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Less pressure on buyers in August in the Victoria real estate market

A total of 478 properties sold in the Victoria Real Estate Board region this August, 42.5 per cent fewer than the 831 properties sold in August 2021 and a 6.3 per cent decrease from July 2022. Sales of condominiums were down 57.1 per cent from August 2021 with 148 units sold. Sales of single family homes decreased 30.3 per cent from August 2021 with 249 sold.

“August is typically one of the slower months for real estate in the Greater Victoria area and this year was no exception,” says Victoria Real Estate Board President Karen Dinnie-Smyth. “After two years of market conditions that favoured home sellers, sales have diminished in the past few months and inventory levels have been slowly increasing.”

There were 2,137 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2022, a decrease of 1.2 per cent compared to the previous month of July but a 90.8 per cent increase from the 1,120 active listings for sale at the end of August 2021.

“One of the metrics we watch when we look at the market is the sales to active listings ratio – this is the percentage of available listings that have sold over the course of the month, which helps indicate the balance of supply and demand,” adds President Dinnie-Smyth. “A high percentage means more of the available listings have sold, which shows a high buyer demand and that’s generally a favourable market for sellers. The lower the percentage, the more properties available. In general, we look at the 15 to 20 per cent range as a balanced market. Right now, the ratio is 28.14 per cent, while at this time in 2021 we were at 94.91 per cent. We continue to trend towards a more balanced market. As conditions change, connect with your trusted REALTOR® to understand how you’re selling and buying plans fit into the current market.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August 2021 was $1,201,400. The benchmark value for the same home in August 2022 increased by 15.8 per cent to $1,391,700 but was down 2.9 per cent from July’s value of $1,433,400. The MLS® HPI benchmark value for a condominium in the Victoria Core area in August 2021 was $509,000, while the benchmark value for the same condominium in August 2022 increased by 22.2 per cent to $621,900, down by 2.8 per cent from the July value of $639,900

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Shift in Victoria Real Estate market brings more time for buyers and sellers

A total of 510 properties sold in the Victoria Real Estate Board region this July, 38.9 per cent fewer than the 835 properties sold in July 2021 and a 16.7 per cent decrease from June 2022. Sales of condominiums were down 39.4 per cent from July 2021 with 172 units sold. Sales of single family homes decreased 35.9 per cent from July 2021 with 254 sold.

“We’d previously indicated a shift in the local housing market,” said 2022 VREB President Karen Dinnie-Smyth. “This continued be the case in July as sales dipped, and we saw fewer listings come to the market, with more of the existing inventory remaining for sale. This slowdown means a calmer and more friendly environment with time for decision-making, which benefits sellers and buyers and will be a relief to many.”

There were 2,162 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of July 2022, an increase of 5 per cent compared to the previous month of June and a 70.2 per cent increase from the 1,270 active listings for sale at the end of July 2021.

“As a result of the higher interest rates and inflation occurring right now, we see fluctuations in price and availability,” adds President Dinnie-Smyth. “Values will rise and fall over time, and historically local real estate values slowly increase over time, which means despite month-to-month variations, if you are buying a home, you have a sound, long-term investment. We need to remember that people don’t buy and sell on a month-to-month basis and that in the larger scheme of things, housing is more than numbers. A property is a place where people live their daily lives, raise their families, etc. It is more than a commodity, and for many it is the most important purchase they make in their lifetime. The government’s recent focus has been on demand-side mechanisms and other market modifiers such as a mandatory three-day cooling off period to start in 2023. A better long-term approach to housing affordability for our future is to address housing supply constraints which will be central to the next round of upward pressure on home prices. Consult with your REALTOR® to keep informed regarding current values and market conditions if you are in the market to buy or sell.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in July 2021 was $1,204,900. The benchmark value for the same home in July 2022 increased by 19 per cent to $1,433,800 but was down 2.1 per cent from June’s value of $1,464,400. The MLS® HPI benchmark value for a condominium in the Victoria Core area in July 2021 was $502,600, while the benchmark value for the same condominium in July 2022 increased by 27.3 per cent to $639,600, down by 0.5 per cent from the June value of $643,100.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Victoria’s hot housing market levels off, supply still important for long-term attainability

A total of 612 properties sold in the Victoria Real Estate Board region this June, 35 per cent fewer than the 942 properties sold in June 2021 and a 19.6 per cent decrease from May 2022. Sales of condominiums were down 40.2 per cent from June 2021 with 202 units sold. Sales of single family homes decreased 31.4 per cent from June 2021 with 302 sold.

“The market feels a bit more normal right now,” says Karen Dinnie-Smyth, 2022 Victoria Real Estate Board President. “We have seen more inventory come onto the market to the extent that we are back to numbers closer to those which we saw in pre-pandemic 2020. This is good news, as more inventory provides more choice and builds in more time for consumers to work with their REALTORS® to make decisions.”

There were 2,059 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of June 2022, an increase of 15.9 per cent compared to the previous month of May and a 49.7 per cent increase from the 1,375 active listings for sale at the end of June 2021.

“It may seem counterintuitive to continue to talk about the need for supply at a time when inventory is rising,” adds President Dinnie-Smyth. “We must keep the conversation alive, and we urge all levels of government to continue to aggressively address the housing supply situation. We need more supply of all types of housing. Not only do we remain on the lower side of longer-term historical averages of homes for sale, but there will be future challenges – changing interest rates, supply chain and labour constraints will hamper the ability to create new homes at a pace to meet future growth. New supply will be the key to future housing attainability in our community.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in June 2021 was $1,184,700. The benchmark value for the same home in June 2022 increased by 23.6 per cent to $1,464,400, up from May’s value of $1,446,400. The MLS® HPI benchmark value for a condominium in the Victoria Core area in June 2021 was $495,900 while the benchmark value for the same condominium in June 2022 increased by 29.7 per cent to $643,100, up from the May value of $633,800.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Pace of the Greater Victoria real estate market steady into spring

A total of 761 properties sold in the Victoria Real Estate Board region this May, 27.5 per cent fewer than the 1,049 properties sold in May 2021 and a 7.6 per cent decrease from April 2022. Sales of condominiums were down 23.1 per cent from May 2021 with 250 units sold. Sales of single family homes decreased 31.7 per cent from May 2021 with 367 sold.

“The real estate market in Greater Victoria is returning to a steadier pace following the strange two years we experienced over the course of the pandemic,” said 2022 Victoria Real Estate Board President Karen DinnieSmyth. “While inventory is still below historical levels for a spring market, it is now within our pre-pandemic fiveyear average, which is good news for buyers. The increase in inventory provides buyers with more options, and we are seeing market activity and price points differ within the unique neighbourhoods that make up Greater Victoria. During a changing market like the one we see now, it is more important than ever to have an expert on your side – whether you are buying or selling it’s a great time to give your favourite REALTOR® a call.”

There were 1,776 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of May 2022, an increase of 30.1 per cent compared to the previous month of April and a 22.5 per cent increase from the 1,450 active listings for sale at the end of May 2021.

“Looking to the future of the market, the Board has reviewed the British Columbia Financial Services Authority (BCFSA) report which the government requisitioned to guide the deployment of their cooling-off plan,” adds President Dinnie-Smyth. “We are aligned with BCFSA on the importance of consumer protection in real estate and see areas of the BCFSA report which reflect the Victoria Real Estate Board’s and the British Columbia Real Estate Association’s recommendations – specifically the concept of a five-day pre-offer period. However, the BCFSA report leaves detailed process and procedural questions unanswered. The government will need to do more consultation with industry stakeholders prior to implementation to ensure these changes are without negative consequences to consumers and to the market.”

The Multiple Listing Service® Home Price Index benchmark value* for a single family home in the Victoria Core in May 2021 was $1,168,800. The benchmark value for the same home in May 2022 increased by 23.8 per cent to $1,446,400, up from April’s value of $1,424,900. The MLS® HPI benchmark value for a condominium in the Victoria Core area in May 2021 was $495,600 while the benchmark value for the same condominium in May 2022 increased by 27.9 per cent to $633,800, up from the April value of $630,200.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Spring is traditionally the busiest real estate season, but early on Victoria’s market sees a change in tempo

A total of 824 properties sold in the Victoria Real Estate Board region this April, 26.2 per cent fewer than the 1,116 properties sold in April 2021 and a 1.1 per cent decrease from March 2022. Sales of condominiums were down 20.8 per cent from April 2021 with 262 units sold. Sales of single family homes decreased 28.5 per cent from April 2021 with 403 sold.

“The past month concluded with notably lower sales when compared to April of last year,” said 2022 Victoria Real Estate Board President Karen Dinnie-Smyth. “This tells an interesting story because activity traditionally peaks over the course of the spring, and this year we have seen a gradual softening of the market. As we have reported many times in the past years, the market hinges on supply and demand. Rising interest rates and inflationary pressures on top of higher prices throughout the region have combined to introduce new market dynamics because of waning demand that consumers and their REALTORS® are now navigating. Our inventory levels remain well below historic averages, so prices remain buoyant because the supply is still much lower than this recent decrease in demand.”

There were 1,365 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of April 2022, an increase of 28.4 per cent compared to the previous month of March but a 6.1 per cent decrease from the 1,454 active listings for sale at the end of April 2021

“The market has made a pivot compared to the spring of 2021,” adds President Dinnie-Smyth. “However, we continue to see competition for lower priced homes and multiple offers are still very much a reality in our market and likely will be for some time. We are currently experiencing a lessening of demand, but that does not mean we can lose sight of the fact that our housing market needs more supply. We must continue to encourage the government and stakeholders to focus on building more homes and not on creating new rules such as a cooling-off period that have nothing to do with getting more people into homes and risk upward pressure on pricing. The market will continue to have corrections, both up and down, and government interventions must target more new doors for the long-term health of our housing market.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in April 2021 was $997,500. The benchmark value for the same home in April 2022 increased by 26.9 per cent to $1,266,200, up from March’s value of $1,233,700. The MLS® HPI benchmark value for a condominium in the Victoria Core area in April 2021 was $513,100 while the benchmark value for the same condominium in April 2022 increased by 26.7 per cent to $650,200, up from the March value of $635,100.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Victoria real estate market continues to experience low inventory and high demand

A total of 833 properties sold in the Victoria Real Estate Board region this March, 29 per cent fewer than the 1,173 properties sold in March 2021 but a 16 per cent increase from February 2022. Sales of condominiums were down 26 per cent from March 2021 with 279 units sold. Sales of single family homes decreased 28.2 per cent from March 2021 with 412 sold.

“Once again, we have had a record breaker of a month,” said 2022 Victoria Real Estate Board President Karen Dinnie-Smyth. “This March had the lowest number of active listings we have seen in a month of March – beating last year’s record low. For context, in the past five years the average number of active listings at the end of March is 1,864 properties. This March had just over one thousand properties at month end. We did see more homes come to market this month compared to February – which is a positive sign – but our supply is still so constricted that multiple offers and competition continues, especially in the lower price ranges. We may see a lift in that pressure if more listings come to market over the spring, but since our inventory is so much lower than average, we have a long way to go to find balance.”

There were 1,063 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of March 2022, an increase of 25.2 per cent compared to the previous month of February but an 18.9 per cent decrease from the 1,310 active listings for sale at the end of March 2021.

“March generally kicks off the busy spring real estate season,” adds President Dinnie-Smyth. “However, this month’s sales and listings may have been partly depressed by reasons beyond the market. After two spring breaks of COVID restrictions, it’s plausible that many prospective buyers and sellers put their plans on pause to travel. Looking forward, it is difficult to predict what this spring will look like as those buyers and sellers return to the market. Many factors – including rising interest rates, the government’s promise to apply new barriers to sales such as cooling-off periods, inflationary pressures and record high house prices – continue to make this a challenging market. If you are considering a move, a sale or both, it’s a good time to engage the assistance of a trusted local REALTOR® to help you navigate the complex landscape.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in March 2021 was $968,500. The benchmark value for the same home in March 2022 increased by 27.4 per cent to $1,233,700, up from February’s value of $1,196,300. The MLS® HPI benchmark value for a condominium in the Victoria Core area in March 2021 was $497,000 while the benchmark value for the same condominium in March 2022 increased by 27.8 per cent to $653,100, up from the February value of $603,600.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Record low inventory prevents Victoria real estate market from cooling‐off

A total of 718 properties sold in the Victoria Real Estate Board region this February, 16.8 per cent fewer than the 863 properties sold in February 2021 but a 51.5 per cent increase from January 2021. Sales of condominiums were down 7.9 per cent from February 2021 with 267 units sold. Sales of single family homes decreased 20.8 per cent from February 2021 with 309 sold.

