New weekly #REWCAP roundup of latest Greater Vancouver market stats reveals prices remain robust
Although July so far seems to be seeing a further slowing in sales activity, with 420 homes registered as sold in the Greater Vancouver region between July 10 and 16, the majority of those deals -260 of them – were made at over list price. Just 119 of the 420 sales went for under asking, with a mere 41 sold for exactly the sticker price.
The property that sold for most over asking was a 2.5-acre parcel of land in Maple Ridge with two homes including a three-bedroom house, listed at $620,000 but sold for 37% more than that at $851,000.
The most expensive listing to be snapped up last week was also a property where the value was all in the land. This was a $4.6 million probable-teardown on Vancouver’s West Side neighbourhood Southlands, which is described as a “91.5-by-200-foot private park-like lot close to golf courses, UBC, transit and great schools.” After 52 days on the market, it sold for nearly $400K under its original price of $4,999,888 (and note the no-doubt-deliberate use of Chinese lucky number 8 in that price).
At the other end of the scale, the least expensive home thus far registered as sold last week is a $150,000, one-bedroom, 634-square-foot, ground-level condo in a 1970s Richmond building. It took just six days to sell, although for only $200 above its $149,800 list price.
There were 1,291 homes newly listed on the market July 10-16, a little higher than the previous week’s 1,255 properties and the same week in June (1,241).
Highest strata fees are found in tallest buildings, finds CMHC study – but what’s the average cost?
Do you ever wonder whether the fees on the condo you’re living in – or thinking of buying – are typical for the type of building?
A new report released July 4 by Canada Mortgage and Housing Corporation reveals the average condo fee in Canada, across all building types and ages, to be $302 a month. The report uses the most recent available nationwide census and survey data up to 2011.
The average condo fee varied significantly between high- and low-rise buildings, and the age of the building. Households living in high-rise towers paid significantly more than those living in low-rise buildings and town homes or row houses.
Condo fees were also found to get progressively higher, the older the building.
The CHMC said, “In 2011, this trend was consistent among fee payers living in high-rise buildings and row houses, and somewhat consistent in other dwelling types.
It added, “Fee payers living in older dwellings were more likely to occupy units with more bedrooms than fee payers living in newer dwellings.”
The report also broke the results down by province and city, with average condos fees in Vancouver standing at slightly lower than the national averages, at $265 a month for a low-rise apartment, $320 a month for a high-rise and $238 for a row home/townhouse.
The CMHC found that across Canada, an increasing percentage of homeowners pay condo fees, as condo ownership gradually increases compared with single-family home ownership. The proportion of households in owner-occupied dwellings who said they pay strata fees increased from 7.5% in 1996 to 12.7% in 2011.
Unsurprisingly, households paying strata fees were found to have lower average incomes than other homeowners. The inflation-adjusted average pre-tax income of households paying condo fees was 10% lower than households not paying strata fees in 1995, and this income gap increased to 25% in 2010.
With Canada’s economy strengthening and key policymakers’ speeches and interviews hinting at a forthcoming rise in interest rates, the loonie has risen to a four-month high.
The speeches follow the US Fed’s strong moves in raising rates three times in seven months, with more US rate hikes likely to be on the horizon.
Canada has seen historic low interest rates over the past few years – but Bank of Canada Stephen Poloz told CNBC in Europe earlier today that, “It does look as though cuts have done their job… We certainly need to be at least considering that whole situation [of raising rates] now that excess capacity is being used up steadily.”
However, Poloz added, “The US [is] obviously way out in front. Canada [is] some distance, perhaps as much as two years, behind, given the oil shock.”
This two-year lag jives with predictions in the British Columbia Real Estate Association’s latest Mortgage Rate Forecast, released June 28.
The BCREA conceded that the chances of an interest rate hike had increased recently, but predicts that this will not come to fruition until early 2018.
The report said, “While the economy is currently very strong, Canada has had several false alarms when it comes to an imminent increase in interest rates. The case for Bank of Canada tightening this time around, however, may be stronger than in the past.”
The BCREA reiterated Poloz’s sentiment that 2015 rate cuts had “done their job” to deal with the oil crisis as one of two reasons why interest rates might rise.
