped another 1.5% month over month, pushing the total increase to 13% this year. Perhaps even more concerning, total inventory plunged to it’s lowest totals in recent history, with just 849 active listings for sale. See last month’s Vancouver Condo Report. Vancouver Condo Sales Vancouver condo sales increased 20% year over year. However, this is comparing it to last August when the market froze to a sudden announcement of a foreign buyers tax. Vancouver condo sales were still 15% above the ten year average. New Listings/Inventory Levels Vancouver condo new listings fell 8% year over year, and were 14% below the ten year average. This is definitely not helping replenish already historically low inventory levels. The biggest issue lies in overall inventory levels which continue to trend lower. Inventory fell 35% year over year. Vancouver Condo Prices The average sales price hit $849,325 in August, which is up 17% year over year. The price per square foot for Vancouver condos increased to $1012, up 19% year over year. Click Here To Access Price Per Square Foot By

Steve Saretsky -

Detached Market Continues to Cool In August A trend is emerging over the past several months in the detached market space. The sales to actives ratio has been slipping, sales are slow, and price growth has stalled. The detached segment has now shifted to a balanced/ buyers market depending on the area. View July detached report here. Detached Sales While there was generally an increase in sales year over year for most areas, this was due to the implementation of a foreign buyers tax which was introduced without warning in August, 2016. With that being said, Vancouver West experienced fewer sales this August than it did one year ago. This is substantial and worth noting as the higher end detached market has been severely impacted from a slow down of foreign capital. New Listings & Inventory New listings across REBGV fell 7% and were 4% below the ten year average for the month of August. Overall inventory levels were down 1% from one year ago. Sales to Actives Ratio REBGV- 16% Vancouver East- 15% Vancouver West- 7% Richmond- 12% Burnaby- 12% As you can see, the detached market is in either a balanced market or a buyers market depending on

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The Canadian Economy

Steve Saretsky -

Vancouver Remains Canada’s Most Unaffordable Housing Market RBC released it’s latest housing affordability report. To little surprise, Canadian Real Estate remains vastly unaffordable for the masses. After back to back declines, Vancouver’s affordability or rather unaffordability metric ticked upwards once again. The RBC Housing Affordability Measures show the proportion of...

Steve Saretsky -

Buyers Paying Hefty Premiums To Lock In New Condos With Condo inventory at all time lows, and prices continuing to surge upwards, buyers are desperately leaping on pre sale developments. But it appears it’s not just the developers cashing in on this frenzy. Students and innocent bystanders are being lured...

Steve Saretsky -

China Attempts To Reign In Property Bubble Despite various attempts to slow China’s massive real estate bubble, nothing has thwarted it to date. Desperate authorities are taking another swing this time around at what some property developers have called “the biggest bubble of all time”. As of Saturday, Property owners in Xi’an,...

Steve Saretsky -

Luxury Home Sales Declining Year to Date, Not Rising There’s nothing worse than an industry fluff piece, no matter what the industry is. A recent report circulating through the mainstream media states Vancouver Home Sales Over $1M are rising, setting the stage for a re-vamped luxury market. However, that is...

Steve Saretsky -

One Bedroom Condos Up Nearly 50% Year over Year In Certain Areas As i’ve been highlighting for some time now, one bedroom condos remain the hottest segment of the market. A growing choir of first time buyers experiencing a ‘just get in’ mentality are driving up prices with hopes of...

Steve Saretsky -

Median Family Income In Metro Vancouver Just $72,000 As first reported in the Vancouver Sun, new census data highlights just how out of whack housing prices have become from local incomes. The median total income for households in Metro Vancouver was a paltry $72,662. Despite Vancouver having the priciest real estate...

Steve Saretsky -

Inventory for One Bedroom Vancouver Condos Sinks 53% Year over Year A great purge of condo inventory is under way, particularly in the one bedroom segment. With the market flooded with first time buyers coupled with investors looking to add to their investment portfolio, one bedroom units have become a...

Steve Saretsky -

Vancouver Detached Market Softens, Attached Prices Push Forward If you read either of my latest Vancouver Detached Report or Vancouver condo Report you’d already know these two markets are going in very opposite directions. Unfortunately there’s a lot of stats out there confusing a mass of Vancouverites. With the latest...

Steve Saretsky -

Bank of Canada Hikes Interest Rates Again, Mortgage Costs on the Rise The Bank of Canada announced another interest rate increase today, increasing the overnight rate by 0.25 basis points in a move that mostly surprised markets. Although I mentioned the strong possibility of it last week. The move may...

Steve Saretsky -

Vancouver Condo Prices Jump Another 1.5% in August The Vancouver condo market continues to defy logic, as the average price per square foot jumped another 1.5% month over month, pushing the total increase to 13% this year. Perhaps even more concerning, total inventory plunged to it’s lowest totals in recent...

Steve Saretsky -

Detached Market Continues to Cool In August A trend is emerging over the past several months in the detached market space. The sales to actives ratio has been slipping, sales are slow, and price growth has stalled. The detached segment has now shifted to a balanced/ buyers market depending on...

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The Saretsky Report. December 2022