Greater Vancouver Real Estate News

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Oct. 26, 2021

Renting vs. Buying a Home

 

Is it better to own or lease property? Learn how to consider your options.

If you are at a point in your life where you are considering homeownership, you probably have some questions. Whether you are currently living at your parents’ home and looking to take the first steps out on your own, or are currently renting or rooming with someone and want to break-free, there are lots of things to consider!

From renting an apartment to owning a single-family home, it all comes down to where you see yourself living and what you can afford. The question then becomes renting versus buying. The beauty is, there is no right or wrong answer when it comes to this discussion, but it is important to look at all the angles before making a decision.

To help you with this, we have broken down the reasons and benefits of renting, as well as the reasons and benefits of buying - and why owning can still be possible, even if you're unsure.

Pros and Cons of Renting a Home

One of the most common reasons that people rent is affordability and the belief that renting is cheaper than owning a home. This can be true in that there is no upfront cost with renting, but you also don’t gain equity either. In addition, there can be times when monthly rent costs are higher than monthly mortgage payments.

Another reason someone may choose to rent is that they simply aren’t sure where they want to live, or maybe they cannot find a place that fits their needs. If you are new to an area, you may want to rent in the meantime so you can get to know the neighborhoods and determine which area is the right fit for you. In some cases, you simply may be unable to find a home that is affordable to buy in the area you want or within a reasonable commute from your work.

To give you a better idea of whether or not renting is right for you, we have put together a little list of pros versus cons to help you decide:

Pros of Renting Property:

 Less maintenance

Fewer repairs

Lower upfront costs

Short-term commitment for people unsure of where they want to plant roots

Protection from potential decrease in property value 

 

Cons of Renting Property:

Monthly payments may increase

Potential for being evicted / lease renewal not being approved

Paying into someone else's mortgage instead of building your own equity

Requiring permission to paint or remodel

 

Pros and Cons of Buying a Home

When it comes to buying, there are many great reasons to consider owning your first-home - and Canadians know it. In fact, even for Canadians 35 and under, more than 40% of households own their own homes! Overall, Canada’s homeownership rate is close to 70%.

One of the main reasons that people choose to buy is for the stability and peace of mind that comes with owning the place you live. This means you are not at risk of being put in a situation where the landlord wants to move their parents into the basement suite and you have to leave or having to deal with increased costs if you go to renew a lease agreement.

For others, the benefit of buying comes in building up equity and ensuring that nest egg for your future. When you choose to rent, you are paying into someone else’s mortgage and into their future but when you work towards buying your own home, suddenly all that money you invested is going to your future instead. This is an extremely important aspect to consider in today’s age when many are having trouble with the idea of saving for retirement.

To further show the benefits and costs of buying, we have broken down some pros and cons to help you to determine if this is the right path for you:

 

Pros of Buying a Home:

Freedom to renovate or modify your home as you wish

You are building up equity in a safe, secure investment as you pay down your mortgage

Potential for additional income if you have a rental suite

Stability and peace of mind from being in control of your investment and owning the place where you live

 

Cons of Buying a Home:

⦁  The risk of losing home value when you sell

⦁  Responsibility for ongoing costs, including mortgage principal and interest, property taxes, insurance and maintenance

⦁  Monthly payments can increase if interest rates go up at renewal time

⦁  Possibility of unexpected and potentially costly repairs

 Yes, You CAN Buy

Now, you may be thinking “how can I afford to buy a house?”. The reality is that if you can afford to pay the high cost of rent in today’s market, then you CAN buy. In fact, it may surprise you to find that 4 in 10 households spend over 30% of their pre-tax income on rent! This is higher than the commonly accepted affordability threshold.

The truth is that, in the long run, homeowners are often financially better off than renters. This is because homeownership enables forced savings that accumulate over the years, growing into a sizable nest egg. If you are unhappy renting or really prefer the idea of owning your own home, you CAN - all you need is the right information and the right preparation!

Some other things to consider before buying include:

Your credit score - do you have good financial standing to be approved for a mortgage?

Your savings - do you have any money put away for a down payment? If not, do you have wiggle room in your budget to start saving?

Your time - do you have the resources to maintain a home, from the yard to any necessary repairs?

Regardless of whether you choose to continue renting or make the leap to owning your own home, the most important factor is your financial security. Getting the right information and looking into all the options will ensure that you are making the best decision for yourself. 

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: Dominion Lending Centers

Posted in real estate
Oct. 20, 2021

Richmond increases rental requirement in future residential buildings

 

Richmond increases rental requirement in future residential buildings

Developers will be required to provide more rental housing supply through their upcoming developments in Richmond, either through an in-kind contribution that incorporates rentals into their project or a financial contribution towards the pool of funding for city-led projects.

During a public meeting last week, Richmond City Council approved policies that now require a minimum 15% low-end market rental residential floor area in multi-family projects with over 60 apartment units, within the area deemed to be the City Centre Area Plan. This is up from the previous policy of 10%.