“It was heartening this month to see some more listings come to market in February,” said 2022 Victoria Real Estate Board President Karen Dinnie‐Smyth. “However, inventory levels remain at record lows and without a strong government focus on increasing supply, buyers will continue to face escalating prices and difficult market conditions.”

There were 849 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of February 2022, an increase of 14.1 per cent compared to the previous month of January but a 35.6 per cent decrease from the 1,318 active listings for sale at the end of February 2021.

“We have asked the government for strong solutions to create supply to bring our market back into balance,” adds President Dinnie‐Smyth. “We need incentives for gentle densification and the removal of municipal barriers to development. What government has chosen to focus on instead is their announcement of a cooling‐ off period for residential sales this spring. They announced this measure with no industry consultation into how this may impact our housing market. The Victoria Real Estate Board and the British Columbia Real Estate Association have strongly recommended against a cooling‐off period. Industry research shows that a cooling‐ off period will add volatility in both slow and pressurized market conditions. It provides no protection for home sellers and creates more risk and uncertainty for them when selling a home. Experienced and well‐funded buyers will have an advantage over first‐time buyers because a cooling‐off period reduces negotiations to price alone. We have recommended alternative ideas for consumer protection – including the suggestion that a pre‐ sale offer period be introduced, which transcends market conditions and would better protect buyers and sellers while also mitigating the impact of pre‐emptive offers. We hope our suggestions are taken seriously, they are a result of thorough research and consultation of hundreds of our local practitioners. Instead of discussing the British Columbia Real Estate Association’s recommendations yesterday, Finance Minister Selina Robinson chose to inform the public that REALTORS® have a vested interest in home prices. For Minister Robinson to suggest that Realtors are keeping prices high is a convenient excuse and a weak attempt to divert attention away from the real issue – supply. Realtors would prefer a balanced market with reasonable prices and plenty of housing supply to meet demand. Our Realtors’ only vested interest is in their clients and the more balanced our market is, the better we are able to serve the needs of buyers and sellers.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in February 2021 was $948,500. The benchmark value for the same home in February 2022 increased by 26.1 per cent to $1,196,300, up from January’s value of $1,161,500. The MLS® HPI benchmark value for a condominium in the Victoria Core area in February 2021 was $494,200, while the benchmark value for the same condominium in February 2022 increased by 22.1 per cent to $603,600, up from the January value of $587,300.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Limited inventory continues to be key in Victoria real estate market

A total of 474 properties sold in the Victoria Real Estate Board region this January, 26.6 per cent fewer than the 646 properties sold in January 2021 but an 8.2 per cent increase from December 2021. Sales of condominiums were down 13 per cent from January 2021 with 188 units sold. Sales of single family homes decreased 39.7 per cent from January 2021 with 179 sold.

“A cursory glance at our sales numbers could lead to the quick conclusion that our market is slowing down,” says 2022 Victoria Real Estate Board President Karen Dinnie-Smyth. “But what we must consider is not only the number of homes that have sold, but also the number of homes which were for available for sale within the month. To put our inventory into context, last year broke the record for lowest inventory for the month of January. This January broke that record nearly in half and that lack of supply in the market really impacts what our end sales numbers are. Had we seen more homes for sale, it’s likely our result would have been many more sales.”

There were 744 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of January 2022, an increase of 14.1 per cent compared to the previous month of December and a 43.7 per cent decrease from the 1,321 active listings for sale at the end of January 2021.

“As it stands, our market will be slow to change until our inventory levels perk up,” adds President DinnieSmyth. “This means we need to see supply added of all types of housing and we need to establish a sustainable source of supply into the upcoming years to meet growth. The reality of housing is that it takes years to add new numbers and until we are better able to meet demand, our market will be under pressure. With the constrained and fast paced market, it’s an excellent time to use the services of an experienced REALTOR®, one who can help you identify a strategy and process for selling or buying – or selling and buying – a new home.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in January 2021 was $932,200. The benchmark value for the same home in January 2022 increased by 24.6 per cent to $1,161,500, up from December’s value of $1,144,900. The MLS® HPI benchmark value for a condominium in the Victoria Core area in January 2021 was $487,500, while the benchmark value for the same condominium in January 2022 increased by 20.5 per cent to $587,300, up from the December value of $570,600.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

The 2021 Victoria real estate market year in review

A total of 438 properties sold in the Victoria Real Estate Board region this December, 30.6 per cent fewer than the 631 properties sold in December 2020 and a 32.9 per cent decrease from November 2021. Sales of condominiums were down 22.1 per cent from December 2020 with 152 units sold. Sales of single family homes decreased 34.1 per cent from December 2020 with 207 sold.

A grand total of 10,052 properties sold over the course of 2021, 18.3 per cent more than the 8,497 that sold in 2020. 2021 sales came in close to 2016’s record breaking sales year where 10,622 properties were sold.

“The theme of this year has been very consistent,” says 2021 Victoria Real Estate Board President David Langlois. “Each month a high demand for homes paired with record low inventory has put strong pressure on pricing and attainability and has made the local and global housing market a top news item and political talking point. We see stories from many countries highlighting the increasing desirability of home ownership in the wake of the pandemic. We leave this year with the lowest number of properties for sale that we have had on record – but with such strong demand that most transactions see multiple offers.”

There were 652 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of December 2021, a decrease of 26.5 per cent compared to the previous month of November and a 49 per cent decrease from the 1,279 active listings for sale at the end of December 2020. This represents the lowest inventory of active listings at month-end in at least the last 25 years.

“We have spoken throughout the year about the need for new housing supply at all levels to help moderate prices and improve attainability,” adds President Langlois. “Some of our municipalities have begun to look at ways to make it easier for new homes to be brought to market and we applaud and encourage any movement in this area – it has been far too difficult and expensive to build homes in our region. The situation we are now in is because of the deficit of supply that has compounded over the past decades of hesitation around growth. However, governments at the federal and provincial level have instead chosen to focus elsewhere and invest their time re-inventing the process of how homes are sold in Canada by creating new rules which include the introduction of a ‘cooling-off’ period. These measures will do nothing to improve our market, nor will they increase consumer protection. The process of how a home is sold is not the issue – homes will sell for what consumers will pay for them – using any sales process. The issue is how homes are brought to the marketplace and our huge lack of supply. Governments should expend their resources to address supply issues that continue to drive up competition for homes and result in ever increasing prices.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in December 2020 was $915,300. The benchmark value for the same home in December 2021 increased by 25.1 per cent to $1,144,900, up from November’s value of $1,122,600. The MLS® HPI benchmark value for a condominium in the Victoria Core area in December 2020 was $487,100, while the benchmark value for the same condominium in December 2021 increased by 17.1 per cent to $570,600, up from the November value of $560,700.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

No change on the horizon for the Victoria real estate market

A total of 653 properties sold in the Victoria Real Estate Board region this November, 17.9 per cent fewer than the 795 properties sold in November 2020 and 12.3 per cent fewer than the previous month of October. 236 condominiums sold, 5.2 per cent fewer than in the previous month of October. 276 single family homes sold, 18.6 per cent fewer than in the previous month of October.

“Strong demand for housing in our community continues to exceed the ultra-low number of listings of homes available for sale,” said Victoria Real Estate Board President David Langlois. “This demand creates competition and pressure on pricing and we continue to see home values notch up. At this moment in time, there are fewer than 600 residential properties for sale in our market.”

There were 887 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of November 2021, 51.1 per cent fewer properties than the 1,813 available at the end of November 2020 and 14.4 per cent fewer properties than the 1,036 active listings for sale at the end of October 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in November 2020 was $903,700. The benchmark value for the same home in November 2021 increased by 24.2 per cent to $1,122,600, a 1.7 per cent increase from the previous month of October. The MLS® HPI benchmark value for a condominium in the Victoria Core in November 2020 was $485,100, while the benchmark value for the same condominium in November 2021 increased by 15.6 per cent to $560,700.

“Only with strong measures around supply will we see a lift in the pressures on our housing market,” added President Langlois. “Governments continue to try to intervene by using demand side measures, such as the province announcing their plan to introduce a ‘cooling off’ period for resale homes. This concept was delivered without industry consultation or supporting data. Introducing measures that add uncertainty to the marketplace fails to address the issues of supply and attainability in our community – and threatens to make the supply situation worse. A cooling-off period will not increase consumer protection – in fact many of the unintended consequences of such a policy could decrease protection for both buyers and sellers. The housing market is complex and policy must be evidence-based and designed for all types of markets – not to react to a moment in time. The government needs to sharpen their focus on the issue that has been documented for years – that a consistent delay in the delivery of homes to meet the needs of our growing population has created housing gridlock.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Inventory pressures continue to constrain Victoria real estate market

A total of 745 properties sold in the Victoria Real Estate Board region this October, 24.7 per cent fewer than the 990 properties sold in October 2020 and 2.1 per cent fewer than the previous month of September. Condominium sales were down 18.1 per cent from October 2020 with 249 units sold. 18.6 per cent fewer condominiums sold in October 2021 than in the previous month of September. Sales of single family homes were down 30.4 per cent from October 2020 with 339 sold. 2.4 per cent more single family homes sold in October 2021 than in the previous month of September.

“Once again – it’s anyone’s guess what our sales numbers would be like had we been in a market with a historically average number of homes for sale,” said Victoria Real Estate Board President David Langlois. “Over the previous ten years, the average number of properties for sale in the month of October was 3,210 – we are one third of that this year. We continue to see record breaking low levels of homes for sale and with continuing competition for homes, we see pricing pressure persist.”

There were 1,036 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of October 2021, 51.2 per cent fewer properties than the 2,122 available at the end of October 2020 and 7.8 per cent fewer properties than the 1,124 active listings for sale at the end of September 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in October 2020 was $880,500. The benchmark value for the same home in October 2021 increased by 25.3 per cent to $1,103,600, a 0.3 per cent increase from the previous month of September. The MLS® HPI benchmark value for a condominium in the Victoria Core in October 2020 was $482,200, while the benchmark value for the same condominium in October 2021 increased by 14.4 per cent to $551,800.

“The only solution to our current market is to create more supply,” added President Langlois. “And creating supply isn’t something that happens overnight, so we need to make a commitment to build in the coming years. That takes cooperation. It takes public acceptance of increased density in some areas, the ability for builders to staff and supply their developments and for investors to be able to make their plans a reality within a reasonable timeline and at a reasonable cost. We need to continue to focus on densification of our urban areas – the idea of encouraging duplexes and small plexes in neighbourhoods and building up in core areas. Thoughtful densification will allow us to protect our greenspace, leverage existing infrastructure and take advantage of existing amenities.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Vancouver Market Update: June

Disclaimer Reminder

Market update

May 2021 listings were 187% higher than the same month last year, but there was also a 13% decrease in homes sold from the prior month.

When the sales-active listing ratio is below 12%, analysts believe prices will trend downward. When the ratio is above 20%, prices should trend up. Here’s where we’re at:

Real Estate stats

We see that in May, the numbers are going down but this doesn’t mean the prices are going down. This is because the sales-active listing ratio is above 20%, so prices are trending up (even though the numbers of those listings have gone down).

What’s our conclusion? The 2021 real estate market in Vancouver will continue to rise.

Real Estate stats

As you can see, the CREA, RE/MAX, and Royal LePage are predicting this too and they’re showing the signs are correct. 

What is happening with real estate activity, buyers, and sellers?

I broadly agree with all of this, and we’re seeing the same thing. There’s an easing of the intense activity that we saw earlier this year. It still is a seller’s market and there are buyers out there. You can still get a five-year fixed rate mortgage for under 2% which is fantastic. There’s some good market action, and it’s actually almost a perfect market because:

  • For buyers, there’s a lot of good properties out there because sellers know they can get a good price.
  • For sellers, they can get a good price for their property if they’d decided to wait.

It’s not as intense for buyers and sellers because if there’s a multiple offer situation, you’re not seeing 10, 15 or 50 offers – it’s about 3-5, maybe 8 only if it’s a really hot property priced very aggressively. The real estate market across the Lower Mainland and the province is made up of micro-markets. For example, if you’re talking about the city of Vancouver, what’s happening with downtown condos over $1 million will be a totally different situation than what’s happening with single-family houses in East Vancouver or on the west side of Vancouver. That’s because the people buying them have totally different income levels and goals.

In terms of high-density urban properties, we still have the COVID-19 hangover, where people still feel uncomfortable being in lobbies, elevators, close proximity to other people at restaurants, bars, and gyms. The reason why we like dense urban neighbourhoods is to be close to and around other people, but people aren’t comfortable with that yet. So, a lot of high-end urban properties are still struggling, especially those at the $1-1.2+ million mark. But, I think that will change dramatically when the borders reopen.