“Firstly, a rate increase of 25 basis points would mainly undo the rate cut made in 2015 to deal with the dramatic decline in oil prices. With the macroeconomic consequences of that oil shock dissipated, there is no longer a need to keep interest rates at their current level.
“Secondly, rapid growth in the Canadian economy means that slack in labour and products markets is being eliminated faster than expected, which should begin to put upward pressure on inflation, with a return to the Bank’s two per cent inflation target sooner than currently projected.”
However, contrary to some predictions that the rise could happen as soon as next month, the BCREA said it does not think interest rates will go up this year.
“While the likelihood of the Bank raising its target rate by the end of 2017 has certainly increased, we still expect the Bank to hold off until early 2018, particularly if oil prices remain low and inflation fails to pick up.”
-Originally published on rew.ca by Joannah Connolly
The days are getting longer. Ice cream truck jingles echo up and down the block. But the surest sign that summer is here? It just might be those “For Sale” signs popping up like dandelions in your neighborhood.
Yep, we’re smack dab in the middle of the most popular time of the year to buy and sell a home. If you’re thinking of starting your home search, your first instinct as a savvy shopper might be to stay away and wait for the weather—and the market—to cool down. Why battle the crowds and bidding wars if you’re in no rush to move?
But there’s no reason to sweat the idea of buying in the summer. In fact, there are some distinct advantages to making your way into the marketplace during housing’s hottest season—as long as you can stand the heat of a little competition.
- Prices aren’t necessarily higher
A huge myth about the real estate market is that homes sell for more in the summer and less in the winter. This is simply not true. Let’s be clear: Home prices do usually peak in June–August. And it’s a seller’s market in most areas. But other forces beyond the summer sun play a major role in a home’s asking price. They include the number of similar homes also for sale in a given area, interest rates, and the job market.
What is true, however, is that there are more homes on the market in summer than in the winter, and there is also a higher number of sales in the summer than the winter.
Which leads us to our next summer-buying advantage.
- Inventory is broader
You wouldn’t buy a car from a dealer with only two models for sale, so why limit your options when it comes to picking a house? The open-plan kitchen you’ve been yearning for or a home in a stellar school district is much more likely to pop up in a busier marketplace.
The large inventory offers significantly more opportunities for purchasers to identify specific floor plans, amenities, and locations, feel more confident in their search because additional properties hit the market every week.
In some less competitive markets, knowing that there are plenty of homes for sale can give you more leverage for price negotiation, and peace of mind knowing that if you have to walk to away, another home will be just around the corner.
- Buying and selling at the same time could be easier
If you need to sell your current home before you can buy another, you’ll likely have an easier time with the balancing act during the summer. Rather than getting trapped with two mortgages, you could have a more seamless transition in a busier market.
If the client needs to sell a home before buying, the home will be more likely to sell, and potentially at a good price, allowing the client to purchase their new home sooner.
But remember, these transactions take time, so if you’re planning on pulling off a double act, get ready as soon as possible so you can capture as much of that golden season as you can.
- School’s out for summer
Any beleaguered parent can tell you why this factor is crucial. By waiting until summer to make your move, you can minimize disruption to your kids’ lives. Plus, their schedule is clear to bring them along to showings. (Beware, though, not all agents appreciate young kids underfoot.)
House hunting during the summer break from school means that kids can more readily attend showings— important when offer time is of the essence and parents want each member to approve of the new family home.
And if the sellers have kids, they might also be trying to cement a sale in time for the new school year—and will likely be more motivated toward the end of the season.
Sellers who find their properties still on the market as summer draws to a close and the ranks of buyers thin out may be more open to price negotiation. In addition, those buyers who were unable to secure a home after months of looking and making offers may become fatigued and drop out of the hunt.”
- You’ll get to know the lay of the land
It’s easier to do a little detective work on your potential home when the weather’s nice and the days are longer. Trees and flowers are in full bloom, so you’ll get a better idea of your prospective new yard. You can step out on that back porch and envision what it will really, truly be like to live there and host your long-anticipated Margarita Mondays. Plus, everyone’s more active, so you’ll get a better feel for the community.
