DATE

Vancouver detached sale
Steve Saretsky -

It appears to be the end of the road for the Vancouver detached housing market. Sales are expected to round out the first quarter of 2018 at their lowest total in twenty years. With that, speculative activity has also dried up. As of March 29th, Vancouver detached home flipping, (a home bought and resold within 24 months) plummeted to it’s lowest total since November 2008. The Vancouver detached market finds itself increasingly vulnerable following increased taxation, tighter borrowing conditions, and a clamp down on illicit money. A $3M purchase now requires a foreign buyer to cough up $668,000 in taxes upon closing. Meanwhile, credit unions have failed to replace the hole left by the big banks following the B-20 mortgage stress test. Per Northcove Advisors analyst Ben Rabidoux on Twitter, “If credit unions are providing a workaround to B-20, it’s sure not showing up in the data yet. Annualized mortgage growth from the end of 2017 is 1/3 that of the banks.” Further, it appears BC has also been relatively successful in it’s ability to curb funny money entering BC casinos and local Real Estate. Eby noted suspicious transactions to B.C. casinos had fallen to $200,000 in February, down from a high

Steve Saretsky -

As anticipated, the BC Government rolled out several amendments to the property speculation tax following it’s controversial and hotly debated announcement. The initial speculation tax hit homeowners who did not pay BC income taxes as well as BC income tax payers who owned second homes but did not rent them out on a long term basis. These homeowners would be required to pay a 2% tax on your homes assessed value every year. This left many BC residents wondering if they were unintentionally targeted as speculators for owning vacation homes. While also targeting Canadian tax payers who lived in other provinces. The tax has now been revised as follows. The tax will only apply to the following areas: Metro Vancouver The Capital Regional District (excluding the Gulf Islands and Juan de Fuca) Kelowna and West Kelowna Nanaimo-Lantzville Abbotsford, Chilliwack and Mission In 2018, the tax rate for all properties subject to the tax is 0.5% of the property value. In 2019 and subsequent years, the tax rates will be as follows: 2% for foreign investors and satellite families; 1% for Canadian citizens and permanent residents who do not live in British Columbia; and 0.5% for British Columbians who are Canadian citizens or

Steve Saretsky -

As national home sales slide, falling 17% year over year in February, the attention shifts to British Columbia, Canada’s most expensive housing market. Despite the barrage of Government policies aimed at curbing the residential housing market, including, a 20% foreign buyers tax, a speculation tax, and an increase of property transfer tax, the market has remained surprisingly resilient. Since prices bottomed in November 2008 after the financial crisis, BC home prices have inflated 97%, peaking out In February 2016 at $779,419. As prices reached dizzying heights many defeated buyers gave up their aspirations for the detached market, and instead, feasted on the condo market. However, despite the red hot condo market, the total average sales price across BC has failed to eclipse it’s 2016 peak. As of February 2018 the average sales price sat at $748,149 a 9% increase from February 2017 but 4% below 2016 levels. The resulting decline of the average sales price falls in line with the decline of total dollar volumes, which have sunk 38% from February 2016. It would appear the glory days of irrational exuberance are in the rearview mirror. At least in the residential space. Avison Youg is reporting the value of British Columbia’s commercial real

Steve Saretsky -

In recent months Canada’s financial regulators have taken a concerted effort to cool the great Canadian housing boom and slow the pace of record high household indebtedness. There appears to be a strong desire to shift away from a Canadian economy over dependant on household borrowing. Recent policies aimed at curbing mortgage credit growth, known as the B-20 mortgage guidelines, have been lauded as the most stringent mortgage changes in recent history. The clamp down which comes fully loaded with three Bank of Canada interest rate hikes in less than a year, appears to be working. National home sales fell 17% year over year in February. Hitting their lowest total for the month of February in the past five years. According the Canadian Real Estate Association price growth has also decelerated for ten consecutive months. Household debt to income also edged down in the fourth quarter of 2017 from 170.5% to 170.4%, while Household credit growth decelerated for three consecutive months, turning negative in January, the first time in over six years. “While it’s too early to tell, we just might have seen the peak in the debt ratio in Q3, as Q1 will no doubt see a sizeable decline