For future multi-family projects with 60 units or fewer, the developers will be required to pay rental cash-in-lieu rates, which will be updated every two years.

The new rates vary between the new city centre and outside of city centre categories. They are $8 per sq ft outside of the city centre and $12 per sq ft inside of the city centre for single-family rezonings, $12 per sq ft outside of the city centre and $18 per sq ft inside of the city centre for townhouse developments, and $15 per sq ft outside of city centre and $25 per sq ft inside of the city centre for apartment developments with 60 units or fewer.

This is up from the existing citywide rates of $4 per sq ft for single-family, $8.50 per sq ft for townhouses, and $10 to $14 per sq ft for apartments. According to city staff, these rates (last updated in 2017) are now outdated relative to current housing market conditions, with both construction costs and average sale prices now significantly higher compared to five years ago.

The city cites an analysis by consultant GP Rollo & Associates, which found that these heightened rates are “appropriate” for most developments, including projects developed by smaller builders. The increases are not expected to significantly impact the pace of market developments or create significant financial risks for developers.

To establish fairness for projects already being considered, city council also approved a one-year grandfathering period for in-stream development applications currently being reviewed by the municipal government. Eligible projects can follow previous policies, as long as their application achieves the first reading with city council within one year of the adoption of the amended bylaws.

Vanprop Investments’ project of redeveloping their 50-acre Lansdowne Mall property is expected to be required to follow the new policies. It will be a significant source of new rental housing, with the high-density, mixed-use community projected to create up to 4,500 new homes for as many as 10,000 residents.

At a later time, city council will also consider a requirement to dedicate 10% of the residential floor area to market rental units in multi-family projects with over 60 units.

Under the previous policies, between January 2018 and August 2021, Richmond was able to secure an average of 118 units of low-end market rental housing each year, and an average of 142 market rental units.

The policy changes are expected to grow the average annual totals to about 180 low-end market rental units and 125 market rental units, in addition to market rental units generated through density bonusing.

Since 2007, the municipal government’s Affordable Housing Strategy has secured over 1,500 affordable housing units and $45 million in cash-in-lieu contributions. And separately, the Market Rental Housing Policy has catalyzed about 568 market rental units since 2018.

Roughly a quarter of Richmond households live in a rental unit, and about 1,000 households in the city are on the BC Housing waitlist for affordable housing.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

 

Source: the Hive, Kenneth Chan

Posted in real estate
Oct. 20, 2021

Fines loom for homeowners as Vancouver's Empty Homes Tax declaration deadline approaches

Homeowners who haven't declared their property's status for Vancouver's Empty Homes Tax for 2020 have just four weeks left to avoid incurring a fine.

The city issued a reminder in the form of a release today (January 5) that announced that only 46 percent of residential property owners have complied so far.

Most homes will not be subject to the tax, the city said, but all homeowners are required to make one declaration per residential property.

The tax was established in the 2017 tax year and amounts to 1.25 percent of a property's assessed taxable value. (The city has announced that this rate will more than double, to three percent, for the 2021 tax year.)

Property owners' who declare after the deadline of February 2, 2021, will be subject to a fine of $250.

The city said in the release that since the program's implementation, more than $61.3 million in net revenues has been raised through the tax to fund affordable-housing initiatives.

For help, you can call 3-1-1 between 7 a.m. and 10 p.m. daily (outside Vancouver, call 604-873-7000).

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source:  The Georgia Straight

Posted in real estate
Oct. 19, 2021

5 Canadian Real Estate Market Trends to Watch in 2021

5 Canadian Real Estate Market Trends to Watch in 2021

What's coming next for Canada's housing markets?

Every year is unique, but 2020 was truly unlike anything we’ve ever experienced in the Canadian real estate market. No one could have predicted that a pandemic would sweep across Canada, slowing the market initially and then driving prices upward in many regions across the country. Many markets across Canada even saw historically strong levels of activity as things picked up very quickly after a short period of inactivity.

Trying to foresee where things are headed this year is a difficult task, but we think these trends are certainly worth paying attention to over the next 12 months. If all five of these trends continue, it should be a very busy year for Canadian real estate.

 

Here are 5 Canadian real estate market trends to watch in 2021:

  1. A steady increase in home prices
  2. Detached homes will be in high demand
  3. Monthly home sales numbers will fluctuate less
  4. Mortgage rates will remain depressed
  5. Potential rental resurgence could change trends

 

  1. A steady increase in home prices

The Canadian Real Estate Association predicts that the national average home price will rise 9.1% in 2021, and if you’ve been following the market, that’s really not hard to imagine. Noting improving economic conditions, the association says that markets across Canada should either hold in terms of pricing or climb higher.