Summer brings people out of their homes, so while you are home shopping with your agent, you will get the chance to take the pulse of the neighborhood and see your potential neighbors. Families can often get a feel for the neighborhood’s kid population during the day in the summer. But beware! Sometimes the romance of summer can distract you from some red flags.
It is fine to stop and smell the roses, but also pay attention to what lurks behind them. The eyesore of a junk pile in your neighbor’s yard. Or the giant cellphone tower you didn’t see through those beautifully full trees—that now you can’t unsee. And make sure that foliage isn’t blocking any potential problems with the home, such as foundation issues or peeling roof tiles.
You should also use this opportunity to test how the property holds up in warm weather. See how well the air conditioning works when it’s pushing 100 degrees outside, and open all the windows to see if any stick or simply won’t open. Of course, your home inspector will check these things, but it never hurts to get a jump-start.
If your home is struggling to catch the eye of a buyer, it could be for an entirely valid reason. Maybe you’re stuck in a sluggish market or have the poshest place on the block (always a tough sell). But there’s another possibility, too—your home could be sitting on the market because of a rookie selling mistake. All of us can make ’em, even those of us who actually have a few home sales under our belts.
The good news? These basic slip-ups can be easily corrected or avoided. To help you out, we spoke to real estate agents to identify some of the most common mistakes people make in trying to sell their home. Sidestep these flubs to avoid sabotaging your own sale.
Rookie mistake No. 1: Overpricing your home
All sellers want to get top dollar for their house. Unfortunately, says Michael Cowling, a real estate agent in Richmond BC with RE/MAX, “many people overestimate the value of their home.” For example, she says, “if a neighbor sells their house for $1,200,000, you might automatically assume that your house is worth at least that much money, but that’s not necessarily the case.”
“Price is typically the reason why a house doesn’t sell. And the last thing you want to do is list too high right from the start, because it could cause your house to sit on the market—which might require you to make a serious price reduction in order to sell it.
“If a home is on the market for more than four weeks, prospective buyers are going to assume that there is something wrong with it,” says Michael.
Your best approach: Listen to your agent’s listing price recommendation, and try not to get too emotional if your agent’s suggestion isn’t as high as you’d hoped.
Rookie mistake No. 2: Not budging on price
Even if the price is right, you might need to be flexible—especially if you’re in a buyer’s market. So, if you receive an offer that’s below list price, you should at least consider making a counteroffer. After all, receiving $5,000 or $10,000 less for your house than what you wanted is a small concession in the long term.
Rookie mistake No. 3: Doing a lousy job of cleaning
Let’s make this clear: Your home needs to be spotless. That might mean hiring a professional cleaner to do a deep and thorough cleaning of the entire place. You might want to consider renting a storage locker to make the process of cleaning out the garage, closets, and attic less onerous. But it will likely be worth it, because clutter distract buyers in a big way.
Bonus: A clean house will also enable you to take great photographs for your listing (see our next point).
Rookie mistake No. 4: Using crummy photographs
Unless you’re an artist with the camera, you’ll want to hire a professional photographer to take pictures of the house, because nearly half of home buyers start their search online, a recent survey by the National Association of Realtors® found.
“You can write a beautiful description, but people aren’t initially focusing on the description, they’re looking at the pictures.”
A good photographer is worth the investment by your agent.
Rookie mistake No. 5: Leaving religious or political belongings in plain sight
“You never know what type of buyer is going to look at your house,” says Michael, so put away all personal belongings—specifically, religious or political items, which can be awfully polarizing. “You don’t want anything that’s going to distract buyers.”
Rookie mistake No. 6: Lurking around at your own open house
This is a huge mistake for several reasons.
“If the buyer knows that the seller is there, they might feel uncomfortable asking the listing agent honest questions about the home,” says Michael. Buyers might also feel like they’re intruding if you’re present, which is kind of crazy.
“People like to open closet doors and look closely at the home without someone hovering over their shoulder”.
Rookie mistake No. 7: Making it difficult for agents to show your home
When selling your house, “be prepared for little privacy,” says Michael. Translation: You’ll need to be flexible when buyers ask to see your home on short notice. To make it easy for buyer’s agents to show the property while you’re away (see No. 6), let your agent install a lockbox with keys to the house.
