The Greater Vancouver Market - Spring 2019
A general sales decline for all home types over the past 9 months with soft buyer demand has led to a decline in home all prices since summer 2018.
Detached home prices softened more and are now off from peak pricing by 15% to 25% depdending on the area and on the price range. Peak pricing in the detached maket was during the summer 2017. Peak pricing in the attached home market was spring 2018 and prices are now off by about 10% since then.
Downward Pressure on Prices?
Strict mortgage lending requirements
New real estate taxes
High home prices
Global change, concern about trade, tariffs
Despite the very low total unit sales during late 2018, the total number of listings then was remarkably steady. Spring 2019 is seeing a nomal and expected increase to the total listings supply. With fewer buyers transacting, sales volumes are only moderately improved in early spring 2019 and it remains a buyer's market even with a normal supply of listings.
With the price compression occurring in the market, buyers can qualify for mortgages which they could not qualify for a year ago. Federal Gov’t mortgage stress test still an inhibiting factor.
Rising Construction Costs
The cost of new construction is on the rise, labour, materials and financing rates. New real estate taxes only add to the cost of real estate in BC. A slowdown in the pre-sales condo market is resulting. If the pre sales condo market were to remain slow, some developers indicate they will either slow down or defer launching some projects.
Consider a typical new built condo in Vancouver costing about $750,000 to an end user,. The total amount of tax paid on this purchase price is almost 30% including GST to Ottawa, Property Transfer Tax to Victoria and all the fees and taxes developers pay to municipalities. The City of Vancouver ask developers to pay $300 per buildable square foot in "community assessment contributions". No wonder new condo buildings downtown are being marketed at $1800 per square foot!
Average Home Price
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, just take the total dollar value of all homes sold and divide it by the total number of homes sold. With fewer expensive homes selling, the average price of sold homes has to be significantly lower. It’s an irrelevant number for 95% of us.
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.”