It’s important to point out that this is one of the most bullish forecasts, but nevertheless, most models from industry professionals and economists are predicting increases. Royal LePage, for example, is predicting a 5.5% increase in home prices across the country, citing limited inventory and unmet demand as the major market drivers. The company is predicting a 9% rise in Vancouver, a 5.75% increase in the Greater Toronto Area, a 0.75% and 1.5% increase respectively in Calgary and Edmonton, and a whopping 11.5% increase in Ottawa. Their full forecast for major Canadian cities is projecting no aggregate losses at all.

 

  1. Detached homes will be in high demand

Many factors should contribute to the expected increase in home prices across Canada this year, but it’s hard to overlook the impact of detached home sales on the market. Detached homes are already typically more expensive than condos, so seeing their demand rise should bring up overall sales volume. While condos are expected to see modest gains over the next year, detached homes are expected to become even higher in demand in every major Canadian city. Young families looking for more space, more home offices, and places to entertain once the pandemic passes are expected to drive the demand for detached homes to new highs, so keep an eye on this trend in 2021. Should the pandemic continue into the summer and fall, this demand could easily continue well into 2022.

For sellers, this is big news. It will be a seller’s market in most Canadian cities this year, and homeowners looking to downsize can expect to see a lot of interest in their detached homes. In a recent survey, 84% of RE/MAX agents and brokers agreed that 2021 would be a seller’s market, largely due to the high demand for more space and low-interest rates.

 

  1. Monthly home sales numbers will fluctuate less

One of the most notable things about the real estate market in 2020 was the wild monthly sale number swings, largely an effect of the COVID-19 pandemic. The CREA expects sales volumes to surge 7.2% to around 584,000 in 2021, but that total number will very likely be more evenly spread out over the year than in 2020. After things began to slowly open up last year after the initial lockdown period, interest in real estate peaked, and buyers flooded the market with offers. This year should have fewer fluctuations.

 

  1. Mortgage rates will remain depressed

To further support borrowing, we’d expect mortgage rates to remain low throughout 2021. The extremely low rates that were introduced last March to calm the markets have enticed first time home buyers who didn’t have their incomes affected by the pandemic. If mortgage rates do stay low throughout the year, which we’d fully anticipate, expect to see the real estate market remain very busy. For many, it’s being viewed as a welcomed opportunity to enter the market.

Interest rates remain low when The Bank of Canada wants to encourage spending and stimulate the economy, and given the challenges Canadians have faced resulting from the pandemic, that’s exactly what they intend to do. The Bank of Canada has stood by its comments last year where they claimed that rates would remain low until 2023, which is how long they expect it to take for the economy to make a full recovery.

"Canada's economic recovery will continue to require extraordinary monetary policy support," the bank said in October 2020. "We remain committed to providing the monetary policy stimulus needed to support the recovery."

Statements like this should give market watchers confidence that mortgage rates will remain low throughout 2021 and beyond.

 

  1. A potential rental resurgence could change trends

Renters could seriously change how the market looks in 2021. We’d expect renters to return to cities in larger numbers once vaccination levels reach the point where a herd immunity to COVID-19 can be established, which would be a trend worth watching. Many people moved back home with family when the pandemic began, but don’t expect that trend to stay around forever. When renters return to major city centers, investors should reenter the condo market, or at the very least be less inclined to sell. It may take until the end of 2021, but keeping an eye on where renters are choosing to live is a great way to tell where condo prices are headed in 2021 and beyond.

We’ll be watching these 5 real estate trends very closely in 2021, especially given how fast we’ve seen things change in the last year. While markets across the country will experience different trends, 2021 could be a year where Canada’s major real estate markets have more in common with each other than they have differences. Low-interest rates in many ways are the glue that holds many of these trends together, so buyers, sellers, and agents should be closely watching what The Bank of Canada is doing and planning accordingly.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

 

Source:  REW

Posted in real estate
Oct. 15, 2021

How to Build the Perfect Home Gym

 

Regular exercise is good for everyone. Daily morning walks, or jogs under the sunset are great ways at maintaining a daily exercise routine. There are also a number of gyms that offer memberships for those looking to go in and get more of a workout. There are a variety of workouts that can be done while going to the gym, but finding the time to get there can be difficult in between work, house upkeep, children and more. Setting up a home gym can be just as great as a facility, if not better. There is the convenience of waking up and going straight to the room with the gym equipment; no designated travel time which can take away from the workout in order to make it to work on time, or school pick up. There are no weekly or monthly membership fees, no extra costs to buy a protein shake at the end of the workout. You can even share your new free gym with others!

Here is how to build the perfect home gym.

Find the Perfect Space

There are a number of spaces in a home that can be used to create a gym. Many people choose a room in the basement or a spare guest room. Here are some of the other spaces that can be created into the perfect gym.

Garage

Create a cubby within the garage for a few gym equipment pieces such as a bike or treadmill. This would be great for anyone looking for a small start-up area. It leaves homeowners ample room to still park or use the rest of the garage for storage.

