DATE

Steve Saretsky -

Recent reports from CMHC and the Bank of Canada, highlight developing trends in the ever so important credit cycle. Everyone already knows about the Canadian debt binge which has become the talking point over the past few years and a strong contributor to sky high house prices. Keeping an eye on these trends will be incredibly important moving forward, not just for the housing market, but the Canadian economy as a whole. In a post stress test world, mortgage credit growth has been suffering. Recent data as of June 2018 from the Bank of Canada, shows the 12 month percent change of residential mortgage credit has slipped to 4.1%, the slowest pace of growth since May 2001. The 3 month annualized pace slipped to 2.8%, a number last seen in March 2014. With housing affordability stretched to record highs it becomes even more difficult to support current valuations without an increase in new borrowers and borrowing capacity. While the private lending space has been booming in recent years it will be extremely difficult to offset recent weakness in mortgage credit growth. This weakness also made headlines within CMHC, who reported 234,000 new mortgage loans opened in the fourth quarter of

Steve Saretsky -

The operations within the pre-sale condo market in Greater Vancouver are rather murky, and obtaining reliable data can be tricky. However, a recent report from MLA Canada, a company whom works closely in the marketing of pre sale condo developments, shed some light on the rather secretive sector of the housing market. Over the course of 2018, MLA Advisory has been tracking pre-sale inventory releases and same month sales rates to assess current demand versus incoming supply, as well as buyer urgency in Greater Vancouver and the Fraser Valley’s housing market. Here’s what the company found: “The mid-year data shows an exceptionally high absorption rate in January 2018 of 94 per cent for new units entering the marketplace. In contrast, June 2018 saw same month absorptions land slightly below 50 per cent. Overall, the market has experienced a downward trend for pre-sale absorptions, indicating a shift from the hyperactive levels experienced over the past two years to more normalized market conditions. Historically, normalized pre-sale activity is viewed as projects experiencing 50 to 65 per cent sales absorptions within the first 6 to 9 months and sell-out periods of 12 to 24 months depending on the size and complexity of the

Steve Saretsky -

Canadian housing data continued to disappoint in the month of June. Albeit the year-over-year decline in home sales was not nearly as disappointing as the month of May. National home sales fell 11% year-over-year in June, a slight upgrade from the 16% decline suffered in May. As sales dipped, so too did the total amount spent on real estate. The total dollar volume dipped 12% year-over-year in June, totalling $23.5B CDN. A tough blow to government tax coffers which have reaped record sums of property tax dollars in recent years.  The national slowdown was particularly unkind to the province of BC where home sales slid 33% year over year, the largest drawdown since June of 2008. Weak buying activity hit Greater Vancouver & Victoria the hardest, sales fell 38% and 30% respectively. However, the pullback was not exclusive to the province of BC. Other than small year over year gains in Quebec City, Toronto, and Montreal, most major cities were hit with a drop in home sales. The average sales price across the nation dipped in June for the first time since June of 2012, shedding 1% year over year. While this marked the fifth month in a row in which the

Steve Saretsky -

The Vancouver Real Estate market was blindsided with another demand side policy from the BC Government. Beginning November 30th strata corporations will be able to fine owners or residents up to $1,000 a day for defying the corporation’s bylaws on short-term rentals. The maximum fine was previously set at $200 per week, a small price to pay when renting your condo illegally on Airbnb. While the new law will be implemented across the province, this adds to recent regulations implemented by the municipal Government in the city of Vancouver. Current city bylaws state short-term rentals are only permitted in your primary residence with a business licence. Further, the strata must permit short term rentals, which the vast majority do not. While the immediate impact of these changes is unknown, we can certainly speculate this will discourage fringe buyers who might be contemplating purchasing a condo with the intent of becoming a full time Airbnb host. Demand has been dwindling in the Vancouver condo market as of late, with sales slipping to a five year low in the month of June. Will we see a few more listings hitting the market as sellers dump their Airbnb properties? Vancouver condo inventory levels

Steve Saretsky -

It’s shaping up to be a slower summer in BC’s once red hot housing market. Home sales for the month of June ticked in at 7884, a 33% decline year over year, this marked a five year low. This appears to be more than just a summer doldrum. Total sales for 2018 appear to be heading back to pre housing boom levels. Through the first six moths of this year home sales are down 20% compared to the same time period a year ago. As sales fell 33%, inventory simultaneously increased. Inventory for sale jumped 21% from June of 2017. This was the first year over increase since June of 2012. However, inventory remains below historic norms for this time of year. Although, the addition of a record high 55,000 units under construction should help in the months ahead. The average sales priced dipped 2% year over year in May, and continued that trend in June, recording a 1.3% decline on a year over year basis. The slowdown raised concerns about stricter borrowing conditions. Brendon Ogmundson, BCREA Deputy Chief Economist, summarized the month as “The impact of the B20 stress test is still being felt across the province, Lower demand as the