We got 185,000 new people in Canada in 2020 which is a very low number. It accounts for all the foreign students, PRs, etc. but no new people are coming because the borders are closed. When they reopen, I think we’ll see a huge surge in urban properties because when people come to a new country, they typically get an apartment in the core as they learn the rest of the city. They typically rent first and eventually buy – those moving out of rentals are usually buying. So, I think we’ll see a huge uptick in activity since the Federal Government said they want 400,000 new people in Canada in 2022 which is significantly higher than what we have before COVID-19 and way higher than what we had during COVID-19. And, a good portion of those people will come to the Vancouver area. We’re already running into housing supply issues which you can see from rising prices and homelessness. And we have city governments across the region that aren’t too responsive to the needs of homeowners. They’re not making enough market or rental housing or social or supportive housing for people with special needs or addiction or homeless issues. So, we’ll see prices increase for quite some time. 

What’s pricing like? Do we need to go for asking or over-asking? Is it even possible to get anything under-asking right now?

 You can get stuff under asking. If it’s a property that is overpriced, messy or dirty but you can see beyond that, doesn’t present well, or has an uncooperative tenant making it difficult to show, you can definitely negotiate.

Do we still need to go in without subject to sale or inspection, or is that environment done as well? 

Subject to sale is challenging in this market. You can do it with a property that has something wrong, like if it’s ugly, messy or dirty. But, for beautiful properties with lipstick on them, don’t bother with a subject to sale. Something that’s beautiful and presented and priced well will probably mean going in subject-free. You’ll be competing but not as crazy as before. The key with subject free is to do your due diligence before. Get the inspection done, read the documents, get the information to your bank. Be safe because there’s risk with a subject-free process. 

I’m dealing with clients who had to make an aggressive offer with dates that didn’t match – so they’re either homeless for a couple of months or carrying two mortgages for a couple months. Are people taking offers that can close sooner even if they’re not the highest?

Yes. No matter what the market’s doing, one of the most important things you can do as a buyer is be prepared. If you’ve talked to your bank, you know when you can move or give notice, and you know exactly what you can do before you get into a situation or negotiation, you’ll be so much better off. Maybe then you can tell a seller your financing subject is just three days because everything is ready to go. Or, if you can move in two weeks or six weeks, a seller might take a lower offer because they have different needs, just like buyers.

What do you think will happen this summer in the market? 

We may see some cooling in the market for three reasons:

  1. When the weather’s warmer, people just stop looking for properties. They want to enjoy their summer.
  2. People will start travelling, maybe not internationally but within the province.
  3. The market is slowing down right now and it could continue as is typical in the summer.

But, it’s anyone’s guess. The mortgage stress test may slow things down later in the summer, but it’s difficult to say. Once those borders open, things will go crazy. I personally think the government coordinated the stress test with the opening of the border because typically a change in mortgage rules has an effect 3-5 months after it’s brought in because it’s affecting new people. The people buying properties right now started talking to mortgage brokers 3-5 months ago and are already going. The people affected by the stress test will be buying 3-5 months from now since they’re just talking to a broker now. They’ll afford less which may slow the market down. I think the government is trying to slow things down in advance of the big surge in demand for real estate when the borders open up. 

Since the summer’s a cooling market, do you think now’s a good time for people to offer, say, 97% of asking on properties that have been sitting around for a while?

When I say cooling market there’s less activity, not necessarily prices going down. When there are fewer buyers and less competition, it gives buyers relative strength vis-a-vis a seller in terms of market power and what they can do. If it’s late August and everyone’s away at the beach, you might see a house that nobody else has. You want to move when other people are fearful and holding back. That’s how you’ll get the best deals.

If someone was not in a rush to sell and activity slowed down without many buyers, would you suggest pulling the listing until September or October? 

Yes. Often, a re-list after Labour Day is best to get a good result because a lot of people are away up until then. 

For good buyer or investor opportunities, are there specific areas you’re liking right now?

Downtown Vancouver is very slow, but the issue with it is your cap rates or percentage per year return for rent, is so low that it doesn’t make sense for investors. Right now the investors we’re working with are doing well in places like the Okanagan. My business partner just bought a three-unit house there that cash flows to $800 per month or something like that. The Fraser Valley is doing really well with single-family houses and condos. We’re seeing significant capital appreciation in both areas. The city of Vancouver and Greater Vancouver is a challenge for investors because the cap rates are so low.

So, it’s a challenging market for investors looking for revenue but the potential upside for capital appreciation is huge because we have so much population growth and city governments throughout the region that are not into creating new housing supply.

What about people who are or aren’t interested in moving to the downtown core, not investing? Are you saying there are better deals for those who want to occupy the place?

Absolutely. There are great options for owner-occupier places downtown. It’s quiet. If you want to get really good value, just lowball stuff until you find someone who wants to sell. 

I wanted to share some statistics. In March, if you look at the one-month change in Vancouver and compare it to April, you start to see more around 1-3%. Then in May, we’re into more like 1-2%.

This shows that yes, prices are going up month to month, but we’re finding the pace is slowing. It’s still going up, just slower. 

Detached homes vs. condos are very similar, but you don’t see the one-month change being negative or zero.

Real Estate graph

So, I believe with the border reopening plus the summer, we’ll have a slowdown. It might be a great opportunity, especially if you’re not a seller or a first-time or lower-priced buyer. The stress test doesn’t affect everyone – many people can still afford what they intended on buying. Keep an eye on what’s out there now and if it’s still around in the summer – there are often price reductions when things don’t sell. 

When I bought my first townhome 16 years ago, we saw two identical places but one was $20,000 more and in a slightly better location, which sold. At the end of the summer, the other one was still for sale. We put in a very reasonable, below-asking offer and got it. So, keep an eye out.

How long does it take for things like the stress test or government change, to really make its way into the market where we feel it? The interest rates are starting to move.

Usually about 3-6 months. But again, the stress test isn’t always a factor. Sometimes it can, but I’ve found many times it doesn’t have an effect – it really depends on what’s going on in the market. 

The other thing for investors is if you can get a mortgage that supports itself, even cash-flowing mildly, at under 2%, the amount of principal repayment is absolutely unprecedented. If you want to invest in Vancouver real estate because you feel you’ll do well with capital appreciation, as so many do so often, this is a great investment strategy. It might take 20% down but you’d buy something, let the tenants pay it down, and sell when it’s increased in value. You’ll have built up tons of equity when you sell just from the tenants.

That’s great, plus sometimes people forget about taxation. If I take my $200,000 and put it in the stock market, there’s no tax benefit. If that same $200,000 goes into an $800,000 mortgage, the interest is deductible.

Real Estate Conclusions

  • Don’t try to time the market. Get what you can afford, whether you’re a buyer or seller. It’s unpredictable and I wouldn’t be surprised if it started to go up.
  • Short-term market predictions: the summer will cool the market, especially with COVID restrictions lessening. But, 2021 is still a year of growth for the Vancouver market. We haven’t seen a statistic or piece of information that leads us to think it won’t continue to go up. 

What am I doing with my clients? I review my clients’ strategies and try to help them take advantage of opportunities in a very safe way.

Real Estate case example

Here’s a case study of a perfect example of how I help my clients. There is no correct choice without an analysis on all three scenarios. People often think about that but they don’t know how to do it themselves. This is a hundreds of thousands of dollars decision when it comes to retirement. You don’t want to make a mistake. So, you can get professional help, like from me and my team.

Here’s what we do:

latitude west process chart

The discovery meeting is complementary. If you decide to work with us, I would do a cost-benefit analysis to show you what it would look like if you bought a second or third property and what it would look like if you didn’t.

For example:

Real Estate graph

Studies show that when you use an advisor, your wealth multiplies significantly over time.

Real Estate Calculations

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A greater commitment to development required to balance local housing market

A total of 761 properties sold in the Victoria Real Estate Board region this September, 23.1 per cent fewer than the 989 properties sold in September 2020 and 8.4 per cent fewer than the previous month of August. Condominium sales were up 9.3 per cent from September 2020 with 306 units sold. 11.3 per cent fewer condominiums sold in September 2021 than in the previous month of August. Sales of single family homes were down 38.6 per cent from September 2020 with 331 sold. 7.3 per cent fewer single family homes sold in September 2021 than in the previous month of August.

“We are in a situation this month that is very similar to last month,” said Victoria Real Estate Board President David Langlois. “We have seen a lot of demand for homes of all types, but very little inventory come onto the market. And just like last month, it would be inaccurate to say that the market has slowed down and certainly an oversimplification to say the market is experiencing traditional seasonal slowing. What we are experiencing is a continued response to long-term low inventory levels.”

There were 1,124 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of September 2021, 53 per cent fewer properties than the 2,389 available at the end of September 2020 but four properties more than the 1,120 active listings for sale at the end of August 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in September 2020 was $879,700. The benchmark value for the same home in September 2021 increased by 25.1 per cent to $1,100,200, a 1 per cent increase from the previous month of August. The MLS® HPI benchmark value for a condominium in the Victoria Core in September 2020 was $482,000, while the benchmark value for the same condominium in September 2021 increased by 13.3 per cent to $545,900.

“It’s a complex market and it has been for some time here in Greater Victoria,” added President Langlois. “We have a lot of people who want to share in this wonderful community, but we do not have the homes to answer the demand at all points in the housing spectrum. Adding more inventory – be it rental or market housing – requires a commitment to building from our community members. If you support more homes, you need to vocally support projects coming through your local municipal council. Many amazing developments never happen or are buried in expense, which adds to the end cost, before they make it through years of permitting because of opposition at public reviews – often by a small but vocal minority. In order to stop our cycle of pressure on pricing due to limited supply, our community must choose to commit to new housing or commit to prices escalating further.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Victoria housing market continues to adapt to long-term lack of supply

A total of 831 properties sold in the Victoria Real Estate Board region this August, 15.1 per cent fewer than the 979 properties sold in August 2020 and 0.5 per cent fewer than the previous month of July. Condominium sales were up 31.7 per cent from August 2020 with 345 units sold. 21.5 per cent more condominiums sold in August 2021 than in the previous month of July. Sales of single family homes were down 29.9 per cent from August 2020 with 357 sold. 9.8 per cent fewer single family homes sold in August 2021 than in the previous month of July.

“Year over year numbers might indicate a slowing of our market, but there are two important factors to consider,” said Victoria Real Estate Board President David Langlois. “The first is that our market is starved for inventory. It should come as no surprise that with half the available inventory of last August we sold fewer homes this August. Without the significant lack of inventory we’re experiencing, sales would most certainly have been comparable to, if not greater than, last August. The second factor is that the previous ten-year running average for sales in the month of August is 675 properties, so with 831 properties changing hands this August, it is clear that our market remains very robust and that lack of supply is the biggest issue impacting attainability for our community.”

There were 1,120 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2021, 56.7 per cent fewer properties than the 2,584 available at the end of August 2020 and 11.8 per cent fewer than the 1,270 active listings for sale at the end of July 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August 2020 was $889,800. The benchmark value for the same home in August 2021 increased by 22.4 per cent to $1,089,400, a 0.7 per cent increase from the previous month of July. The MLS® HPI benchmark value for a condominium in the Victoria Core in August 2020 was $483,400, while the benchmark value for the same condominium in August 2021 was $540,600, an 11.8 per cent increase.

“The federal election will focus on each party’s proposed policies and programs for housing,” added Langlois. “The primary issue for housing attainability has been and remains one of supply. While increasing a consumer’s ability to pay through tax free savings accounts, extended mortgage terms, or altering stress test provisions may assist some buyers to obtain housing, it will do nothing to slow the price appreciation that the systemic lack of housing supply continues to fuel. Specific commitments such as incentivising municipalities with infrastructure grants for density improvements, increasing on-campus housing, supporting co-op and leasehold developments and utilizing surplus federal lands to directly add to housing stock can all provide a path to more supply. Debates about bidding processes and foreign buyers do not offer material solutions to improve supply nor the attainability of housing. The municipal, provincial and federal governments’ failure to support real growth and diversity in housing stocks has created the market conditions we find ourselves in today. Housing policy matters and we hope that all voters consider what each party proposes and the potential impact to our market.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Victoria housing inventory continues to decline over summer months

A total of 835 properties sold in the Victoria Real Estate Board region this July, 14.7 per cent fewer than the 979 properties sold in July 2020 and 11.4 per cent fewer than the previous month of June. Condominium sales were up 18.8 per cent from July 2020 with 284 units sold. 16 per cent fewer condominiums sold in July 2021 than in the previous month of June. Sales of single family homes were down 29.2 per cent from July 2020 with 396 sold. 10 per cent fewer single family homes sold in July 2021 than in the previous month of June.