Rookie mistake No. 8: Leaving pets at home during showings
Some people are simply scared of pets, (yes, even your cute little pug), or they might have allergies that will make them want to steer clear. So don’t just crate your dog or cat during showings; instead, take them with you or drop them off with a neighbor while buyers are viewing the house. And because pets, like humans, tend to accumulate lots of stuff—leashes, collars, toys, water bowls, and the like—make sure you stow their paraphernalia in a cupboard or closet. And do a quick vacuum of pet hair before you go!
Federal Reserve officials forged ahead with an interest-rate increase and additional plans to tighten monetary policy despite growing concerns over weak inflation.
Policy makers agreed to raise their benchmark lending rate for the third time in six months, maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5 trillion balance sheet this year.
Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely, the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. The committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.
Policy makers also issued forecasts showing another three quarter-point rate increases in 2018, similar to the previous projections in March.
The Feds actions and words struck a careful balance between showing resolve to continue tightening in response to falling unemployment while acknowledging the persistence of unexpectedly low inflation this year.
Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the committees 2 percent objective over the medium term, the statement said.
The committee had previously described inflation as close to their goal.
Data released earlier Wednesday showed that, on a year-over-year basis, the core version of consumer price inflation, which strips out food and energy components, slowed for the fourth straight month, to 1.7 percent in May. Following that news, the probability that the June hike would be followed by another increase this year dropped to about 28 percent from 48 percent, according to pricing in fed funds futures contracts.
In a separate statement on Wednesday, the Fed spelled out the details of its plan to allow the balance sheet to shrink by gradually rolling off a fixed amount of assets on a monthly basis. The initial cap will be set at $10 billion a month: $6 billion from Treasuries and $4 billion from mortgage-backed securities.
The caps will increase every three months by $6 billion for Treasuries and $4 billion for MBS until they reach $30 billion and $20 billion, respectively.
Officials didn’t reveal the exact timing of when the process will begin this year, as well as specifically how large the portfolio might be when finished.
The FOMC retained language that it expects to keep raising interest rates at a gradual pace if economic data play out in line with forecasts.
Yellen is scheduled to hold a press conference at 2:30 p.m. where reporters are likely to ask, among other topics, about her outlook for rates and the balance sheet.
Wednesday’s decision brings the Feds target for the federal funds rate, which covers overnight loans between banks, to a range of 1 percent to 1.25 percent.
The vote was 8-1, with Minneapolis Fed President Neel Kashkari dissenting from a rate increase for the second time this year, preferring no change.
Quarterly projections for 2018 and 2019 showed Fed policy makers largely maintained their expected path for borrowing costs. The median forecast still has the central bank making three quarter-point increases in 2018; the end-2019 rate is seen at 2.9 percent, a slight change from 3 percent in the March projections.
The new forecasts may in part reflect changes in the FOMC since the last meeting, including the departures of Governor Daniel Tarullo and Richmond Fed President Jeffrey Lacker, and the arrival of new Atlanta Fed President Raphael Bostic.
In any event, interest-rate projections for 2018 and 2019 are becoming less reliable guides to future policy amid the likelihood that the Feds Board of Governors will see a major makeover in the next year.
The Fed has in recent weeks wrestled with contradictory signals from unemployment and inflation. Joblessness in the U.S. dropped to a 16-year low at 4.3 percent in May. Despite that, the Feds favorite measure of price pressures, excluding food and energy components, rose just 1.5 percent in the 12 months through April, down from 1.8 percent in February. The Feds target for inflation is 2 percent.
The recent economic developments prompted FOMC members to drop their median projection for inflation to 1.6 percent in 2017, from 1.9 percent forecast in March. The median forecasts for 2018 and 2019, however, were unchanged at 2 percent.
They also reduced slightly their estimate for the lowest sustainable level of long-run unemployment to 4.6 percent from 4.7 percent. That change, and the reduction in the 2017 inflation forecast, could reduce the urgency policy makers feel to hike rates again in coming months, especially if inflation remains soft.
Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined, the FOMC statement said.
Economic-growth projections were little changed, with the median forecast for 2017 moving to 2.2 percent from 2.1 percent.
