December: a month of lights; snow and feasts; time to make amends and tie loose ends; finish off what you started and hope your wishes come true.
December 2018 is the time to reflect on the past year and try to imagine where 2019 will take us. All events are connected and impact the Canadian economy and the real estate market in BC.
Locally we were all mesmerized by the international soap opera of the arrest of Meng Wanzhou, the CFO of Huawei Technologies at YVR at the behest of the US government under the terms of the Canada-US Extradition Treaty. It’s becoming clear that the arrest was more complicated than it appeared in the warrant issued by the New York prosecutor. China is taking out it’s anger against Canada because their economy is suffering from US tariffs which they don’t want to aggravate further. Canadian citizens have been arrested and been made to disappear in China in retaliation while Ms.Meng is living comfortably while out on bail in one of her two Vancouver mansions. She enjoys the freedom to travel within Richmond, Vancouver and the North Shore while she waits for the case to proceed through the Canadian courts. Based on previous Canadian cases where the subjects did not want to be extradited to Asia, including appeals and delays the current extradition could take from 5-10 years to be resolved.
The Chinese threats against Canada will impact the Metro Vancouver real estate market as much of the activity at the higher end is generated by Chinese buyers and sellers. If China removes Canada as an approved tourism destination the economy will falter as China is the #1 source of tourism income in Vancouver. We’ll have to wait and see if people who want to leave China are too afraid to come to Canada. There is strong support for Ms.Meng in the expatriate community.
Photo by elora manzo on Unsplash
November sales stats show a drop in sales numbers from October. There seems to be a wait and see game going on. Under the mortgage stress test many buyers are finding themselves qualified for a mortgage that is 20% less than they need to purchase a home that they want. They hope by waiting that an affordable property may become available. As a result last month’s sales were 34.7% below the 10-year November sales average and was the lowest sales for the month since 2008.
The slower growth of income and population plus rising interest rates have cut into the business and profit margin of CMHC according to the second quarter report. There were 205,000 new mortgages in the second quarter of 2018, down 11.9% from the same period in 2018. The second quarter was relatively buoyant so these figures will be lower in the fourth quarter.
The Canadian Press reports that according to 2019 projections by Royal LePage the national median home price will increase by 1.2% with Toronto and environs going up by 1.3% to $854,552. Vancouver is projected to have a .06% increase to a median price of $1.29 million. The winner is Montreal at a 3% projected increase and a $421,306 price point. The RE/MAX report projects a 1.7% average home price increase. In Vancouver it projects a fall of 3% in 2019 after a 2% rise in 2018. Chilliwack is singled out as a growth city with a potential price increase of 13%.
We will now dream of sugarplums and home sales in 2019. Overall it is a time of great opportunity in the housing market. Vancouver is never down for long.
Detached homes sales have declined 38.6% compared to November 2017. The detached benchmark price across the region is $1,500,100, a 6.5% decrease from November 2017. This includes a 1.6% decrease compared to October 2018.
Townhomes are desirable to downsizing buyers but the drop in the numbers of sales of detached homes has put many buyers plans on hold. Attached sales numbers are down 36.8% from November 2017, The benchmark price across the region is $818,500, a 2.6% price increase compared to November 2017. This includes a 1.3% decrease compared to October 2018.
Condominiums which were the choice of first time buyers last year have been heavily impacted by the mortgage stress test and the 2.3% price increase from November 2017. Apartment sales numbers are down 46.3% from November 2017. The regional benchmark price is $667,800. This includes a 2.3% decrease compared to October 2018.
"Home prices have declined between four and seven percent over the last 6 months, depending on property type."
as stated by Phil Moore President, Real Estate Board of Greater Vancouver. "We’ll watch conditions in the first quarter of 2019 to see if home buyer demand picks up ahead of the traditionally more active spring market."
The sales to active listing ratio for November 2018 is 13.1%. By property type, the ratio is 8.9% for detached homes, 14.7% for townhouses, and 17.6% for condominiums.
In November 2018 the benchmark price for a detached in North Vancouver was $1,569,100 down 7.6% in one year, up 62.7% in 5 years and up 93.7% in 10 years.
In Richmond the detached benchmark price was $1,606,900 down 7.2% in one year, up 65.4% in 5 years and up 119.8% in 10 years.
In Vancouver East the detached benchmark price was $1,470,800 down 6.5% in one year, up 72.0% in 5 years and up 140.5% in 10 years.
In Vancouver West the detached benchmark price was $3,205,500 down 10.3% in one year, up 52.9% in 5 years and up 131.8% in 10 years.
In West Vancouver the detached benchmark price was $2,738,300 down 13% in one year, up 40.6% in 5 years and up 104.7% 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 affordable inventory.
In November 2018 the benchmark price for a condo apartment in North Vancouver was $574,000 down 0.2% in one year, up 57.7% in 5 years and up 75.4% in 10 years.
In Richmond the condo benchmark price was $658,500 up 4.9% in one year, up 80.6% in 5 years and 99.9% in 10 years.
In Vancouver East the condo benchmark price was $551,400 up 2.0% in one year, up 77.7% in 5 years and up 101.5% in 10 years.
In Vancouver West the condo benchmark price was $781,900 down 3.6% in one year, up 65.5% in 5 years and up 89.0% in 10 years.
In West Vancouver the condo benchmark price was $1,207,500 up 4.6% in one year, up 68.8% in 5 years and up 91.1% in 10 years.