“The real estate story right now continues to be inventory,” said Victoria Real Estate Board President David Langlois. “The market is driven by inventory; and fewer home listings lead to fewer home sales. In that context, these numbers do not reflect a downturn in our market but reveal sales falling due to this continued trend of low inventory.”

There were 1,270 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of July 2021, 52.1 per cent fewer properties than the 2,653 available at the end of July 2020 and 7.6 per cent fewer than the 1,375 active listings for sale at the end of June 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in July 2020 was $909,900. The benchmark value for the same home in July 2021 increased by 18.9 per cent to $1,082,000, a 1.7 per cent increase from the previous month of June. The MLS® HPI benchmark value for a condominium in the Victoria Core in July 2020 was $494,900, while the benchmark value for the same condominium in July 2021 was $535,100, an 8.1 per cent increase.

“As a sort of housing gridlock continues to develop, the pressure to create more of all different types of homes in our community of should not be lessened,” added Langlois. “It is important for the long term health of our housing market that a strong focus continue on developing new homes to meet our growing demand. The current market is increasingly challenging for buyers and sellers. It’s important to access the expertise and knowledge of your local REALTOR® to ensure your interests are protected.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Vancouver Market Update: July

Disclaimer Reminder

Market update

June 2021 listings were 54% higher than the same month last year, but there was also an 11.9% decrease in homes sold from the prior month. 

When the sales-active listing ratio is below 12%, analysts believe prices will trend downward. When the ratio is above 20%, prices should trend up. Here’s where we’re at:

Mar 2021 we are 52.9% detached homes, 79.9% townhomes, 65.4% condos
Apr 2021 we are 37.4% detached homes, 70% townhomes, 51.5% condos
May 2021 we are 29.8% detached homes, 53.8% townhomes, 43.5% condos
June 2021 we are 27.5% detached homes, 49.2% townhomes, 37.1% condos

Prices are still trending up because they’re all above 20%, but they’re slowing down. The number of sales compared to the number of listings isn’t as high in June as it was in March. From the data, we predict the prices should still trend upward. 

Right now we’re seeing the market calm down after an elevated period of activity because of the market stimulus. But, the market does typically slow at this time of year because people are typically on vacation. As well, with the relaxing of COVID-19 travel restrictions in BC and across Canada, we’re seeing many people just wanting to get away. Many people are feeling burnt out from being restricted to Vancouver, even though it’s a great place to live and be. This slows the market. Also, when you have elevated activity, the buyer pool gets depleted and things calm down.

Going forward, I look at what the Bank of Canada is doing in terms of interest rates and quantitative easing (the bond-buying or printing of money) since it stimulates the real estate market by pushing down long-term interest rates. The Bank of Canada has scaled back printing money, but it is still happening and interest rates are still low. They’re not saying when they’ll raise rates. If you have a five-year 2% mortgage, that’s an extremely low interest rate that stimulates the market. If you have 2% inflation on top of that, which many people are saying could happen, that money becomes free! I think we’ll see the market calm a bit and come September, things will pick up. And I think things will really pick up when the border is open, particularly for the condo market.

Looking back at the CREA real estate forecasts pretty much coming to fruition, we’re on track for the tail end of this year.

Real Estate Forecast: 2021

The Bulls

  • The Canadian Real Estate Association (CREA): +9.1%
    • “Current trends and the outlook for housing market fundamentals suggest activity will remain relatively healthy through 2021, with prices either continuing to climb or remaining steady in all regions,” the association said.
  • RE/MAX Canada: +4% to +6%
    • “While we’ve seen a significant shift in buyer preferences this year. We believe factors such as the supply issue, pent-up demand and historically lower interest rates will continue to fuel activity in 2021,” Elton Ash, a regional executive vice president at RE/MAX, said in a release.
  • Royal LePage: +5.5%

 

What I’ve seen from my clients from March-May are people getting outbid constantly. So you have some people enjoying their summer in their new place and a group of people who were excited to buy, but not anymore. They’re putting it off and I’m one of those people – I was excited about a place, I would have had to sell my place, but now it’s summer and I want to do other things. Maybe I’ll look in August or September. I hear people are going in with subjects now. The subject-free over asking has really cooled off.

The market is a bit easier for buyers, but prices are still rising as can be seen from the sales-to-listing ratio you mentioned. The increases are significant over time. 

From what you’re seeing, what kind of listing price numbers are we looking at? Is it still asking and a bit above or is it possible to get below asking? 

People are able to negotiate on price. Depending on what it is and where, less expensive options will be more difficult and more expensive options are easier to negotiate on price, which has more to do with the foreign buyers’ tax than anything else plus the real estate market structure which is very much like a pyramid – there are fewer buyers at the top and more at the bottom. You can definitely negotiate, but it’s still a sellers’ market and not a buyers’.

If something was still red-hot, would it be the single-family houses? 

It would be townhouses, less expensive condos, and stuff just outside of the core that’s affordable for people earning income from the Vancouver and BC economy. Areas closer to the core aren’t as busy, but, overall, pretty much every BC market is active and there’s a lot of demand. That will continue once the borders open and people start coming. The federal government has timed when the restrictions ease for when they will reduce some of the stimulative effects from the Bank of Canada.

If you had a client looking at getting into the market for the first time, would you recommend summer as the right time? Or should they wait until there’s more product?

It depends on what they’re looking for. A lot of sellers, particularly those with nice product who have the option to wait, will often wait until after Labour Day. There are options now but you do see a big supply surge at that time. However, you’re dealing with rising prices from 0.5-1% per month, as you can see from the stats package. In three months, you’re looking at 2.6-9.7% and some double-digit increases in the six-month change to June 2021. So, if you’re a cost-sensitive buyer you’ll do better to focus now. And, if you start looking now, you’ll be ready come September because you’ll have seen different options and what they sell for. Because for some people, including myself, it can take time to get ready and see what’s out there before you buy something.

Real Estate graph

If we take a look at the one-month change in April, the numbers went from 3-7% depending on the area, then in May the numbers lightened up, but they were all still positive. So, the prices kept going up month by month. Then in June, they’re pretty much where they were a month ago at 0.2% or -0.2%, which tells me it’s about the same pricing. But, if you look at the three-month, they’re all upward. I feel that in the summer, we’re still going to stay relatively flat from a price perspective but come September and October unless there’s a dramatic change somewhere, we’ll probably see these numbers back heavily in the positive.

Real Estate graph Real Estate graph Real Estate graph

I agree. You get more buyers and sales activity, and when you have more buyers you get more competition and increased prices. Prices don’t rise at a steady clip and pace – it’s micro-fluctuations in the market where maybe one week is dead and the next is crazy and so on. In the summer, there are more quiet times than busy times. You see busy surges, but they pick up after Labour Day just because everybody’s back from vacation, the weather is cooler, and kids are back in school.

Yes. In detached homes, you can see the six-month change has been absolutely incredible – all in the double digits. Then when you look at the one-month change, it’s stabilizing around 0%.

Real Estate graph

Condos have a similar story, but they were a lot quieter in March-April when everything else was going crazy. Would you say they’ve picked up from 3-4 months ago?

Real Estate graph

Yeah, but not dramatically. I think condos will really pick up once we have the borders open. Immigrants to Canada, foreign students, and other newcomers start with condos – in most cases renting, but in some cases buying them. I think we’ll see more upward pressure on condos and high-density options than low-density options. 

Is there anywhere out there you’d say is an actual bargain right now?

It’s tough to find right now, with the low rates in the market everyone is looking for a place right now. If you’re looking for revenue, the Okanagan and the Fraser Valley are quite good for cash-flowing properties. But in the Lower Mainland and on southern Vancouver Island, it can be incredibly difficult to find a property that gives you significant revenue. These properties are typically capital appreciations, or those that go up in value over time. You’d be breaking even at best, or subsidizing at worst. But, you might just get significant capital appreciation in the Vancouver area because we get so many people coming here – it’s a growing city.

I agree. Vancouver’s always done some odd things. I’m a cash flow guy, but unfortunately to get a cash-flowing property there your deposit would probably have to be north of 20%. I was actually just in the Okanagan and looked around at real estate, and depending on where and what, you can actually get a great investment there. And I know you have a partnership out there if anyone’s looking for an Okanagan property. Mike can help you out by doing a great comparison of what’s in Vancouver and the Fraser Valley. I know condo properties in Kelowna are quite hot right now, so you want to work with a trusted realtor.

I always say if you’re buying a home, not for investment but to live in yourself, there’s no better time than the present. Trying to time the Vancouver market can be very dangerous, especially if you’re on the outside looking in and waiting for it to go down or for more idealistic conditions. I think that more people have been burned by that and ended up jumping in later. People rarely get a smokin’ good deal after waiting two years. So if you are serious about jumping in, you should probably start the process. Or if you’re thinking about upgrading, that’s something that I do with my clients. I try to determine if it makes sense for them. 

Some conclusions from the past month are:

  • Don’t try to time the market.
  • Short-term market predictions: it’s now normalizing. I agree with Mike on this. Unless something dramatic happens, it means there will be subjects again like subjects of finance and inspection along with price negotiations.
    • I had said when the market was really crazy that when times are good, people think they’re going to be good forever, and when times are bad they think they’ll be bad forever. But that’s never the case. When people were going in over-asking and subject-free, I said that wasn’t going to last forever and we’re seeing that now in a more normal market.
  • I look at the data and feel that 2021 will remain in an upward trend for Vancouver real estate prices. I haven’t seen one sign that would push them downward.

What am I doing with my clients? I review my clients’ strategies and try to help them take advantage of opportunities in a very safe way.

Case Examples slide

Here’s a case study of a perfect example of how I help my clients. There’s an analysis that needs to be done, especially for those looking to keep their house and leverage the equity to buy an investment property – you need help with this option. 

I work with clients to solve their financial needs, including real estate. It starts with a discovery meeting that doesn’t cost anything, where we talk about the problem you’re trying to solve and what I can do to help you. If you decide to become a client, we navigate through all the options until we implement a strategy and then review it.

Latitude West Process Graph

I would do a cost-benefit analysis to show you what it would look like if you bought a second property and what it would look like if you didn’t. For example:

Investment Graph

This is what a true financial advisor should be looking at – not just the stocks, bonds, and mutual funds, but also the real estate with that.

When you use an advisor, your wealth multiplies significantly over time. Studies have shown that over 15+ years, someone who’s worked with an advisor tends to be 3 times wealthier than if they had done it on their own. I’m sure it’s even higher with real estate, which I can advise on and many others can’t.

Example photo

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Connect with us and let us know what you’d like to hear about at future updates, whether it’s analysis or comparisons of different areas or properties.

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Low inventory and strong demand continue in Victoria real estate market

A total of 942 properties sold in the Victoria Real Estate Board region this June, 16.6 per cent more than the 808 properties sold in June 2020, but 10.2 per cent fewer than the previous month of May. Condominium sales were up 61.7 per cent from June 2020 with 338 units sold. 4 per cent more condominiums sold in June 2021 than in the previous month of May. Sales of single family homes were down 4.3 per cent from June 2020 with 440 sold. 18.1 per cent fewer single family homes sold in June 2021 than in the previous month of May.

“We are at a point now where we can look at yearly comparisons with a new lens,” said Victoria Real Estate Board President David Langlois. “In recent months we have been unable to glean anything by comparing year over year numbers because of the sudden and unexpected impact of the pandemic on the 2020 market. But June last year was when the market started its reacceleration. Buyers came back into the market in droves even though listings were restrained compared to long term averages.”

There were 1,375 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of June 2021, 49 per cent fewer properties than the 2,698 available at the end of June 2020 and 5.2 per cent fewer than the 1,450 active listings for sale at the end of May 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in June 2020 was $896,700. The benchmark value for the same home in June 2021 increased by 18.6 per cent to $1,063,500, a 2.6 per cent increase from the previous month of May. The MLS® HPI benchmark value for a condominium in the Victoria Core in June 2020 was $490,400, while the benchmark value for the same condominium in June 2021 was $531,100, an 8.3 per cent increase.

“We see now even more sales activity than the return to the market we saw last year,” added Langlois. “And our inventory is much more restricted, with more than thirteen hundred fewer listings for sale than the year previous. We can see the strong impact this shrinking supply has had on year over year prices. There are many factors we need to watch while this summer’s market unfolds, including the change in borrowing rules that may impact first time buyers, declining levels of inventory and demand from outside of the province as tourism and travel reopens. Speak with your REALTOR® if you’d like fresh insight into our current market.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Unwavering demand reinforces need to support supply of homes

The Victoria market continued to show its strength through the month of May, with a near record setting pace for sales and ongoing record low inventory levels. A total of 1,049 properties sold in the Victoria Real Estate Board region this May, 129.5 per cent more than the 457 properties sold in May 2020, but 6 per cent fewer than the previous month of April. Sales of condominiums were up 200.9 per cent from May 2020 with 325 units sold. 1.8 per cent fewer condominiums sold in May 2021 than in the previous month of April. Sales of single family homes were up 111.4 per cent from May 2020 with 537 sold. 4.8 per cent fewer single family homes sold in May 2021 than in the previous month of April.