Dining Room

Some people love dining rooms, others don’t even go in theirs. Add a yoga mat, full-length mirror and some house plants and just like that, a simple, yet perfect zen den.

Basement Rec Room

The popular home gym choice is the basement rec room. This time let’s make it inviting. Floor mats, a few essential workout pieces, a mirror and inspirational wall decor; motivating space for anyone to feel welcome.

Attic

Converting an attic into a gym can be great for those up for the task. Depending on the attic and home, not much work may need to go into it. Throw on some wall paint, open up those windows and sweat!

Outdoor Gym

Maybe the perfect spot for a gym is the outdoors. The fresh air is great for everyone’s mental well-being, mix that with an awesome workout and the day is bound to be a good one. Having a covered porch is a great way to keep all the equipment dry and allows for workouts to happen outdoors whether it is rain or shine.

Bathroom

Having a big bathroom should be taken advantage of when choosing a space for a home gym. This can be a perfect place for a spa feel. Grab an elliptical and some eucalyptus cuttings to hang in the shower for afterward.

Equipment

Once space is decided and ready for the equipment, it is time to decide on what best suits the needs of the new gym user. Someone who is working with a small space can consider using equipment that has more than one use. A resistance bow is a great option as it works out the arms, core, chest and legs. A vertical climber is another great piece of equipment to get an intense workout in a small space. Using a climber will tone legs, arms and abs. Detachable pull-up bars, door mounting punching bags, and a compact treadmill are also fantastic workout equipment that can be used in small spaces. More factors to be considered are what types of workouts will be had in the home gym. Cardio, muscle building, yoga; all needing different types of equipment. Rowers, bikes, and step machines are all great ways to keep up with cardio. However, a leg press or bench press may be better when looking to build muscle.

Entertainment

Avid gym goers know there is always a tv to watch, or music to enjoy. The same should be said for a home gym. How easy is it to stay on a treadmill for 40 minutes while watching your favorite Netflix show? Adding speakers for motivating music, whether it is a playlist full of dance music or calming music you would hear at a spa. Tv is also great for Yoga videos to follow along with.

Mirrors

Mirrors are great for any gym, whether it be at home, outdoors, or at a facility. Mirrors, especially in a home gym can open up space and make it look twice as big, leaving people feeling less confined. Mirrors can also serve a purpose by allowing those who are working out to watch themselves and make any corrections as they go. Poor body posture is a common correction that needs to be made during workouts. It can go unnoticed unless it is seen by the person doing the workout, hence the mirror.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

 

Source:  MLS

Posted in real estate
Oct. 15, 2021

Tree trespassing: Maintaining border and boundary trees

Tree trespassing: Maintaining border and boundary trees

Trees are prominent features for both residential and commercial properties. Owners have a responsibility to understand and properly maintain the trees on their land – especially if they are shared with or may impact neighboring land.

Tree trespassing, often referred to as nuisance trees, occurs when the roots, branches, shedding debris or actions of an owner of a border tree interferes or causes damage to a neighboring property. Neighbours who have a tree trespassing on their property are legally entitled to remove any offending parts of the tree. The neighbor can cut the roots, branches or shedding debris of the trespassing tree without consent from the owner of the property on which the tree lives.

It is important to understand the difference between boundary and border trees.

These two classifications dictate responsibility and liability for maintaining trees and the safety of the property on which they stand. Boundary trees have a trunk or visible roots that grow across a property line. The landowner and neighbor are both responsible for maintaining these trees, as they are common property for both parties. If a boundary tree is to be removed, consent is needed from both parties.

Border trees have a trunk or visible roots that are close to but not over the property line. This means that the landowner is solely responsible for maintaining the tree or trees.

While the idea of tree trespassing and responsibility over trees might seem simple, there are actually a lot of laws involved that many property owners might not be aware of. For example, did you know that leaning ladders against a tree to cut overhanging branches is considered trespassing? And for the more contemporary tree-concerned citizen, did you know that using selfie sticks to inspect the neighbor’s trees is also considered trespassing?

These laws differ according to where the property is located, so it’s important to look up all provincial and territorial laws, regulations and policies before removing, trimming or even taking a photo of a tree that is shared with a neighboring property.

Additionally, if you’re purchasing a new property, it’s important to understand which trees are your sole responsibility and which will be a shared responsibility with neighbours.

Should a dispute over a neighboring tree – or damage due to a tree – arise, the first step in resolving the conflict is to notify the neighbor that their tree is causing damage or inconveniencing the adjoining property. This is the fastest way to settle disputes, as tree owners are not always aware of how their trees may be impacting a neighboring property.

This being said, the owner of the tree is responsible if the tree causes damage to the neighboring property. This includes the tree falling into the neighboring property.

The owner of the tree is not responsible for trimming parts of the tree that cross the border between the two properties – unless those parts are damaged and unsafe.

If a neighbor wants to trim parts of a border tree that is on their property, they can only do so to the property line. This includes tree parts that are underground and overhead. The owner of the tree is not responsible for incurring the cost of trimming.