Steve Saretsky -

While history doesn’t repeat, it certainly does rhyme. All real estate booms follow a very similar pattern. Higher prices tend to pull demand forward, at the same time drawing in a larger class of investors. This creates two things, well actually three things. Sales increase, available inventory for sale declines, which results in rising prices. As we can see, just a few years ago there was a healthy number of condos for sale. However, in a very short time frame condo inventory plunged to record lows over the past few years. Rising prices and a perceived scarcity created a fear of missing out and buyers snatched up remaining units almost regardless of price or condition. This allowed condo prices to inflate rapidly, growing 30-40% year over year in many areas. These market conditions create an excellent opportunity for developers to build and maximize profits. Demand appears insatiable and it feels we will never have a surplus of housing again. As such, developers rush to meet the demand. To no surprise, Condo units under construction in greater Vancouver has reached an all-time. As of May 2018, there were over 35,000 apartments under construction, more than three standard deviations from the long term

Steve Saretsky -

As the Vancouver Real Estate market heads into the dog days of summer it is desperately trying to shake an abnormally sluggish first half. To suggest sales have been weak might be an understatement, Vancouver detached housing sales have fallen to a 27 year low in the month of June.  Home sellers and Realtors remain relatively confused and unsure when this storm will pass. Many have chosen to take their home off the market and try again at a later date.  This is probably why we have seen new listings start to dwindle as we experienced following the foreign buyers tax back in August 2016. New listings for the month of June tumbled 29% year over year, down to their lowest total in thirteen years. Despite new listings declining, for sale inventory still moved higher, increasing 8% year over year. It jumped to the highest level for the month since June of 2012. This is in large part due to historically weak sales.  There were just 177 sales in the month of June, this marked the lowest total ever recorded dating to 1991 when the Real Estate Board of Greater Vancouver began compiling comprehensive market data. This marked a 35% decline

Steve Saretsky -

The steady as she goes condo market has started to wobble. Despite the noise in the detached market, the condo market has been churning out rather impressive price appreciation. Those days appear to be nearing an end. The average price per square foot, which has been an accurate gauge of condo prices in a sea of data confusion, officially peaked out in January 2018. Six months later prices have failed to push new highs, despite prices generally pushing new highs in the spring selling season. The average price per square foot now sits at $1034, a 5% increase year over year. While that’s still in positive growth territory, the deceleration of price growth has been noticeable in 2018. While condo prices have begun to stabilize, this is in large part due to a declining number of buyers. Who knows where they all went but Vancouver condo sales sank 32% year over year in June. There were a total of 475 condo sales this month,  the lowest since June of 2012. As sales have begun to slide, inventory has finally stopped falling. After nearly three years of consistent declines in overall inventory, it pushed higher by jumping 40% on a year

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The Canadian Economy

Steve Saretsky -

Recent reports from CMHC and the Bank of Canada, highlight developing trends in the ever so important credit cycle. Everyone already knows about the Canadian debt binge which has become the talking point over the past few years and a strong contributor to sky high house prices. Keeping an eye...

Steve Saretsky -

The operations within the pre-sale condo market in Greater Vancouver are rather murky, and obtaining reliable data can be tricky. However, a recent report from MLA Canada, a company whom works closely in the marketing of pre sale condo developments, shed some light on the rather secretive sector of the...

Steve Saretsky -

Canadian housing data continued to disappoint in the month of June. Albeit the year-over-year decline in home sales was not nearly as disappointing as the month of May. National home sales fell 11% year-over-year in June, a slight upgrade from the 16% decline suffered in May. As sales dipped, so...

Steve Saretsky -

The Vancouver Real Estate market was blindsided with another demand side policy from the BC Government. Beginning November 30th strata corporations will be able to fine owners or residents up to $1,000 a day for defying the corporation’s bylaws on short-term rentals. The maximum fine was previously set at $200...

Steve Saretsky -

It’s shaping up to be a slower summer in BC’s once red hot housing market. Home sales for the month of June ticked in at 7884, a 33% decline year over year, this marked a five year low. This appears to be more than just a summer doldrum. Total sales...

Steve Saretsky -

While history doesn’t repeat, it certainly does rhyme. All real estate booms follow a very similar pattern. Higher prices tend to pull demand forward, at the same time drawing in a larger class of investors. This creates two things, well actually three things. Sales increase, available inventory for sale declines,...

Steve Saretsky -

As the Vancouver Real Estate market heads into the dog days of summer it is desperately trying to shake an abnormally sluggish first half. To suggest sales have been weak might be an understatement, Vancouver detached housing sales have fallen to a 27 year low in the month of June....

Steve Saretsky -

The steady as she goes condo market has started to wobble. Despite the noise in the detached market, the condo market has been churning out rather impressive price appreciation. Those days appear to be nearing an end. The average price per square foot, which has been an accurate gauge of...

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The Saretsky Report. December 2022