“Victoria is an amazing place to live and we will continue to see demand for property here,” said Victoria Real Estate Board President David Langlois. “In the future we need to support the creation of a housing market that can respond to demand and population growth and evolve with community needs. Adding inventory to the Greater Victoria market should be the focus of every municipal council across the region.”

There were 1,450 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of May 2021, 43 per cent fewer properties than the total available at the end of May 2020 and just 4 properties fewer than the 1,454 active listings for sale at the end of April 2021.

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in May 2020 was $855,900. The benchmark value for the same home in May 2021 increased by 17 per cent to $1,036,100, a 3.9 per cent increase from the previous month of April. The MLS® HPI benchmark value for a condominium in the Victoria Core in May 2020 was $500,000, while the benchmark value for the same condominium in May 2021 was $526,000, a 5.2 per cent increase.

“Recently the City of Victoria moved to fast-track non-profit developments, which is an exciting step in the right direction,” added Langlois. “But continued attention needs to be paid on housing of all types. By supporting an increase in urban density, we can ensure attainable housing, address missing middle family housing, increase tax revenues for community amenities and protect green space by slowing sprawl. If you are concerned about attainable housing and the future of homes in Greater Victoria, consider supporting the next housing development proposal in your neighbourhood.”

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Vancouver Market Update: May

Market update

April 2021 listings were 342% higher than the same month last year, but there was also a 14% decrease in homes sold from the prior month.

 When the sales-active listing ratio is below 12%, analysts believe prices will trend downward. When the ratio is above 20%, prices should trend up. Here’s where we’re at:

Prices were viciously going up, but if you look at April, the numbers significantly dropped:

What are the reasons these numbers have gone down from March to April?

We’re seeing an expansion in supply that’s normal when there’s a big run-up of sales activity. People who own and are thinking of selling see that it’s a fantastic time to sell — prices are rising, volumes are high, there’s a lot of liquidity, financing is cheap, so they say let’s put our place on the market. So, one month you get big sales — last month was the highest on record – people know there are buyers, they’ll get top dollar and their place won’t sit around. There’s also an interesting market dynamic: everyone thinks you get the best deals when the market’s soft, but this isn’t necessarily true. When the market’s soft, you don’t get those properties that are really well taken care of and really special, owned by people who have the resources to hang on. When the market is doing well is when the people who have the money to hang on decide to put their really nicely maintained, special properties on the market. 

So, for a buyer, it’s a great time right now because you have extremely low interest rates and a big expansion of supply that makes the buying process a lot easier than it would have been six to eight weeks ago with multiple offers. I recently helped a client in Alberta buy a single-family house in Kitsilano on a 40’ x 122’ lot that he’s looking to redevelop and there were only two offers, the second of which came in at the very last minute and didn’t seem that strong, so we won it. Other clients of mine negotiated the price down on a property in Caulfield, West Vancouver, in a very nice location on a large lot and, though it needs maintenance, it’s a solid house. 

On the flip side, depending on the market, it’s been a little more challenging as a seller. North Vancouver, East Vancouver, the Fraser Valley are still easy to sell and more difficult to buy areas, but at least now you can still actually see properties and take your time to look at them. Market conditions have marginally improved for buyers and are a little more challenging for sellers, but it’s still good for both sides.

I feel market prices will slowly keep rising based on the numbers. When we look at the forecast from our previous session, there were numbers ranging as low as 4% up to 9% for the 2021 outlook. Here’s the one-month change for the past 3 months. The numbers are climbing up. Sure, the activity has slowed a bit but from a pricing perspective, the numbers are still trending upward.

To dissect this, if we look at the one-year change for single-family homes, it’s still quite prominent year-over-year. Even for the three-year change, all the numbers keep going up.

The condo market isn’t as much as single-family but still is trending upward. No pricing is trending upward.

What’s happening right now for buyers — do you feel they don’t need to go over asking right now?

It depends on the product. If you’re competing in a multiple offer situation, the minimum you need to go in on is full price. In most cases, you probably have to go over. If you’re working with a realtor, make sure to get their advice. They should be able to help and guide you in a multiple offer situation. There’s a difference between asking price and market price and a good realtor should be able to calculate the market price for you, irrespective of the asking price. Often, sellers will put the asking price just below the market price to get a lot of activity and get that market price, or to get a buyer that overshoots and goes over market price. It’s really important to work with someone who knows the product and area and has a track record of winning these things.

If you look at some of these numbers — a 3.1% change in overall composite price for the Lower Mainland per month. If you annualize that, it’s a 36% increase in value for the whole year. We’re looking at some pretty steep price rises. These prices will rise because of sales ratios – anytime they’re above 12%, prices will rise. For single-family houses, they’re around 37.4%, condos are about 51.5%, and townhomes are about 70%. But, within the market you’ll have different ratios — for example, downtown Vancouver has a very low sales ratio for condos so that could be a place to get some real value. A lot of people are still concerned about COVID, but once people are vaccinated and we have herd immunity, I think they’ll realize what a great place downtown Vancouver is to live. People will want the busy shopping, restaurants and patios again.

We can only hope that things start to get back to normal again.

What’s going on with the potential new stress test in June? What do you think will happen with rates and people losing their low fixed rates?

The stress test is a way for the federal government to control the real estate market that doesn’t involve them raising rates for the overall market. The only way the Canadian economy is competitive internationally and with the US is with a low Canadian dollar. The way to achieve that is by the Bank of Canada keeping interest rates low – the side effect of that is to push up asset price, in this case real estate, because it’s so inexpensive to buy. The government controls this by tightening the mortgage qualification rules. With it, you’re not qualifying at 1.75% or 2.25%, you’re qualifying much higher at, say, 5.5%. They want to know that you can afford that mortgage even if rates get that high. They do this for three reasons:

  1. To say they’re doing something about housing affordability in Canada as part of a re-election strategy.
  2. To keep control of the real estate market because if it goes crazy, it can throw the economy off track.
  3. To protect consumers from themselves. The US financial crisis was largely caused by irresponsible or lack of regulation — you had the mortgage industry and politicians saying “let’s give everybody mortgages”, and nobody slowed things down.

The stress test can be a pain when you’re trying to sell a property, but overall I do think it’s a good thing because it keeps us safe.

There’s been mention of interest rates increasing to cool down the market. How significant of an impact will this have overall, moving forward?

Interest rates aren’t increasing to cool the market down, but that may be their effect.

Right now the bond market is changing because of perceptions of future inflation, but I don’t see inflation getting that high. In the past, the world economy was cellular. So, if we didn’t have enough shirts, cars, and socks in Canada, too bad – we can’t bring in any more because of the 20% tariff from the US. So, the price of these things would go up and that would be overall inflation on the economy. Now, you can bring in any of these things from all over the world with low tariffs and shipping. Where we’ll see inflation hit is in cryptocurrencies, real estate, and the stock market because there’s limited amounts of these things and they’re not easily replaced. I think interest rates will eventually go up, but I don’t see them surging to 10-12% like when I was a kid or 20% when Paul Volcker raised rates dramatically in the early 1980s as head of the US Federal Reserve. Rates may even go down if the economy has problems going forward.

I’ve been doing this for 16 years and have seen a booming market when interest rates are around 5%. The real estate market can go crazy with very high interest rates. What happens is the department of finance, which controls the stress test, pushes out mortgage amortizations. In 2005 when I started, you could get a 40-year amortization which is very good when interest rates are high — you’re paying huge amounts of interest which means writeoffs on an investment property. Just because you have high interest rates doesn’t mean you won’t have a rising real estate market.

I’ve seen interest rates go up a number of times and it didn’t really have a dramatic effect to cause real estate to crash or cool off. People always need to buy. If they’re worried the rate will go up from 3%, they’ll buy at 3% or whatever it may be. In the past few months we just saw incredibly low rates mixed with pent-up demand. The two crossed paths and suddenly there was a surge of people wanting to buy.

If I want to sell in New West and buy in Abbotsford, is it better to use the same agent for both transactions, or two different ones who know each area better?

It really depends on the realtor and how comfortable you are with them knowing each area. You can have a fantastic realtor who knows the buying and selling side well.

I would have two separate realtors because those markets are so different, so specific and so far apart. You could have your New West realtor refer you to someone in Abbotsford so they don’t feel bad (or vice versa). Plus, the Abbotsford realtor will take you seriously because you’ve been referred and they know you won’t waste their time. If you’re looking for a realtor in either area, I’d be happy to refer you.

Does the foreign buyers’ tax apply for non-Canadian and Canadian spouses?

Go with an accountant or lawyer’s opinion on that one — it’s beyond the scope of my license and they can advise you best.

When COVID slows down with increased vaccinations, how do you feel it will affect the market? Better for buyers or sellers?

It depends where. When we have herd immunity, I wouldn’t be surprised to see places like the Fraser Valley, Bowen Island, Nanaimo, Squamish, and other markets further out soften or even have price declines. The cores of cities — downtown Vancouver, Metrotown, North Surrey, Lougheed Town Centre — super dense places people have moved away from because they’re worried about COVID will have people moving back to them. Prices and demand will go up in these places, and the craziness we’ve seen outside of cities will come back to these urban locations.

Are you knowledgeable about US property rules and laws? I have one property in the US and want to buy a condo.

Yes. I have clients with properties in the US, and I own down there too. We can set up a discovery call to continue the conversation.

Don’t try to time the market. It’s dangerous. Find something that fits with what you’re looking for, whatever the rates happen to be. Check your cash flow, see if you can afford it. I think there will be added pressure if anyone is still holding on to a lower rate. People who locked in at 1.7-1.8% for 120 days should be coming to the end of the cycle soon. New rates are still in the low 2s and are historically low. Based on the data we’ve seen, 2021 will remain on an upward trend for Vancouver real estate prices for sure.

I review my clients’ strategies and try to help them take advantage of opportunities in a very safe way.

Here’s a case study of a perfect example of how I help my clients. There’s an analysis that needs to be done. I work with clients to solve their financial needs, including real estate. It starts with a discovery meeting that doesn’t cost anything, where we talk about the problem you’re trying to solve and what I can do to help you. If you decide to become a client, we navigate through all the options until we implement a strategy and then review it.

I would do a cost-benefit analysis to show you what it would look like if you bought a second property and what it would look like if you didn’t. For example:

The analysis if you’re considering changing or acquiring real estate is so important, and if you can’t do that analysis yourself you should book a discovery meeting with me. When you use an advisor, your wealth multiplies significantly over time. I’m sure it’s even higher with real estate, which I can advise on and many others can’t. 

 

Rising Rates Effect On Vancouver Real Estate: March

Webinar Title Cover - March 2021 Disclaimer notice

Vancouver real estate listings in February were up 56% from the previous month, which is 73.3% higher than the same time last year. Analysts predict that prices will go down when the sales to active listing ratio goes below 12%. When the ratio is above 20%, it signals prices will go up. In December 2020, we were at 35.2% for detached homes, 50.4% for townhomes, and 33.1% for condos. In January of this year, we had a lot more product come on the market and were at 26.3% for detached homes, 37.6% for townhomes, and 27.8% for condos. In February we went back up to 41.8% for detached homes, 61.8% for townhomes, and 41.7% for condos.

March Webinar Stats Update

What does this mean according to the analysts? Sales prices are trending up since all of these numbers are over 20%. It’s like trying to turn a boat around – it won’t correct quickly, the momentum keeps going upward. We feel prices will continue to go up in 2021.

What about mortgage rates? If you take a look at the chart, the crazy ‘80s rates were in the low 20-percents. They were at 18% for a while and then for a short time the historical largest rate at 22.75%. What happened in the years when mortgage rates went up progressively? Did it slow down the real estate market? Yes, but only for a short time. That’s what we believe will happen again. If there is a slowdown, I don’t think prices will be negatively affected, unless we see data showing that. Of course, we use data such as sales to active listings. That’s what guides us to see which direction prices will go.

 If we look at the rate trends, in several places of the analysis, including speaking with people who were around for this in the ‘80s, when lending rates went up, people actually started to buy more. Why would people do this? They didn’t have a crystal ball to know what would happen the next year. Newspapers said rates could go as high as 28-30% and if you didn’t buy now, you could miss the boat and never be able to afford a house.