The FOMC next meets in six weeks, on July 25-26. A Bloomberg survey of 43 economists conducted June 5-8 showed a median expectation for rate hikes in June and September, followed by the start of balance-sheet unwinding in the fourth quarter.
Copyright Bloomberg 2017
Home buyer activity returned to near record levels across the Metro Vancouver* housing market in May.
Residential property sales in the region totalled 4,364 in May 2017, a decrease of 8.5 per cent from the 4,769 sales in May 2016, an all-time record, and an increase of 22.8 per cent compared to April 2017 when 3,553 homes sold.
Last month’s sales were 23.7 per cent above the 10-year May sales average and is the third highest selling May on record.
“Demand for condominiums and townhomes is driving today’s activity,” Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said. “First-time buyers and people looking to downsize from their single-family homes are both competing for these two types of housing.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 6,044 in May 2017. This represents a 3.9 per cent decrease compared to the 6,289 units listed in May 2016 and a 23.2 per cent increase compared to April 2017 when 4,907 homes were listed.
The month-over-month increase in new listings was led by detached homes at 27.1 per cent, followed by apartments at 22.7 per cent and townhomes at 14.1 per cent.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 8,168, a 5.7 per cent increase compared to May 2016 (7,726) and a 4.5 per cent increase compared to April 2017 (7,813).
“Home buyers are beginning to have more selection to choose from in the detached market, but the number of condominiums for sale continues to decline,” Oudil said.
The sales-to-active listings ratio across all residential categories is 53.4 per cent. By property type, the ratio is 31 per cent for detached homes, 76.1 per cent for townhomes, and 94.6 per cent for condominiums.
Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“While sales are inching closer to the record-breaking pace of 2016, the market itself looks different. Sales last year were driven by demand for single-family homes. This year, it’s clear that townhomes and condominiums are leading the way,” said Oudil. Contact me to understand the different factors affecting the market today.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $967,500. This represents an 8.8 per cent increase over May 2016 and a 2.8 per cent increase compared to April 2017.
Sales of detached properties in May 2017 reached 1,548, a decrease of 17 per cent from the 1,865 detached sales recorded in May 2016. The benchmark price for a detached property is $1,561,000. This represents a 3.1 per cent increase over May 2016 and a 2.9 per cent increase compared to April 2017.
Sales of apartment properties reached 2,025 in May 2017, a decrease of 5.8 per cent compared to the 2,150 sales in May 2016.The benchmark price for an apartment property is $571,300. This represents a 17.8 per cent increase over May 2016 and a 3.1 per cent increase compared to April 2017.
Attached property sales in May 2017 totalled 791, an increase of 4.9 per cent compared to the 754 sales in May 2016. The benchmark price for an attached property is $715,400. This represents a 13.1 per cent increase over May 2016 and a 1.9 per cent increase compared to April 2017.
Originally published: Housing Market Insight – Vancouver CMA – Date Released – May 2017
When home prices in the City of Vancouver fluctuate, there is a measurable effect on home prices of other municipalities; this is known as a spill-over effect. The spill-over effect from Vancouver takes several years to fully set in for other municipalities. Within commuting distance of Vancouver City, the length of the commute and the size of the spill-over effect are related. House prices in municipalities that are outside of the commuting range are still affected by price changes in Vancouver.
In the fourth quarter of 2016, in CMHC’s Housing Market Assessment, moderate evidence of house price acceleration was detected in the Vancouver census metropolitan area (CMA), and in the following quarter acceleration was also measured in the Victoria CMA. Market commentators have also suggested that strong house price growth in Vancouver in 2016 was spilling over from Vancouver to other centres in British Columbia. The purpose of this report is to measure the link between house prices in the City of Vancouver and other major centres in British Columbia, and to discuss possible causes.
Spill-over effects from Vancouver City are strongest in Richmond and the North Shore. CMHC estimated how price movements in the City of Vancouver affect municipalities that are both nearby and farther away. Our results show: There is a detectable spill-over effect. The spill-over effect is strongest in municipalities adjacent to the City of Vancouver. As the distance increases, the spill-over effect generally becomes smaller, but only up until a point. Beyond commuting distance, the effect is similar regardless of distance. “Our estimates show that on average a 1.0% increase in house prices in the City of Vancouver was immediately transmitted to places like Burnaby, Richmond, and the North Shore resulting in price increase of 0.45% in Burnaby and Richmond and 0.73% in the North Shore.”