Steve Saretsky -

For years Canadian Real Estate has been the unstoppable engine propelling the economy forward. The little engine that could, along with the finance and insurance sector managed to contribute 23% of GDP in 2017. The resulting housing boom has inflated national home prices by 49.68% in just five years per the MLS home price index. However, recent data from the Canadian Real Estate Association suggests the party may be coming to an end. National home sales fell by 16.9% year over year in February. The decline marked a five year low in activity for the month of February and pushed sales 7% below the ten year average. “The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers moved purchase decisions forward late last year before tighter mortgage rules took effect in January,” said Gregory Klump, CREA’s Chief Economist. “Momentum for home sales activity going into the second quarter is also likely to weighed down by housing market uncertainty in British Columbia, where new housing polices were introduced toward the end of February.” Price growth appears to be tapering on a national level, despite new listings sinking 6.4% below the ten year average. The

Steve Saretsky -

Financial regulators continue to caution on the health of the Canadian financial system. Earlier this week, The BIS (Bank of international settlements) released their quarterly report citing Canada, along with Hong Kong & China are flashing early warning indicators of a potential banking crisis. Canada, whose economy grew last year at the fastest pace since 2011 was flagged thanks to its households’ maxed-out credit cards and record high household indebtedness. Several days later, Moody’s, one the largest credit rating agencies, also jumped on the bandwagon. Moody’s raised concerns over Canadian households stretching their debt to disposable income to 171%, adding “Almost half of outstanding mortgages will have an interest rate reset within the year, which will increase the strain on households’ debt-servicing capacity.” Fortunately, The Bank of Canada believes mortgage renewals would be “manageable for most.” Specifically, citing higher income, and more home equity at the time of renewal to be mitigating factors. Additionally, many borrowers that will renew in the next year, could be locking in lower rates than when they had secured a mortgage 5 years ago. However, Canadian households are already feeling the pinch following the Bank of Canada’s 2017 rate hikes. As of the fourth quarter of 2017

Steve Saretsky -

As British Columbians await the final details of the new policies aimed at cooling the property market and taxing speculators into oblivion, it’s clear the BC NDP Government is juggling a political hot potato. The BC NDP, which has been left to clean up the housing file after years of inaction from previous Government and a reluctance from the Bank of Canada to hike toxically low interest rates, are caught in the middle of a growing social divide that could get ugly. It’s now believed the 2% speculation tax which targets homeowners not paying income tax in BC would also capture BC income tax payers who own recreational or seasonal properties. For example, a British Columbian who owns two homes, a principal residence in Vancouver and a seasonal vacation home in Kelowna would receive a non-refundable income tax credit to offset the speculation tax. However, in many cases it appears the income tax credit would not be enough to offset the speculation tax. For instance, the speculation tax, which is calculated at 2% of the assessed value on a $1 million dollar recreational property would fetch $20,000 in taxes payable. A British Columbian with an income of $100,000 a year

Steve Saretsky -

After a surprising 4% GDP print back in July, Bank of Canada Governor Stephen Poloz moved quickly to hike rates three times. However, recent data suggests, Poloz may have moved too quickly. The latest Q4 2017 GDP numbers came in at a disappointing 1.7% growth, well below the Banks forecasted 2.5%. Today, as expected, the Bank of Canada took their foot off the pedal. The central bank decided to keep rates on hold, and took a cautious outlook moving forward. “Strong housing data in late 2017, and softer data at the beginning of this year, indicate some pulling forward of demand ahead of new mortgage guidelines and other policy measures. It will take some time to fully assess the impact of these, as well as recently announced provincial measures, on housing demand and prices. More broadly, the Bank continues to monitor the economy’s sensitivity to higher interest rates. Notably, household credit growth has decelerated for three consecutive months.” The deceleration of mortgage credit comes as a concern to the overall Canadian economy which has become heavily dependant on an incredibly long credit cycle. Canada’s credit cycle has been responsible for driving a historic housing boom, while inflating total outstanding mortgage