Understanding the responsibility of tree ownership is an important part of owning a property. Sharing a tree with a neighbor should not be thought of as a nuisance, though.

For example, did you know that if a tree has fruit overhanging into a neighboring property, the neighbor is responsible for offering it back to the tree owner? Small acts like that are what make trees a delight to share with neighbours.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source:  Real Estate Magazine

 

Posted in real estate
Oct. 10, 2021

Posthaste: Buying a home in Canada is suddenly substantially more affordable — but there’s a catch

Don’t expect the income boost we’ve been seeing to last

Buying a home in Canada hasn’t been this affordable in four years, but there’s a catch — actually more than one.

According to a top financial institutions Economics’ Housing Affordability Measure that came out this week the proportion of income Canadians need to meet housing costs (mortgage, taxes, utilities) fell 3.3 percentage points to 47.3% in the second quarter, the most affordable since 2016.

Substantial improvements were evident from coast to coast with an average buyer now able to afford an average home in most markets, though the most expensive cities Victoria, Vancouver and Toronto remain the exception.

Even these cities though recorded the largest declines on the measure (which means homes got more affordable) and “decade-strong drops took place in virtually all markets we track,” said a top 5 banks senior economist.

But the catch to this new-found affordability is that it is rooted in the federal government’s unprecedented income support during the coronavirus pandemic.

The $56 billion Canadians received through government aid programs in the second quarter was more than the $23 billion they lost in wages because of COVID-19, said Hogue and this has distorted the housing affordability picture. Household disposable income leapt 11% and that income rise alone shaved 3.5 percentage points off the affordability measure. Lower mortgage rates and a slight drop in the cost of utilities also helped affordability, though gains were somewhat offset by higher home prices.

Without that surge in income, affordability would have worsened, and for that reason the bank expects the relief will be short-lived. “Everything else being equal, a return to pre-pandemic income levels would effectively roll back all of last quarter’s substantial gain in affordability,” said the senior economist.

So what does this mean for the housing market?

The expert said the improvement in affordability “no doubt greased the wheels” of housing’s stunning rebound this summer. In August average home prices in Canada soared almost 20% and sales spiked 33% from the same month last year.

But the pandemic is changing the housing market in other ways too.

Working from home and a decline in the appeal of big cities because of social distancing “are increasingly driving buyers further away from downtown locations into suburbs, exurbs and even cottage country,” said the expert.

Demand for rentals in urban centres is declining, and this is cooling investor interest in condos, he said. A growing desire for homes with more space is also hitting condo sales and shifting demand to single and semi-detached homes.

“The bottom line is we expect condo prices to weaken in larger markets next year, while we see prices for single-detached homes remaining generally resilient — albeit increasing at a slower pace. “

These trends were particularly noticeable in Toronto and Montreal.

At 64.5% income needed to support a home, Toronto is the second worst for affordability in the country, only behind Vancouver. Changing housing preferences have seen a boost in demand for single-family homes, the least affordable category, pushing prices up even further. Meanwhile, the supply of urban condos for sale has increased.

Montrealers also are increasingly migrating to the suburbs, said the expert. Buyers looking for bigger homes with a yard have been snapping up properties in Laval and on the north and south shores, and more condo owners on the Island are selling. Affordability here is at 40.5% despite rising prices, but the expert said that is unlikely to be sustained.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: Financial Post

 

Posted in real estate
Oct. 7, 2021

Way Out of Balance: Housing Supply and Demand During the Pandemic

 

· The unusual circumstances of the COVID-19 pandemic produced an unexpected and substantial increase in housing demand while the supply of listings fell.

·  As a result, buyers outnumbered sellers by as much as 2.5 to 1 in some months with markets in Victoria and the Fraser Valley seeing more than 7 potential buyers for every seller.

·  While demand has normalized somewhat, most provincial markets remain severely under-supplied and therefore far from balanced.

 

Introduction

During the COVID-19 pandemic, the demand for housing surged across BC despite a severe recession and closed borders. As a result of the crisis and lockdowns, homebuyers prioritized square footage over characteristics such as proximity to the urban core. This preference shift generated considerable relocation demand as square footage could be more easily purchased in smaller, less densely populated regions. Home prices rose in smaller markets which did not have adequate housing supply to absorb the large and sudden increase in demand. In this Market Intelligence, we use a novel modelling approach to estimate the total number of interested buyers over the course of the pandemic and highlight which regions suffered the most severe imbalances of supply and demand.

 

Methodology

A common theme across all markets during the past year, especially at the height of market activity in the spring of 2021, was the presence of multiple offers on listings. However, it is difficult to measure this phenomenon since only successful transactions are observable in the statistics and there are always buyers in the market that are unable to find homes. Therefore, sales statistics are only capturing a share of the potential pool of buyers. The market’s ability to satisfy total buyer demand depends on the availability of houses to purchase, measured by total listings, and the market’s efficiency at matching buyers with sellers. There are some markets where the ability to match buyers and sellers is very difficult due to factors such as demographics, affordability, and the characteristics of the housing stock. In these markets, we are more likely to observe more buyers than sellers, multiple offers, and accelerating prices.

