"Summertime, and the livin' is easy
Fish are jumpin' and the cotton is high..."
- George Gershwin
Not so much in Metro Vancouver real estate this year. There has been a decline in the numbers of sales of housing units with no corresponding decline in prices, but there is a sea change in attitude and expectations. Change on every front in Canada and around the world is in the air and the uncertainty is creating a lack of confidence in our short term financial future.
A recent report on the disparity of home price to income in North America encapsulates the Vancouver problem. As Andy Yan of SFU City Program, author of the report states: Vancouver is an expensive place to live and a hard place to make a living. Vancouver is the third most expensive area after Silicon Valley-Santa Clara CA at number 1 and then San Francisco area at number two. The median real estate price and income in San Jose-Sunnyvale-Santa Clara is the highest at $1,085,595 home price and $131,000 income. Vancouver median home price according to Yan is $800,220. The median income of $72,662 comes in at #50 out of 51 cities with populations over 500,000.
A recent Angus Reid survey as reported by CTV News states that more than one-quarter of Canadians are under financial stress and can’t make ends meet. These problems are exacerbated by real estate costs including rent. According to Padmapper the median rent for a one bedroom apartment in Vancouver dropped 4.3% to $2,000 per month while a two bedroom unit comes in at $3,200.
The tariff war initiated by the United States against most other countries is worrying the stock market. BlackRock CEO is concerned that globalization and trade are threatened with negative unintended consequences to the international community.
Despite denials by BC government interests and Stats Canada’s incomplete statistics everyone working in the Vancouver housing market knew that it was skewed by massive amounts of cash being invested from China, often by unidentified trusts and student nominees. It has come to light that much of the money fueling the rising prices in the Vancouver real estate market over the past 10 years were illegal funds laundered through casinos without any oversight by police or gaming officers at the direction of the Provincial Government. The billion+ tax dollars per year pouring into the Provincial Treasury made it possible to overlook signs of criminal activity.
China is struggling with US tariffs and other slowdowns so is no longer allowing huge amounts of cash to flow out of the country into real estate in Canada.
Although the government of the day came late to the party and succeeding governments have tightened the rules (as one experienced realtor has said the days of high living and real estate investment have passed and they are now regulating and strangling the new struggling real estate market). As a result of the imposition of the Foreign Buyer Surtax in July 2016 a well-funded lawsuit was initiated by a student who chose not to take out Canadian Permanent Resident status and was hit by the Foreign Buyer Tax on the purchase of a property in Langley. The lawsuit requests that based on racial discrimination the Foreign Buyer Tax be rescinded and all monies collected be refunded to the foreign buyers who paid the tax. The NDP government has based all their budgeting on raising tax revenue so to refund billions of dollars may be an impossibility for the BC taxpayer. Douglas Todd of the Vancouver Sun has made a strong refutation of the lawsuit premise and adds details of where foreign buyer taxes are applied around the world including China, the home country of the instigator of the lawsuit. He makes the point that the Foreign Buyer Tax is not xenophobic.
The detached home market has become price sensitive. Most homes in desirable locations are selling for slightly below their Assessed Value. The BC Assessment Authority bases their figures on sale prices of similar properties reported before July 1 of the previous year.
Currently the benchmark price for a detached home in Metro Vancouver is $1,598,200, a 0.7% increase from June 2017. The sales numbers for June 2018 are 42% below June 2017.
Townhomes are the replacement for detached homes for many families. Due to price and availability the number of sales dropped 34.9% from June 2017. The benchmark price for an attached home is $859,800, a 15.3% increase from June 2017.
Sales of apartment homes were down 34.9% from June 2017. The benchmark price is $704,200 which is 17.2% higher than June 2017.
"Buyers are less active today. This is allowing the supply of homes for sale to accumulate to levels we haven’t seen in the last few years," as stated by Phil Moore President Real Estate Board of Greater Vancouver. "Rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening home buyer activity today."
The sales to active listing ratio for June 2018 is 20.3%. By property type, the ratio is 11.7% for detached homes, 24.9% for townhouses, and 33.4% for condominiums.
In May 2018 the benchmark price for a detached in North Vancouver was $1,683,600 down -0.4% in one year, up 75.9% in 5 years and up 84.0% in 10 years.
In Richmond the detached benchmark price was $1,648,600 down -0.1% in one year, up 74.5% in 5 years and up 114.4% in 10 years.
In Vancouver East the detached benchmark price was $1,541,400 up 0.5% in one year, up 82.4% in 5 years and up 129.9% in 10 years.
In Vancouver West the detached benchmark price was $3,392,500 down -6.5% in one year, up 63.7% in 5 years and up 112.1% in 10 years.
In West Vancouver the detached benchmark price was $2,944,900 down -5.8% in one year, up 61.3% in 5 years and up 78.0% in 10 years.
Each year affordability declined for local buyers. First time buyers are particularly hard hit by mortgage stress tests, high prices and lack of inventory.
In June 2018 the benchmark price for a condo apartment in North Vancouver was $602,800 up 14.1% in one year, up 68.0% in 5 years and up 67.9% in 10 years.
In Richmond the condo benchmark price was $683,800 up 19.4% in one year, up 92.7% in 5 years and 91.1% in 10 years.
In Vancouver East the condo benchmark price was $573,800 up 13.0% in one year, up 88.1% in 5 years and up 91.2% in 10 years.
In Vancouver West the condo benchmark price was $842,600 up 9.0% in one year, up 75.3% in 5 years and up 82.0% in 10 years.
In West Vancouver the condo benchmark price was $1,286,500 up 10.1% in one year, up 81.9% in 5 years and up 72.4% in 10 years.