70 Year Historical Lending Rate Graph

Let’s play that out in today’s market: interest rates are at about 1.6-1.7%. Let’s say interest rates are on their way up and might land at 2% or even 2.5%. If you’re looking for a property, is that going to motivate you to get into or stay out of the market? If you knew that you only had a year left with rates of under 2%, you’re going to run out and buy a property. But, it’s supply and demand – now we have too much demand, so what will it do to prices? It will push them up.

I agree. The reason why historical rates were so high back then is that there was excess demand in the economy. It was booming. In the early 1980s, when Paul Volcker was head of the Federal Reserve, he raised rates that high to cool the economy down. So, now what we’re seeing with this slight uptick in super low rates right now is just an indication that the economy is starting to come back, and quite frankly I don’t see it as that bad of a thing at all. It’s quite normal. The reason why interest rates are going up is that the bond market, which is what controls variable rates in Canada, has indicated they anticipate accelerated economic growth and good times ahead. When you have a good, growing economy and a demand for money, that pushes up the interest rate.

What we’re seeing in the market is crazy. For most types of properties, with few exceptions, there’s excess demand and not enough supply. Single-family houses under $1.5 million are just crazy. We’re seeing price increases now, but I think over the next few months we’ll see even more dramatic increases. Using statistics to see what’s happening in the market is kind of like driving a car with the windshield painted black while you look in the rearview mirror, but we’re seeing upward pressure on prices right now.

I don’t see anything slowing down. If we take a look at the real estate forecast for 2021, the Canadian Real Estate Association predicts +9.1% in prices across Canada. RE/MAX products +4-6% and Royal LePage predicts +5.5%.

Real Estate Forecast 2021]

Just in the past month, there’s been a 3.1% increase in the Lower Mainland and a 4.9% change in the past three months. In the past six months, there was a 6% change. Every number is positive; we’re trending upward.

Feb 2021 Real Estate Stats

If you dissect this and just look at houses, the one-month change was 3.9%. The three-month change, just since November, is incredible: Coquitlam was 7.1%, Vancouver was 5.3%, Lower Mainland was 7.3% – we are heavily trending up. The one-year percentage change is in double digits across the board. You can get that entry-level house, a step up from a townhouse or condo, in the low one-millions – they will be on fire. There’s too little supply, too much demand, people holding onto 1.5-1.6% interest rates only good for a few months or so who are anxious to buy, or they’ve sold and have to buy to close their sale so they’re very motivated.

 Or, they may have sold and are sitting on cash in a rising real estate market – every time real estate prices rise, it shrinks the purchasing power of the cash you have. That’s another thing to consider.

 You also have people who have sold and are kind of homeless. They’re living in parents’ basements, a short-term rental or Airbnb. They thought they’d be doing that for a month, but maybe it’s been three months and they’re dying to get out of there.

Last time, we said condos weren’t so hot and I’d still say the same. Numbers in the one-month and six-month change are slowly trending up.

Condo Homes Graph

If you compare what’s happening with houses to condos in some areas, especially expensive, high-end, for example at Boundary Road and east and in North Vancouver, you could say they’re a bit soft. We’re not seeing multiple offer situations and if sales occur for condos, we’re seeing buyers able to negotiate a bit. I’d say that’s related to the hangover from COVID and the fact that a lot of people still don’t feel comfortable being in a condo and common, shared areas like lobbies. But, give it three to nine months and the condo market will explode too because the Bank of Canada said they’ll keep rates low in the form of quantitative easing – they won’t raise rates.

Detached Homes Graph

I feel the same. I think rates will go up a bit, but they could even go down. In 2018, rates went up by a quarter-point three times in 12 months – we thought that was it and we’re going back to rates at 4-6%. But, what happened was rates stayed in the low twos for years. They crept up and up and then no one predicted it, but they went back down.

What will the rising rates do to purchasing power?

Rising rates do have a negative impact on purchasing power, but I don’t think the rises we’ll see in the next two years will be significant enough to damage it. Right now, we’ve got a hyperfocus on real estate, mortgages, investment, primary residence, multiple offer situations. But, if you step back and look at the overall economy of Canada and the US, we’re still coming out of the COVID-19 crisis. They shut down our economies for 3-9 months and there are still ongoing lockdowns and other things that have a big impact on the economy. The North American and other major advanced economies cannot handle high interest rates – they’ll go into recession. I would argue that central banks and national governments across the world will continue to have accommodated monetary policy – meaning very low interest rates, printing money and introducing stimulus. For example, Joe Biden’s $1.9 trillion stimulus package passed this year. So, of course, that will put upward pressure on demand and interest rates. But the Federal Reserve, the European Central Bank, and the Bank of Canada will keep printing money which pushes down long-term interest rates. Rates may be going up now but they’ll go back down. Look at the stock markets: when interest rates went up, the stock market went down. For example, Tesla went up 20% yesterday because the Federal Reserve and other banks said they will be keeping interest rates low. Rates won’t rise dramatically until at least 2022-2023. It slows the economy dramatically and governments who want to be re-elected won’t be, even though central banks are independent. They’re not here to stop the economy; they’re here to support and keep the economy going, and real estate is a huge part of the overall economies of Canada and the US.

I had clients that were quoted on a 10-year fixed rate at under 3%. The banks aren’t stupid – they’re not going to give out 10 years at 2.5% if they thought rates were going up; they’d lose a lot of money. I think rates will stay low but, naturally, they go up a little bit – but it’s about how people will react when they go up.

That’s the thing. If you step into the bank’s shoes, the mortgage is an investment in you and the property. If they loan you $500,000 for 10 years at 2% and inflation hits 2% or more next year, they’re losing money. Banks are not in the business of losing money; they make money. So if they’re willing to offer such a low rate for so long, I think they have a pretty good idea that rates won’t go up.

Also, if we look at the overall economy before COVID-19 hit, we were dealing with low inflation. So, you’ll see central banks and national governments wanting to increase inflation. If you get a locked-in mortgage at under 2% and the Bank of Canada’s and Federal Reserve’s target for inflation (as they’ve recently hinted at) is 2%, the bank is effectively paying you for the use of that money. But if inflation picks up and your interest rate is a bit higher, it’s not that bad because the amount of debts goes down by the inflation rate.

Is it a good time to invest in a condo right now since there’s not much overbidding and prices are slowly creeping back up? What will the rental situation be like for the rest of the year?

For full disclosure, I should be completing on an assignment condo I bought in East Vancouver in April, and the reason why I bought it is, first and foremost, the rates are the lowest I’ve ever seen. I want to take the money I’ve saved and invest it somewhere. The condo is worth about $500,000, I’m putting $120,000 down, I’m getting a five-year fixed-rate mortgage at about 1.65%. In terms of the principal, it will pay down $10,000 per year, or a 10% return on investment per year regardless of whether prices go up or down. The other thing I like about this is that if inflation does go up, it will affect the price of real estate by pushing it up – real estate is the best investment if you’re concerned about inflation – and it will increase rent. 

When I work with my clients, I avoid focusing on if a price is high or low. I do the analysis by entering the price, the rent, the vacancy, the down payment, and the mortgage rate and then seeing if it will break even or cash flow positively or negatively. So, even if you have to bid $5000 over asking to get a place, you should still check to see if it cash flows and makes sense with your criteria. Don’t assume it’s a bad idea. You need to dig a bit deeper with someone like Mike or myself – the quick answer to “is it a good idea to buy a two-bedroom condo in downtown Vancouver?” is maybe. We’d have to see all the other pieces first.

 Yes – it depends on your personal financial situation. A guy like Christian can look at your finances and recommend what to do or not do based on what you’ve got, what’s tax-efficient, best for your retirement, your family situation, etc. Then, come talk to me and I’ll show you the options that work best for your personal financial situation. Everyone’s employment, financial, tax, and lifestyle situation is different. We help with customized plans specific to individuals.

In the current environment, what and where is the hottest, in-demand sellers’ market product?

Single-family houses east of Boundary Road to Hope, the North Shore, Okanagan, and southern Vancouver Island, along with single-family houses south of the Fraser River – or basically across Greater Vancouver – under $2.5 million are just on fire. Big price appreciation coming in the next few months.

 So, someone coming in now that wants one of these must come in subject-free and over-bid – how much do they have to go over to get one?

It’s anybody’s guess. Talk to someone like Christian, talk to your accountant about the tax perspective, then, most importantly, talk to your mortgage broker so you know exactly what you can spend before you go shopping. You need this information in advance because, in multiple offer situations, the whole process is backwards – you do your inspection and send information to your mortgage broker before you write the offer so that it can be clean when presented. Going subject-free on a property is risky, but you can hedge and mitigate that risk by doing your due diligence in detail before submitting your offer. That’s the key in a market like this – be prepared, have everything done and ready before you shop.

Also, this can make your offer a lot more powerful and get you a deal if you’re operating in markets that aren’t as hot as single-family houses in the mentioned areas. Maybe you’re looking for a condo in downtown Vancouver and find a property that’s been on the market for 150 days and the seller is motivated. If you go to them with a subject-free offer and a deposit, they’ll take you more seriously at a lower price than they would someone who offers 10% below asking but needs two weeks to get their stuff done.

The part I play with clients is, let’s say they’re trying to buy something for $1.3 million and the mortgage broker says they can go to $1.4 million, so they go for that, but then I look at their plan and see they want to have a kid within 2-3 years. At that point, they’ll have one income or pay for daycare for 4-5 years and are paying for real estate $100,000 over asking that they could barely afford already on a 1.6% interest mortgage, but if it renews at 2.2-2.5% they could be in trouble. That’s where financial planning is needed – people get so caught up in buying the house that they don’t think about whether they can afford it in 3 or 5 years.

Safety first – you never want to have surprises. Working with advisors means you won’t have them or buy anything you can’t afford.

Let’s say you qualify for a 1.6-1.7% mortgage and rates go up to 2% before you’ve bought anything. What will this do to housing prices in 3-4 months when people are in this situation?

First of all, I don’t think we’ll see that kind of interest rate appreciation. But I think it will take the market from being red hot crazy to just red hot. I’ve been doing this for 15 years and have seen three big run-ups in prices. The first two, interest rates were at 4-5% – much higher than right now. You can have a surging real estate market with much higher rates, and here’s why. The longest amortization you can get on a property is 30 years, most being 25 years. When I started in 2005, you could get a 40-year amortization. A 35 or 40-year amortization dramatically increases a buyer’s purchasing power as it dramatically reduces payments (while increasing interest costs).

For investors, this is good, because most of the payment is for interest which gives you a bigger tax deduction on the revenue coming in from that property. The Department of Finance can see rates rising and be concerned it’s causing real estate to go down, so they can increase amortizations. This dramatically increases affordability and keeps the real estate market going. The government uses the real estate market to boost the Canadian economy – they did it in 2008-2009 and they’re doing it now. The Bank of Canada said they will keep policies accommodative, meaning they’ll keep the prime rate low and will continue to print money. Right now, they’re printing $4 billion every week! If the interest rates get forced up because of the bond market, they’ll just push out amortizations. We need low interest rates though since we’re coming out of COVID.

Is there any area or product in the Lower Mainland you feel are good buys, not crazy red hot or competition with a million people?

Yaletown and downtown Vancouver, anything $2-2.5 million and over either one or two bedrooms. Also, two bedrooms in North Vancouver are relatively soft. There are pockets where the market isn’t that crazy and I’d argue a lot of that softness in the condo market is a holdover from COVID-19. The reason why everyone wants single-family houses is that they’re hot and people are still concerned about COVID. But once that mass vaccination happens and borders open, I think the market will surge, particularly condos.

Up until COVID-19, we had 350,000 new people coming to Canada each year. In 2020, it was only 187,000 people. Right now, Immigration Canada and the federal government are doing everything they can to get people in the immigration system fast-tracked so they can become permanent residents and citizens. Before COVID, the government wanted to bring in 400,000 people but they didn’t make it. Now, there will be a huge amount of people coming in as immigrants, foreign students and visitors. This will create massive demand for condos because when people are new to the country, where do they go? As tourists, where do they go? Downtown Vancouver, downtown Victoria, Kelowna. They’re simple, easy to understand, walkable areas. So, I think that condos in the cores of cities are a fantastic buy and if you do so, you’ll be extremely happy with your investment when the borders open

Prediction for interest rates in Vancouver

In the short-term, there will be added pressure to buy for those with low, locked-in 120-day rates in the low to mid-ones. There won’t be a slowdown for entry-level detached homes, especially for those with suites. People need that mortgage helper when they move from condo to house.

In the summer, there will be a natural slowdown in volume and overbidding when people don’t really want to sell and wait for the fall.

