The Greater Vancouver Market Overall
A general sales decline for all home types over the past 3 months as a result of soft buyer demand across the board led to a further decline of home prices in the detached market this summer and a decline in the strata market. All home types and price ranges affected.
Detached home prices softened more this summer after about a year of gradual declines and are now off from peak pricing by 20% to 25%. Prices in the attached home market also softened this summer but by about 7% on weak demand. Peak pricing in the attached home market was just a few months ago.
Strict mortgage lending requirements
New real estate taxes
High home prices
Global change, concern about trade, tariffs
Despite the very low total unit sales this summer, the total number of listings on the Greater Vancouver Real Estate Board has been remarkably steady for the past few months. We are not seeing large increases to the total listings supply.
I expect to see soft market conditions throughout the fall, with a stronger market emerging in spring 2019. Sales volumes will be higher this fall as buyers return to take advantage of new attractive new pricing.
With the price compression that has occurred in the market, buyers can now qualify for mortgages which they could not qualify for earlier in the year because of Federal Gov’t mortgage stress test. Lower prices cause the market to kick into gear.
Rising Construction Costs
The cost of new construction is on the rise, labour, materials and mortgage rates. The new real estate taxes only add to the cost of real estate in BC and are causing a slowdown in the pre-sales condo and townhouse market also. If that market were to remain slow, some developers indicate they will either slow down or put some projects on hold.
Consider a typical new built condo in Vancouver costing about $750,000 to an end consumer, the total amount of tax paid on the purchase price is about 30% including GST to Ottawa, Property Transfer Tax to Victoria and all the developer permit fees and taxes to the City. The City of Vancouver looks to developers to pay $300 per buildable square foot for community assessment contributions. No wonder new condo buildings downtown are being marketed at $1800 per square foot!
Average Home Price
The media says the average home price is way lower today than just a few years ago. OMG! Think about this. The biggest change that has occurred in our market is the mix of homes which is selling. Sales of high-end luxury homes are very slow with few sales to report compared to several years ago. To calculate the average home price, we just take the total dollar value of all homes sold and divide it by the total number of homes sold. With so few expensive homes selling, the average price of all sold homes has to be significantly lower. It’s totally an irrelevant number for 95% of us, but it makes for good headlines, so don’t pay any attention to it when you see it in the news.
Next year, we’ll look back at the summer/fall of 2018 and say that was a great time to buy. More sellers are getting aligned with the new market more competitive conditions.
1911 - RJ McDougal, writes about Greater Vancouver Real Estate
“Land prices are high, it is said, higher than anything would warrant. ’Why, the workingmen cannot afford to pay at the rate demanded for these tiny outside lots,’ asserted one man recently. The same thing was said here twenty years ago, answer the pioneers; others of us know that it was repeated ten years ago and five years ago, and our children and our children’s children will hear the same tale of woe decades hence.”