Five traits of the rebounding Vancouver housing market: Realtor
Credit to Author: Evan Duggan| Date: Thu, 21 Nov 2019 14:00:59 +0000
It’s not quite a whiplash. More like a rebound. But Metro Vancouver’s residential property market is showing signs, once again, of change.
Roughly three-and-a-half-years ago, governments of all levels launched a series of taxes and interventions aimed to cool the local housing market to make it easier for locals to have a shot at buying a home.
Since 2016, the B.C. government increased the province’s tax on foreign buyers of major urban-area properties to 20 per cent, launched a speculation and vacancy tax on urban areas and boosted residential tenant protections. The City of Vancouver enacted its own vacant home tax and the federal government introduced a mortgage stress test on borrowers in Canada.
“You had this confluence of several different taxes impacting the strength and confidence and general overall sentiment in the market,” said local realtor Adil Dinani. “It did exactly what it was intended to do. It cooled the market.”
Confidence in the market seemed to drop to its lowest last December, with sales volume and prices lagging through the first quarter of 2019, Dinani said.
But now, the market feels like it has stabilized, and confidence is climbing once again. There’s a new reality, and it has five notable characteristics, Dinani detailed.
The correction in the last two years has brought overall housing prices down 10 to 15 per cent across the market, he said. “We saw buyers take their foot off the gas pedal and hit the brakes.”
There have been months in that time that experienced 50 per cent year-over-year sales volume declines. But owners have started to “socialize” with the new prices and have realized that prices must come down if they want to sell.
“We (have) started pricing our homes reflective of the new market,” Dinani said.
October home sales for the region across all housing types totalled 2,858. That figure climbed from 1,966 deals in October of last year — a 45 per cent increase, according to recent stats from the Real Estate Board of Greater Vancouver.
“We started seeing more sales and buyers started seeing value,” Dinani said. “This feels like we’re getting enough value to get (more buyers) into the market.”
Despite the mortgage stress test, borrowers can still get their hands on low-interest capital.
“Interest rates remain extremely low,” he said. “We hit five-year fixed mortgage rates of 2.5 or 2.6 per cent a couple months ago, and now we’re around 2.8 per cent for five-year fixed-rate mortgages.”
Generally, mortgage debt remains cheap.
“We’re starting to see things pick up again in a very meaningful way,” Dinani said. Well-priced homes are once again getting multiple offers from buyers.
“Personally, when representing buyers or sellers, (I had) probably four multiple-offer situations in the last six days,” he said.
In the mega-luxury market, or homes priced at $8 million to $20 million, sanity has returned.
There are fewer buyers, especially fewer foreign purchasers, and asking prices have started to “normalize,” Dinani said.
Before the correction, luxury homes realistically worth $10 million were sometimes being listed for nearly twice that much, and people were buying them.
Now we’re seeing 30 per cent price reductions and more luxury deals, although fewer sales for homes worth more than $10 million, Dinani said. “That luxury market is probably working through its correction.”