I don’t think there will be a decrease in prices – there’s no indicator of this that I’ve seen based on my analysis. But, there will be a cooling of the multiple bid and subject-free climate we’re in now.

Rising Rate Impact Info

I don’t necessarily agree. In my experience, you see a massive run-up of prices and they plateau at a higher level whereas sellers won’t negotiate as much because they know things can pop off again. So, I think we’ll still see this craziness and price rises going into the summer. Many people I know in the industry feel that once the border opens up, we’ll see a 25% increase in prices across the board. There’s a lot of pent up demand from people throughout Canada or who are Canadian citizens outside of Canada just waiting to buy in BC.

Well, we can both agree that there’s no way prices are going down.

Real Estate Graph

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Forecast

Real estate

There are two camps for the 2021 forecast: the bulls and the bears. For the bulls, CREA says we should go up by 9.1%, RE/MAX says 4-6%, and Royal LePage says 5.5%. These estimates are based on different housing trend factors. The bears are pessimistic: RBC and Scotiabank think it will be flat, Fitch Ratings believes we’ll decline by 3-5%, and CMHC thinks it will be 9-18%. This was also their stance for the prior year, which they were wrong about. 

All of this to tell you that it’s confusing! First off, these stats are based on all of Canada. Vancouver is such a unique market, so I’d be very careful about painting the country as one whole. 

So, let’s look at Vancouver real estate: December sales were up 22.1% from the same time in 2019 – typically, people don’t buy and sell a lot in December but because of the pent-up demand it was high in December.

Analysts believe when you have a sales-to-active-listing ratio below 12, you get downward pressure. When it’s about 12, you have upward pressure.

  • Last month, we were at 27.9% for detached homes, 40.1% for townhomes, and 23.9% for condos.
  • Now, we’re at 35.2% for detached homes, 50.4% for townhomes, and 33.1% for condos.

So, not only are we significantly above the 12% mark, we’re trending upward. In my view, in 2021, we’ll see the real estate market in the Greater Vancouver area continue to rise.

 Stock market update

As an investor, should we put our money in stocks or real estate? I invest in both. We are back to pre-covid stock market levels. There was an amazing opportunity last year – all of the easy money was if you invested new money during the March-April crash. Tom Lee of Fundstrat believes there will be a cooling-off because we went up so quickly in Q1 but then there might be a pullback by the end of the year when the vaccine is fully rolled out and the economy is back up and going. There is opportunity in the stock market, but there will be volatility. So, personally, I’m looking at real estate.

What is happening on the front lines of real estate in the Greater Vancouver area? 

It’s starting to get really busy. Single-family houses in East Vancouver are extremely hot and in high demand. Houses are getting anywhere from 10-20 offers in some cases. Larger, ground-oriented townhouse options are doing extremely well. I was looking at a small duplex in Strathcona listed at $1.19 million that sold for $1.425 million, and its lower-level unit listed for $899,000 sold for $1.185 million.

We’re seeing significant demand and upward pressure on prices. This goes back to what we were talking about with the sales ratio – when you have an elevated ratio above 12% for an extended period, you start to see prices increase. I would argue this is caused by the extremely low interest rates. We’re seeing variable rates for insured mortgages (those where you put down less than 20%) at 0.99%. For non-insured mortgages, where people put down more than 20%, we’re seeing 1.39%. I’m personally investing in property and am getting quotes of 1.59-1.69% for five-year fixed mortgages. This is fantastically low. If we see inflation get to the Bank of Canada’s target of under 2% and you have a 1.59% mortgage, you’re literally being paid by the big banks or your mortgage lender for borrowing that money.

Things are very active. Downtown Vancouver, as I mentioned last time, was quite soft mid- to late-last year, but it’s perking up now and we’re seeing a lot of demand. I just relisted two listings that were very quiet last year, one with no showings, and now offers are coming in and many more showings. Things are starting to perk up in the downtown core. Single-family houses in North Vancouver are extremely active. I think we’ll see a broad surge in demand for all property types because we have these extremely low interest rates.

As the vaccine gets rolled out, we’ll get away from what I term the “90% economy” we’re in right now, where people in foodservice, travel, and other industries aren’t working and making income, to an economy where people in large numbers are going out to restaurants and bars and travelling, as they get more comfortable. We’ll then see an uptick in demand for rental units which will push up rents and make investments people are making now in rental properties look very wise. Rents have come down in downtown Vancouver across the region during COVID as people move away from smaller units because they feel uncomfortable in high-density, crowded places – younger people are moving home with their families and people are moving into larger spaces further out. But I think this will reverse. 

If you look at what’s been happening with the stock market before the vaccine announcement, many stocks were way down, like oil and airlines, and all these remote working stocks were way up. As soon as they announced a credible vaccine, we saw a surge in these stocks because we’re going to get back to the way we were and things will be okay. Once we see the vaccine distributed, the economy will start booming. We’ve got ultra-low interest rates. The economy and real estate markets were doing really well before COVID-19, and the Bank of Canada and the federal government have both signalled they will allow the monetary and fiscal stimulus to continue well after we’re vaccinated because we have to make up for lost GDP. I think those who invest now will do quite well going forward, and I’m extremely optimistic about the market going forward. 

I echo this. You know that I’m also looking for real estate right now, as are my family members and clients, and what I’m finding is they’re having trouble finding product. There seems to be a supply shortage, and when you pair that with heavy demand, you get upward pressure on prices. I know multiple people who put in asking or above-asking offers in certain areas and were outbid.

I’m looking at properties that are at 2017 pricing or less. We’re almost at five years, an economic cycle, so what are the chances we’ll see certain products back to their 2017 levels? In 2025, eight years from those prices, the chances are pretty high. But it might be one year or six months from now. I think we’re in a window of opportunity, especially for the buyer who might not have been able to afford 2017 prices at 2.28% interest. Now, same pricing in 2021 at 1.6% on five-year fixed, and that same person probably earns more income now. Across the board, I think people will realize this and it’ll cause upward pressure. 

I agree. You make a good point – 2017 was a banner year for real estate in Vancouver. A lot of that was to do with money coming in from overseas, but interest rates were a lot higher then. Now, one of the biggest drivers of real estate, immigration, is on hold. As well, foreign students support a lot of revenue properties and furnished rentals. So, we’re seeing this upward pressure on price but we don’t have the components of demand for Vancouver real estate. As well, not many properties in the city are cash-flowing, but I’ve been looking with a close real estate colleague of mine in the Okanagan and Alberta – both have cash-flowing properties (the only concern with Alberta is the future of oil).

I agree. You also need to be careful of vacancy in Alberta.

 In this report, I wanted to highlight some things.

The one-year change in Greater Vancouver is 5.4%. But, when you dissect by area and property type, I notice many are in the double digits! Coquitlam,10.7%, Bowen Island, 28.7%, Sunshine Coast, 22.4%.

 These are the areas we identified before, where people are moving during COVID because they feel secure.

Yes. and if you look at the 10-year returns, they’re high at 6-7% ROI year-over-year for 10 years. Remember, your home is a capital gains tax-free investment.

For condos and townhouses, the numbers are in the single digits or even slightly negative. So, I’m feeling like the detached home is a hot commodity right now – there’s low supply but high demand.

Absolutely. They’re not making any more single-family houses or lots – if anything, supply is constricted. Anytime a new condo building goes up or a new duplex is built, they’re made of single-family house lots. We see the price of condos going down because of COVID; I would argue this is the time to buy that type of product if you’re an investor. As an investor, don’t look at the things that are up now; look at the things that are down. In future, what’s down will come up. Right now, that’s condos.

I live in the type of house that’s in very low supply and high demand, and right now I’m exploring listings with lower than 2017 prices – I want some discounts on the upgrade. If you can afford it, with these low rates, it’s not a bad strategy.

This brings me to my next point. Should I be making a move in real estate? My philosophy is that money always increases when it’s in three buckets:

  1. The stock market
  2. The real estate market – all of my clients love real estate which is why they gravitate to me as opposed to a traditional advisor. I like to encourage people to buy real estate, whether it’s through a holding company, personally owned, residential, commercial or multi-unit.
  3. Cash or fixed-income reserve to capitalize when there’s an opportunity

Here’s a typical client of mine:

  • Newlyweds, looking for a financial advisor beyond what the big banks offer
  • Each owns a condo and earns a good income
  • They want to start a family and upgrade their home
  • Options are to:
    • Sell both and upgrade,
    • Keep both as rentals and save up for a down payment on an upgraded home, or
    • Keep one as a rental and sell the other for a down payment, but which one?

Many financial planners don’t do the analysis that’s required to properly answer these big questions.

Latitude West would have a discovery meeting to find out what you’re trying to do, navigate different options, then implement the strategy. Then we do a competitive analysis to compare the two homes and see what the net advantage is. We do this with investment and personal properties.

We can show what retirement looks like for two or three properties on the revenue side.

People should be using an advisor when they can’t do things themselves, but they should be the right advisor – someone using real estate if that’s what you want to do.

Don’t try to time the market. I think that rates will stay very low and demand for real estate will be high. How does this integrate with your stock portfolio or other investments? That’s where I can help. I review my clients’ strategies to ensure they’re taking advantage of opportunities in a safe way.

Questions

Can you talk about the potential disparity between condos and single-detacheds in terms of 2021 predictions?
My crystal ball is as good as yours, but I personally think that overall you’ll see demand across the board for everything. I think single-family houses will continue to be in extremely high demand and you’ll see price appreciation, particularly in areas with good schools and lower prices. Condos may go up faster than single-family houses because you’ll see a lot of demand from renters, and I think rents may start going up later this year. This could make condos a lot more attractive. As people get vaccinated and become more comfortable living in urban areas because, up until COVID, people were leaving single-family houses and the suburbs. This will continue because many people these days aren’t having kids or getting married and want to live a single life, which, I’d argue, isn’t as good in the suburbs as it is in the core. Condo prices might catch up with the gains of single-family houses. Before the foreign buyers’ tax, single-family house appreciation was significantly higher than that of condos and after the tax, that switched because there wasn’t as much overseas money going into higher-priced single-family houses. Condos are very much designed for and affordable to the local market. It’ll be interesting to see what happens after COVID – single-family houses will always be in demand because their supply is constricting, but I think condos will do quite well.

Do you see adding a laneway home to your property a benefit still, or will the regulations cause problems?

Adding a laneway home is a fantastic return on investment. The key though is to look at the lot you have, what the zoning is and what’s allowed. But, if you can build a revenue property for $250,000 that pays you $1,800-2,500 per month, you’re in a great situation. Let’s say you earn $2,000 per month for a year, or $24,000. To get the cap rate, you divide that by the cost of investment, or $250,000 in this case. That’s a 9.6% gross return, and in my view anything over 5-6% in Vancouver is fantastic because it’s so rare. If you can build a laneway home in a cost effective way, I would do it.

What allocation should go into real estate, stocks, and reserves?

This isn’t an easy question to answer because everyone is different depending on their stage of life and how much real estate they already own. One example to look at is the Canadian Pension Plan. if you look to see what you make off this as a ROI, it’s very high. They have many money manager professionals because they have to pay out CPP when we retire. They have 22% in reserve cash, 34% in some form of real estate assets, and the remaining 44% in equities. Another example to look at is the Tiger 21 – these people are the richest investors in the world. You need a $10 million minimum investment to be part of this group, which is like a club. The average person in it is worth $100 million. They publish where they’ve invested their money: they have about 35% in real estate, 20% in accessible cash, and 45% in equities. Now, I wouldn’t say keeping 20-25% in cash is a good idea in this environment right now. The important part is being able to access the money without selling the stocks or real estate. My personal setup, being a real estate guy, is having a larger real estate portfolio than stock portfolio, but I have access to about 20% of my whole portfolio if I needed it.

What effect will the federal foreigner tax, to be applied from spring 2021, have?
I don’t think it will have any effect in BC because we already have the foreign buyers’ tax. It will be bad for places like Alberta and the Maritimes, where Europeans buy vacation homes. It’s a political fig leaf on the part of the current government to hide the fact they’re no longer doing anything on housing affordability. They’re using the real estate market as a safety balloon to keep the Canadian economy from sinking. They’re doing this by dramatically cutting interest rates, as they did in 2008-2009, which causes the real estate market to surge. This increases tax receipts but it also, more importantly, creates massive stimulus in the Canadian economy and keeps it from going into a deflationary spiral. It won’t be impactful – it’s a political nothing to help get the Liberals re-elected. 

Is a studio in the downtown core a good investment?