Using a model framework recently developed by researchers at the US Federal Reserve, we can gain insight into how total demand evolved over the pandemic in different regions of the province and how much supply may be needed to bring those regional markets back into balance. A full description of the model is in Appendix 1. 

While the estimates of total demand produced by the model are ultimately just estimates of an unobservable variable, the results of this modelling exercise certainly match what we have observed in markets across the province, with estimated total demand overwhelming the supply of listings.

 

Supply-Demand Analysis

From our analysis we estimate that total demand for housing in the province surged during the pandemic to its highest level on record. At the peak of market activity in March 2021, an estimated 67,000 buyers were searching for homes across BC while only 24,000 listings were available that month. The result was significant upward pressure on prices and transactions often occurring after multiple offers.

Ultimately, some portion of this demand was satisfied through sales while other potential buyers exited the market due to affordability constraints or were otherwise discouraged due to dwindling supply. As the number of buyers has declined since March, the MLS® average sale price has been essentially flat on a monthly basis. 

On the supply side, the total inventory of homes for sale has been sliding downwards since before the pandemic. Once the pandemic struck in early 2020, the decline in listings activity continued as potential sellers withdrew from the market. 

New listings did recover after pausing during the initial months of the pandemic but have since declined to pre-pandemic levels. Net new listings (new listings minus withdrawals) are tightly correlated with net new buyers since most buyers are also sellers. At the onset of the pandemic, new buyers and new listings both sharply declined as the pandemic halted market activity. However, potential buyers swiftly returned to the market in early summer, outpacing new listings activity for several months.

 

Additional Supply Needed to Restrain Prices

The average home price in BC has increased by close to 25 per cent since the start of the pandemic. Even with total demand now currently trending toward historically average levels, we estimate that the provincial market would have needed to roughly double the number of active listings available over the course of the pandemic to meet the surge in demand and keep prices flat over the period.

Historically, the gap between the number of buyers and sellers has been predictive of growth in home prices. As expected, there is a strong positive correlation between our estimate of the ratio of total demand to active listings and growth in home prices, with prices rising much faster as the ratio of buyers to sellers rises. Our estimates show this ratio was particularly elevated during the spring of 2021, with buyers outnumbering sellers by a ratio of almost 3 to 1. The imbalance between supply and demand was even more pronounced in regions of the province experiencing significant relocation demand. Whether due to remote work opportunities, a pandemicinduced desire for space, or accelerated retirement plans, buyers flooded into markets on Vancouver Island, the Fraser Valley and the Okanagan, overwhelming limited supply and causing significant price increases. We examine these regional trends in the following sections.

 

Regional Markets

Since 2019, the number of active listings has declined in all four major regions of BC. As of August, the number of active listings ranged between 50 per cent and 80 per cent of the corresponding value in January 2019 in the same region.   

While the number of available properties declined, the number of buyers searching for properties surged shortly after the start of the pandemic. Naturally, this resulted in a rapidly rising buyer-toseller ratio. In most regions of BC, the buyer-to-seller ratio briefly dropped at the start of the pandemic, reaching the nadir in April 2020, but in the following months it quickly rose, dragging prices upwards. In most markets, the ratio hit its peak in March 2021, which was also the peak of prices and sales. It has since declined but remains elevated by historical standards. The following sections examine each region individually.

 

Lower Mainland

The buyer-to-seller ratio in the Lower Mainland tracks the overall value for BC very closely. During the slowdown of 2018 and 2019, buyers and sellers were closely matched, with demand picking up right before the pandemic prompting a drop in market activity. The ratio then rose rapidly until March 2021, surpassing a value of three, before declining to a value that remains elevated by historical standards.

The ratio for the individual real estate board areas located in the Lower Mainland reveals some very interesting trends. While the regions covered by the Real Estate Board of Greater Vancouver saw a sharp increase in the ratio of buyers to sellers, that increase paled in comparison to Chilliwack and markets within the Fraser Valley Real Estate Board such as Surrey, Langley, and Abbotsford. Those markets saw an enormous rise in total demand during the pandemic as potential buyers looked outside of the Vancouver area for more affordable space.

We estimate that at the height of the market during the spring, buyers outnumbered sellers by as much as 7 to 1 in the Fraser Valley and Chilliwack, resulting in many transactions involving multiple offers and rapidly escalating home prices. Indeed, while home prices rose about 14 per cent in the Greater Vancouver Area, prices in the Fraser Valley and Chilliwack were up close to 30 per cent.