Steve Saretsky -

Vancouver’s detached market remained awfully quiet in February, following a continued trend of weaker sales and rising inventory. Vancouver detached sales in the city of Vancouver fell 20% in 2017, dipping to it’s lowest levels since 2008. That continuation is well underway to begin 2018, and with further Government regulations aimed at cooling the property market even further the short term prospects for the detached market remain rather grim. Vancouver Detached Sales Vancouver detached sales fell to a 27 year low for the month of February. There were just a total of 130 home sales in the area, a shockingly dismal number for a once red hot property segment. On a year over year basis, detached home sales fell 26%. Or 54% below the ten year average for February. New Listings/ Inventory New listings, which have plagued the Vancouver real estate market in recent history, enjoyed a solid rebound this February. New listings climbed 32% on a year over year basis, but still registered 13% below the ten year average. Should new listings hold steady it would certainly apply further downwards pressure on prices, given the weak sales. Total inventory levels climbed 9% year over year. There’s currently 11 months

Steve Saretsky -

The Vancouver condo market remained robust through February. Despite continued regulations aimed at cooling the Vancouver Real Estate market, including the BC Governments recently announced 30 point plan, strong demand and aggressive bidding wars persisted. While some demand has been pulled forward as a result of recent mortgage regulations, the full extent of recent changes have yet to be seen and may not fully rear it’s head until later in 2018. Vancouver Condo Sales Vancouver condo sales fell by 6% on a year over year basis. This is a trend that will likely continue from the resulting policy changes aimed at curbing demand. Vancouver condo sales for the month of February were 3% below the ten year average, and well peak sales activity in February 2016. Vancouver condo sales using a 6 month average highlights the shift towards declining sales volumes. New Listings/ Inventory Levels New listings had a nice rebound following a dismal February 2017, growing by 18% in February 2018. Despite the year over year growth, new listings were still near historically low levels for the month of February, coming in 14% below the ten year average. Vancouver condo inventory levels continue to garner headlines, ensuring what many

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 -

It appears to be the end of the road for the Vancouver detached housing market. Sales are expected to round out the first quarter of 2018 at their lowest total in twenty years. With that, speculative activity has also dried up. As of March 29th, Vancouver detached home flipping, (a...

Steve Saretsky -

As anticipated, the BC Government rolled out several amendments to the property speculation tax following it’s controversial and hotly debated announcement. The initial speculation tax hit homeowners who did not pay BC income taxes as well as BC income tax payers who owned second homes but did not rent them out...

Steve Saretsky -

As national home sales slide, falling 17% year over year in February, the attention shifts to British Columbia, Canada’s most expensive housing market. Despite the barrage of Government policies aimed at curbing the residential housing market, including, a 20% foreign buyers tax, a speculation tax, and an increase of property...

Steve Saretsky -

In recent months Canada’s financial regulators have taken a concerted effort to cool the great Canadian housing boom and slow the pace of record high household indebtedness. There appears to be a strong desire to shift away from a Canadian economy over dependant on household borrowing. Recent policies aimed at...

Steve Saretsky -

For years Canadian Real Estate has been the unstoppable engine propelling the economy forward. The little engine that could, along with the finance and insurance sector managed to contribute 23% of GDP in 2017. The resulting housing boom has inflated national home prices by 49.68% in just five years per...

Steve Saretsky -

Financial regulators continue to caution on the health of the Canadian financial system. Earlier this week, The BIS (Bank of international settlements) released their quarterly report citing Canada, along with Hong Kong & China are flashing early warning indicators of a potential banking crisis. Canada, whose economy grew last year at...

Steve Saretsky -

As British Columbians await the final details of the new policies aimed at cooling the property market and taxing speculators into oblivion, it’s clear the BC NDP Government is juggling a political hot potato. The BC NDP, which has been left to clean up the housing file after years of...

Steve Saretsky -

After a surprising 4% GDP print back in July, Bank of Canada Governor Stephen Poloz moved quickly to hike rates three times. However, recent data suggests, Poloz may have moved too quickly. The latest Q4 2017 GDP numbers came in at a disappointing 1.7% growth, well below the Banks forecasted...

Steve Saretsky -

Vancouver’s detached market remained awfully quiet in February, following a continued trend of weaker sales and rising inventory. Vancouver detached sales in the city of Vancouver fell 20% in 2017, dipping to it’s lowest levels since 2008. That continuation is well underway to begin 2018, and with further Government regulations...

Steve Saretsky -

The Vancouver condo market remained robust through February. Despite continued regulations aimed at cooling the Vancouver Real Estate market, including the BC Governments recently announced 30 point plan, strong demand and aggressive bidding wars persisted. While some demand has been pulled forward as a result of recent mortgage regulations, the...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022