Figure 1 shows the spill-over effect from Vancouver to other municipalities in British Columbia. These results measure price changes due to a random and unexpected increase to the house prices of Vancouver after accounting for other sources of variation. The reported results are an historical analysis of the house price data in British Columbia and they can be thought of as the average spill-over effects of the past. That means that this is not a forecast of how spill-over effects will happen in the future, as the exact causes of spill-over effects are complex and differ over time. In addition, these values do not imply that every price movement in Vancouver has resulted in a visible price movement in other markets. There are other factors that may have cancelled out these effects or amplified them, depending on the particular example. These effects are related to changes in the Vancouver housing prices in isolation of other factors that would jointly affect house prices in B.C. centres like province-specific or national economic developments and regulatory changes targeted to housing markets.
Short-run Spill-Over Effects Mainly Affect Direct Neighbours of Vancouver City. Our estimates show that on average a 1.0% increase in house prices in the City of Vancouver was immediately transmitted to places like Burnaby, Richmond, and the North Shore resulting in price increase of 0.45% in Burnaby and Richmond and 0.73% in the North Shore. The immediate response of other centres was also detected.
Spill-over Effects Take a Long Time To Be Fully Realized. The spill-over effect only becomes fully realized over a long period of time, such as 5 years or more, for most municipalities in British Columbia. As with the short-run effects, the further away from Vancouver, the lesser the extent of the spill-over effect up until a point. Beyond commuting distance, the effect is similar regardless of distance. After five-years, in places as far away as Kelowna, for example, prices were 0.5% higher than they would have been otherwise. In Richmond and the North Shore, the long-run spill-over effect from Vancouver was as strong as the long-term effect on Vancouver itself. When prices increase unexpectedly in Vancouver, they eventually had the same effect on Richmond and the North Shore. For Burnaby, the link between prices was somewhat weaker. This is possibly due to the historically higher share of apartment sales in the Burnaby market as compared with Richmond and the North Shore.
Spill-over effects are consistent with a trade-off between commuting distance and lower house prices. House price levels vary from one municipality to another for many reasons including but not limited to: proximity to employment or economic activity, available services, land availability and use, property tax rates, natural and geographical features. When the difference in house prices between two neighbouring areas exceed what is warranted by such factors, home buyers have an incentive to buy in the lower priced area. A very common example is when a buyer chooses to locate in a municipality Vancouver increased faster than in Surrey or Langley. In all likelihood, some buyers chose to locate in areas with longer commutes because of the additional cost required for living closer to Vancouver. To be clear, this data is not conclusive evidence of this effect because we do not explicitly know buyer motivations. Vancouver has notably different type and quantity of supply than Surrey, for example, but the incentive structures are clear; there is a trade-off between house price and commute. With that in mind, this data also highlights the fact that the incentive structure changes over time, meaning future spill-over effects will likely differ from what occurred in the past.
Migration out of Vancouver provides another route for spill-over effects. The steady migration out of Vancouver means that there has long been a flow of potential buyers from the Vancouver CMA housing market into other parts of British Columbia (Figure 5). This out migration provides a clue as to another potential channel for spill-over effects. To the extent that the migration data approximates the flow of homeowners in Vancouver leaving for other parts of the province, price fluctuations in Vancouver house prices affect the home purchasing budgets that migrants take with them to other markets. Intraprovincial migrants leaving Vancouver were typically over the age of 30, with the highest concentration between the ages of 45 and 50. In other words, the people leaving Vancouver were very likely to have some home equity built up, especially considering the 65% homeownership rate in the Vancouver CMA combined with the fact that homeownership rates are higher, on average, for older demographics. Because there are other ways for Vancouver to influence other municipalities, spillover effects from Vancouver decrease with distance, but only up until a certain distance. For markets like Kelowna, the spill-over effects are likely linked to people leaving Vancouver and settling elsewhere.