 

Interior

A major theme observed during the pandemic was the relocation of buyers into less densely populated areas of the province. That trend is evident in our estimates for demand in BC’s Interior. Like all of BC, the buyer-to seller ratio in the Interior trended at a lower level prior to the pandemic following the introduction of the B20 mortgage stress test in 2018. During the pandemic the ratio briefly fell before surging to record levels. It then receded as frenetic market activity, rapidly rising prices, and dwindling supply may have discouraged potential buyers.

Interestingly, markets in the Okanagan and Kamloops are estimated to have had a much more acute imbalance of supply and demand during the pandemic compared to the Kootenay. In those markets, we estimated that during the peak months of market activity, buyers outnumbered sellers by as much as 3 to 1. However, in the regions covered by the Kootenay Association of Realtors, despite very low listings and record sales in 2020 and 2021, the ratio of buyers to sellers never exceeded a value of one. Distance from the Lower Mainland could be a factor, with less relocation demand coming from Vancouver, though we certainly did see some migration to the Kootenay and sales were very strong.

 

Vancouver Island

There is no more undersupplied housing market in BC than Vancouver Island, and Victoria in particular. Active listings for all Island markets are about 70 per cent below where they would need to be to ensure balanced growth in home prices. As a result of both soaring demand and crashing supply, the swing in the buyer-to-seller ratio was the most dramatic in this market. Again, following the same pattern, the ratio for the Island as a whole hit 5.5 in February 2021, meaning that there were 5.5 times as many buyers as sellers in that month. This was naturally associated with very rapid price gains as most transactions at this time were in multiple offer situations. From December 2020 to March 2021, the average sale price on Vancouver Island leaped roughly 20 per cent.

In Victoria, we estimate that at the height of the market, there were nearly nine potential buyers for each available listing, by far the most severe imbalance of supply and demand of any market in the province. As a result of this imbalance, home prices in Victoria increased 20 per cent during the pandemic with single family homes posting a greater than 25 per cent increase.

 

Northern BC

Much like what we observed in the Kootenay markets, the ratio of buyers to sellers in Northern BC was low prior to the pandemic and increased significantly during the pandemic but never exceeded a value of one, peaking at about 0.9 before declining.

Like the Kootenay, the BC Northern region is composed of many small and diverse markets. Most of the BC Northern region is a significant distance from the Lower Mainland which may temper potential relocation demand. Ultimately, the lower estimate of total demand is a result of a lower estimate of the matching parameter in the North, or of how well buyers and sellers can match to complete a successful transaction. That estimate is based on the average days on market for properties and the average search time of buyers. Properties in the North tend to be on the market longer than in other areas of the province. For example, during the pandemic, average days on market for a home in the BC Northern Real Estate Board area was about 43 days whereas that same measure was about 18 days for the Fraser Valley. That longer period of availability translates to less frenetic market activity and fewer discouraged buyers. Though that may not be true of individual markets within a region as diverse as the North.

Nonetheless, we did see a surge in new buyers in the North with monthly sales hitting an all time high in May 2021. While that surge was largely matched by new listings, record-high sales and a sharp decline in active listings translated to a 28 per cent jump in average prices for the BC Northern region.

 

Conclusions

The model-based estimates of the imbalance between supply and demand in this report confirm the trends observed throughout the pandemic as well as the broader long-run issues contributing to challenging affordability in BC.

The surge in demand during the pandemic, prompted by shifting buyer preferences and record low borrowing costs, caused a substantial increase in home prices, especially in smaller markets that did not have adequate supply to absorb a sudden increase in demand. While the pandemic is a rare event, the experience of the housing market during this unusual time further highlights how challenging it is for supply in the housing market to keep up with rapidly changing demand. This is particularly true in markets where the supply of new housing has been hampered by delays caused by municipal processes and approvals.

Without a coordinated strategy among all levels of government that incentivizes municipal governments to meet housing targets, we will continue to have markets that are vulnerable to rapid price increases at times when we see large shifts in demand.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

 

Source:  BCrea

 

 

Posted in real estate
Oct. 4, 2021

5 Signs That Now is the Right Time to Move

Learn when to really consider a new home

Making the decision to move can feel overwhelming. You’ve likely been settled in your current home and neighborhood for a while and changing location, packing up and moving, and restarting your life in a new area will take a lot of work. It can be easy to just stay where you are, but moving is often the right choice – especially if you’re in need of a fresh start. It’s hard to truly know if moving is the right decision at any time, but these are five of the most common signs that you might be ready to move.

It’s the Best Financial Decision

When your financial situation has changed for the better or the worse, a move might be the next necessary step for you.

Your Monthly Payments are Tight

If you’re finding that your current income can’t support your housing and living costs, or you could see it being a problem in the future, consider a move that will put you in a more comfortable position financially. You have plenty of options you can explore. For example, there’s the option of downsizing to a smaller, more affordable home. Or, you can consider moving into a new city that has more affordable housing. Either way, if your budgets are tight, it’s essential you act quickly. Moving to a home that aligns with your budget will help you avoid debt and can reduce financial stress in your life.

Your Income has Increased

Conversely, if you’ve found that your pay has increased and you have significant disposable income, a move can be a smart choice. If you’re currently renting, consider entering the market and purchasing your first home. If you’re already a homeowner, you can look at upgrading to a larger home, or shopping for a home in a more desirable area.

Upgrading your home can be a smart financial move that will help you build wealth. The Canadian housing market has seen relatively steady growth for the past 17 years, and investing in the housing market can help you build wealth over the long-term. Book an appointment with a mortgage broker to understand how much more you can afford at your new income level.

The Space You’re In Doesn’t Fit Your Needs

As life progresses, our spatial needs can change. If you’ve been looking around your house and reconsidering its spacing, it might be time to switch to a home size that fits your lifestyle better.

Increasing Space

A growing family may find that they need more rooms and more space to live comfortably. Often, a “starter” home will become too small for your needs in just a few years. You start to accumulate items – such as sports gear, bikes, decorations, gifts – and find you can’t store them anymore without feeling cluttered. A new home can offer you more rooms, a backyard, a larger kitchen, or anything else your current house is missing.

Downsizing

On the other hand, parents whose children have all grown up may find the upkeep of a large home too stressful. When you downsize, you also reduce your household upkeeping responsibilities and allow yourself time to focus on hobbies instead. If you’re feeling crowded in your new smaller space, follow some basic design tips to make a small space feel big.

Whether you’re downsizing or upgrading, having a home that fits your sizing needs will allow you to feel more comfortable in your day-to-day life.

You’re Ready for a Change

The right kind of change can bring excitement to our lives. Moving allows you to consider many new possibilities. You can move to a new neighborhood or city or change from an apartment to a townhouse. Maybe you can finally get a pet if you move out of your no-pet strata or no-pet rental. Or, perhaps you’ve always wanted to buy a fixer-upper and get your hands dirty turning it into your dream home, or live closer to the water so you can go sailing on weekends. The possibilities are quite endless.

Consider making a list of priorities you would want in a new home and see what ideas start to emerge. This will give you a clear picture of what you’re looking for and get you excited about a change!

You Have a Different Commute

When people buy homes, one of the things they consider most in the purchasing decision is their commute time to work. The workforce has changed dramatically in the past few years, with more companies allowing employees to work from home either a few days a week or full-time. Your new commute (or lack of commute) can completely change your desired location. For some people, remote work will finally be an opportunity to move outside of the city and get more space in the suburbs, which is just one of many potential market shifts we could see in a post-COVID-19 world. For others, this might be the perfect time to move to another city or province entirely.

You’ve Been Thinking About It (A Lot)

If you’ve had moving on your mind for a while, it’s likely for a reason. The desire to move can present itself in many ways. You could continuously be looking at interior design concepts and furniture even though you do not need to update your current space, or you could be looking at listings on REW all the time to gather a sense of how hot the market is.

If you notice yourself indulging the idea of a move, listen to your instincts and run the numbers. Start the process of considering a move and see if it continues to feel like the right step:

Make a list of what you want and don’t want in a new place in terms of size, amenities, location, and more.

Consider your budget and what you can afford.

Review listings online to see what your budget can get you.

If you’re ready, talk to a mortgage broker and hire a realtor.

Give it some thought, speak to your friends and family, and review the list above until you come to a decision you feel comfortable with. Even if you don’t end up deciding that moving isn’t the right option for you right now, you’ll be more satisfied with your decision to stay put.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source:   Real Estate Weekly

Posted in real estate
Sept. 17, 2021

Ditch Your Summer Clutter

Ditch Your Summer Clutter

Has summer clutter taken control of your home? Fall gives everyone the perfect reason to declutter from summer and prep for the rest of the year. If you have a cluttered home, here are a few tips to help you begin your fall cleaning.

Start with the Closets

Closets are the easiest place to begin. You and your kids should try on every piece of clothing. Get rid of anything too small or out of style. Next, move the summer clothes to the back and your fall and winter clothes to the front. Make sure those clothes still fit; if not, they must go.

Lose The Summer Garage Chaos

Do you have bikes, gardening supplies, summer sports equipment taking over your garage? Take a weekend and give your garage a fall makeover. Donate or sell old toys, bikes, and tools. Map out a storage plan to fit your summer stuff and make your winter tools accessible.

Freshen up The Kitchen

Whether it’s for the big game or the upcoming holiday season, fall is the start of hosting season. Take time to declutter, organize and scrub your kitchen. Get rid of the extra little things you don’t use. You might be surprised at the duplicate items you find. Trash, donate, or sell the items to make a little extra cash.

Get Rid of Old Toys

If you have kids, you most likely have old toys shoved into a closet, drawer, or corner. If they haven’t seen the light of day in a while, it’s time to pass them on.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source:  STEPHANIE VILLANO, PMP, CSM

Posted in real estate