Housing Market Insight – Vancouver CMA – Date Released – May 2017
Secondary suites continue to be an affordable housing option for Metro Vancouver area residents, benefitting home owners as mortgage helpers and tenants as a less expensive roof over their heads. Secondary suites are so prevalent that Canada Mortgage and Housing Corporation estimates there are now about 101,808 accessory suites in the Metro Vancouver region.
With so many suites in our area, it’s important to remind home owners to let their insurer know about a suite and to buy insurance to cover the suite. “Whether the suite is legal or illegal, having insurance coverage is vital. There is a misconception among home owners that their existing policy will cover a suite.
A home owner who doesn’t tell their insurer about a suite and that there are two households living in the home, opens themselves up to significant risk.
An unreported and uninsured suite could potentially void the existing insurance contract on the primary residence if there is a flood or a fire. Some home owners may not properly insure their property because of fear that their insurer will report the suite to the local municipality. This isn’t true, however its always good advice to comply with local bylaws and report and register the suite with the local municipality. How much will insurance cost? “About 10% of the cost of your total home insurance. So if you’re paying $1,200, it will cost you an additional $120.
Home owners who rent their secondary suite can also buy separate comprehensive rental insurance. Depending on the insurer and on the policy, this can cover vandalism and damage by tenants, typically up to a payout maximum limit of $5,000. This insurance doesn’t cover the tenant’s belongings. The tenant has to buy their own insurance for their possessions.
Home owners with laneway homes, coach homes above garages and other authorized or unauthorized accommodation on their property should also let their insurer know and should buy appropriate coverage. When buying a property with a suite it’s a good idea to find out beforehand whether the property is insurable.
Based on the official community plans for Metro Vancouver municipalities, there is room for an additional 215,000 suites in the region.
Source: Greater Vancouver Real Estate Board
As originally published on www.crea.ca
Because all real estate is local, home prices can vary widely across Canada. REALTORS® often use average prices because they’re easy to calculate: simply divide the value of homes sold by the number of sales. The result is an “average” price that can be compared from one time period to another and across housing markets.While this sounds simple enough, it actually isn’t. The problem with using averages to gauge price levels or changes is that extremely high value home sales distort calculations.
Imagine 10 people are at a bar, each of whom earn an annual income of $50,000. There’s no variation in their incomes and the average annual income for the group is $50,000.
Now suppose Mark Zuckerberg, CEO of Facebook, sits down at the bar and his annual income is, say, $1 billion. The average annual income for the group of 11 is now $90,954,545 – yet no one’s individual salary has changed. The average is still statistically correct, but misleading and/or misrepresentative.
Similarly, when the number and/or proportion of home sales rises in three of Greater Vancouver’s most expensive neighbourhoods (namely, West Vancouver, Richmond and Vancouver West), the national average price climbs (all other things being equal). However, that doesn’t mean selling prices have climbed in other neighbourhoods.
As the chart above highlights, from May 2008 to January 2009, home sales in these three neighbourhoods dropped by 72%, contributing to a drop of over $43,000 in the national average price. As home sales there rebounded from March to October 2009, the national average price jumped back up by $52,000.
Between April and August 2010, sales again dropped in these neighbourhoods, after CMHC introduced tighter mortgage regulations. This contributed to a decline in the national average price. Fast-forward to early 2011 (January to May), when home buyers in these neighbourhoods advanced their purchasing decisions to beat further mortgage regulations, and the national average price rose. It then subsequently declined between May and December 2011 as sales in these three neighbourhoods dropped once the regulations took effect.
More recently, due to a surge of activity in the Greater Vancouver market between August 2015 and February 2016, the national average price climbed by more than $70,000. However, between February and October 2016, the national average price slipped by just $21,000 as home sales in these neighbourhoods decreased by over 71%. The smaller decline in the national average price reflected rising sales activity in the Greater Toronto Area, where the proportion of national sales activity is greater than any other major urban centre and ranks among Canada’s more expensive markets.
It’s difficult to know whether average price changes reflect an actual appreciation or decline in home prices versus changes in the mix of sales. That’s why the MLS® Home Price Index is a far better way of gauging price trends and levels: unlike average and median prices, it isn’t prone to being distorted by changes in the sales mix from one month to the next.