Absolutely. I like studios a lot and you can get great revenue from them, particularly if they’re furnished. But, you have to buy in the right building and it needs to be good quality. A lot of buildings in downtown Vancouver are showing their age, and you see these listed on Realtor.ca. A lot of them are junk and have serious insurance deductible issues. One particular building I won’t name has many small and one-bedroom units, and it’s one of the few that allows short-term rentals. The insurance deductible is $750,000. So, if you own a property there worth, say, $600,000, you don’t have the right insurance, and your tenant causes a leak that’s $749,000 worth of damage, you are personally responsible for this. So, be very, very careful when buying an investment property and make sure you have a realtor who knows how to steer you right. If you do it wrong and have an insurance claim, the deductibles can be a catastrophic loss. Many of these buildings have a $250,000 water damage deductible, and I think you’ll see many more getting them. Another issue with these buildings that are 20-25 years old is the building envelope – major work comes up. You might get a cheap unit for good rent, but your investment pro forma will be completely blown up if in year two of ownership the strata says they need $30,000 or $50,000 to do the building envelope or parking membranes.

Housing in Greater Victoria remains in high demand

“Comparing last year’s April market to 2021 does not provide us any real insight into long term market trends,” said Victoria Real Estate Board President David Langlois. “Instead of comparing to last year’s numbers, we need to look at years before the pandemic to see how April 2021 compares to average. In the most recent five years pre-pandemic, the average number of sales in the month of April was 896. April 2016 holds the record for sales with 1,286 properties sold. The five-year average for active listings was 2,596, so we sit at more than one thousand homes fewer than a recent average level of inventory.”

A total of 1,116 properties sold in the Victoria Real Estate Board region this April, 288.9 per cent more than the 287 properties sold in April 2020, but 4.9 per cent fewer than the previous month of March. Sales of condominiums were up 353.4 per cent from April 2020 with 331 units sold. 12.2 per cent fewer condominiums sold in April 2021 than in the previous month of March. Sales of single family homes were up 246 per cent from April 2020 with 564 sold. 1.7 per cent fewer single family homes sold in April 2021 than in the previous month of March.

There were 1,454 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of April 2021, 36.9 per cent fewer properties than the total available at the end of April 2020 and 11 per cent more than the 1,310 active listings for sale at the end of March 2021.

“We’ve seen an imbalance in our market for a quite a few months,” explained Langlois. “Our market is based on supply and demand and there is a disconnect right now with record low supply and high demand. Unfortunately, our housing supply is not as elastic as market demand is. Desire for homes in a certain market can erupt quickly, while building homes takes years. These realities make it hard to bring our market into balance. Efforts by government to dampen demand by making home ownership more expensive through taxes and borrowing limitations do not bring balance. Municipal governments adding costs and time delays to new developments do not bring balance. A commitment to developing our communities over the long term may.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in April 2020 was $884,600. The benchmark value for the same home in April 2021 increased by 12.6 per cent to $996,500, a 2.9 per cent increase from the previous month of March. The MLS® HPI benchmark value for a condominium in the Victoria Core in April 2020 was $533,600, while the benchmark value for the same condominium in April 2021 was $547,600, a 2.6 per cent increase.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Hot Areas to Invest in Vancouver

April 8, 2021

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

April Webinar Title Card

April Webinar Disclaimer

Market update

March 2021 listings were significantly up 126% from the same month last year. The number of transactions last March were super low because of COVID when things started to shut down, so it’s a low baseline. But, the report says that in March, residents bought and listed across the region at levels not seen before. It’s a huge increase because of the amount of stimulus going into the market, and we’re seeing that pent-up demand that occurred during COVID being released. We’re seeing all-time highs of property sales. It’s unprecedented.

When the sales-active listing ratio is below 12, it means prices are trending downward. When the ratio is above 20, it means we’re trending upward. In January we had 26.3% for detached homes, in February it was 41.8%, and March was 52.9%. The data shows we’re significantly trending upward. If I’m reading things correctly, we’ll see prices rise in 2021.

Yes, 100%. We’re already seeing this. If you look at different areas of the city like East Vancouver, single-family houses went up 13.5% in the past year. Vancouver West is up 10.4%, West Vancouver is up 19.2%, and North Vancouver is up 19.4%. We’re seeing even bigger gains in areas like Victoria, the Okanagan, and the Sunshine Coast.

If you look at what’s happening with condos, prices in the core are muted but if you get out to areas like Maple Ridge, a condo went up 12.3% in the past year. In Pitt Meadows it was 10.6% and in Tsawwassen, 10.8%. There are also big price gains in Whistler and Squamish.

It’s a continuation of what we’ve seen with people leaving the core, but I think that will change as vaccinations get rolled out. These gains will spread into the core of the city.

The Real Estate Board of Greater Vancouver provided the below stats. Email Mike to get a copy of the full report.

The one-month change in stats from January to February was all positive. Then in March, not only are they positive, but they’re all higher than before. So, I feel we’re gaining momentum.

Real Estate graph

Real Estate graph

I agree. I follow Jerome Powell, the head of the Federal Reserve, and we’ve recently seen a slight uptick in inflation that’s resulted in slightly higher interest rates. Right now, a lot of people have rate holds at extremely low rates, like under 2%, that will be disappearing through April-June. Those people will be very motivated to get out there shopping and buy before the rates increase.

Personally, I think rates will go down again because we’ll see a bit of inflation in the next few months as the economy opens. But once it does, I don’t see that inflation spreading. I think it will be focused on the real estate and stock markets, but we won’t see a return to the overall yearly inflation of 7-8% we saw from the late 1960s to the early 1980s. I’m confident we’ll see continued real estate price increases without interest rates going up significantly. Once they go up a bit, they might come down in a few months.

Yes. People I talked to in the mortgage industry said their phones are ringing off the hook because the fixed rate is going up and some people are hopping on the bandwagon a little bit late. You might get a five-year fixed now in the low-twos, whereas  a couple months ago people were getting something in the mid-ones.

Real Estate presentation slide

If you look at the prices of detached homes, the hottest thing in the first quarter of the year, the numbers are pretty aggressive – the three-month change is double digits in certain areas. What is going on in housing, specifically single-family?

Real Estate graph

It’s interesting. Before the 2016 foreign buyers’ tax, single-family houses increased in value faster than condos. The upper end of the market went the craziest. This was reversed once the tax was brought in. High-end houses got soft really quickly. Now, we’re seeing a return to the market of the past with no foreigne buyers – it’s all local people, money and incomes. So, we’re seeing the biggest price increases in single-family houses located in areas most affordable to local people who make, compared to other cities of similar size and economic development, a relatively low income. 

Single-family houses under $2 million are going absolutely crazy. If we look at three-months for single-family detached homes across the Lower Mainland, it’s 11.8%, but places like Pitt Meadows and Richmond are at 17.5% and 10.3%, respectively. Port Coquitlam is up 16.2%. These are unprecedented price increases where single-family houses are still affordable to people on a local income. Locals have money saved up from staying in from the lockdowns and building up cash from low interest rates. People are getting into bigger and better houses, but it’s very few foreigners. We deal with Canadian citizen clients overseas because non-Canadians don’t want to get hit with the 20% foreign buyers’ tax. The hot areas are those like East Vancouver and the Fraser Valley, where locals can afford. There’s definitely some variety across the region.

It’s great to hear there is price appreciation for sellers. Tell us about the environment for putting in offers – is it still an overbidding situation?

It really depends on what it is. Single-family houses under $2.5 million – in places like East Vancouver, North Vancouver, and the Fraser Valley – are crazy multiple offer situations. For single-family houses over $2.5 million on the North Shore or in East Vancouver, or those over $3 million on the west side, you probably won’t see many multiple offer situations. It’s very price dependent. If it appeals to a local buyer or local taste and it’s under $2.5 million, expect it to be hot. 

Got it. Tell me about what’s going on with condos. It was slow to kick the year off, but has it picked up?

Yes. The condo market is really interesting. My focus is on the core of the city and the inner suburbs. Downtown Vancouver and the city core is unique and has been quieter than the suburban markets – condos over $1 million are not too active; as you get out further they become more so. One-bedrooms downtown and surrounding are very hot, particularly stuff that’s well priced – same with Surrey and anywhere along a SkyTrain line and the high-density nodes of the Vancouver area. This goes especially for the smaller rather than bigger units because there are a lot of investors and first-time home buyers. The market is doing really well.

My real estate business partner just bought a house in Kelowna, which is a place also on fire. The difference between Kelowna and the city core is in Kelowna, you’re looking at 5-7% gross cap rates, which is phenomenal, especially if you’re paying under 2% on a mortgage. If you get out of the city’s core, from a rental and investment perspective, things get a lot better.

Real Estate graph

What are some things that have changed this month or that will happen later this year?

The biggest thing is to get in touch with your financial planner and mortgage broker so you know what’s happening with interest rates, because it’s a very dynamic situation. We’re seeing rates rise across the board for many types of mortgages, particularly fixed rate. Your broker will help you get the best mortgage for your goals and your property – be it an investment or your primary residence. Financial planners like Christian can help you prepare for a purchase – you need your financial house in order to have the best experience when buying property. You need to make sure your finances are tax efficient so you can retire the way you want to.

I’d echo that. I help my clients avoid overbidding when they can’t actually afford what they’re overbidding despite qualifying for it. Or, they’re looking for every penny from every resource possible because they’re flustered by being beat out the past three attempts at a purchase. People are looking to use their inheritance early for down payments. 

But you need to look at what’s going on – people get too emotional and competitive with getting out-bid. I would look at things like if your retirement and kids are set up, and what would happen if you take time off for maternity leave – can you still afford the property you’re looking at? I add value by giving people ideas they never even thought of. I have a client now who’s holding a great rate and is anxious to buy where they live, but they keep getting beat out in that area. I suggested they stay where they are but to buy in another area with good cap rates and cash flow. I can do the analysis to see if it makes financial sense. When you’re holding on to a down payment and a great interest rate for way too long and you miss the boat, it’s not good either.

 What’s your take on what will happen in the next year?

I always look at what the heads of the central banks say. They’re all saying they’ll keep interest rates low to make sure the economy gets back to where it should be and where we were before COVID-19. They’ll print lots of money and keep those long-term rates low, which will keep demand for real estate high. We’re starting to see some things come from the Department of Finance and the office for OSFI which oversees mortgages – they’re tightening up the stress test to increase qualifications and slow the market, but I personally think this economy and market are unstoppable. We have basically the most active market we’ve ever seen in BC and there’s still a relatively high unemployment rate. But when those people go back to work and people start going to restaurants and travelling, we’ll see a lot more demand for housing in the core and quieter places, like we’re seeing in the Fraser Valley or on the Sunshine Coast, for instance. I’m optimistic we’ll see significant price increases across the board, at least for the next few years.

 I definitely agree. I think in the short term, there will be a lot of added pressure to buy for those who have a low, locked in 120-day rate of under 2%. Some people will get really competitive because they know, from a cost perspective, if they have to renew at 2.1% or 2.2% but they’re holding a 1.6%, it’s a big differential. 

I also don’t see any slowdown in the detached market especially if it has a suite in it, because you have all these people jumping from condos and townhomes to houses which is much easier to do with the income from a suite.

Unlike when we last spoke and weren’t hearing about much action or multiple offers on condos, they’re starting to come back. Clients renting on the sidelines are looking in that market and starting to realize condos are a good buy right now. Now, everyone’s jumping in so prices are going up.

Real Estate presentation slide

Yes, absolutely. What’s going on with the stock market? 

We haven’t vaccinated everyone yet, the cruise lines aren’t cruising, hotels aren’t to capacity, and airlines aren’t all flying, but you wouldn’t know this from what’s happening in the stock market! It is open for business. There’s so much theory about why so much money is flowing into the stock market and why there are all-time highs, higher than pre-covid even though the economy hasn’t recovered and we have a massive amount of unemployment and permanently shut down businesses. It doesn’t mean things are too high though – there’s tons of opportunity inside the stock market.

 I’ve always said I like the stock market, but I don’t love it. I love real estate. I always combine the two for my clients and see how they can work together. I think if someone has invested all of their money in the stock market, they’re missing out and vice versa. I think real estate is a great way for younger people to grow their wealth because they’re leveraging their money against the bank.

The stock market is a hedge; another asset class to grow and potentially yield great returns. But, the danger is when a lot of people invest in the stock market, like last year, and they think they’re geniuses because everything went up. The easy money has been made though, from about March-May of last year until now. Now, it’s trickier because we have some very over-inflated things, like Tesla. It was at 100-200, then it went up to 500-900 and pulled all the way back down to 600. You need to be careful with high-flying stocks like this, or cryptocurrencies.

Now is the time when professionals need to come in. There is still opportunity. You want someone with the same vision as you. Some of my clients love real estate but have $100-200k on the sidelines and don’t want to see it in cash until their next real estate purchase. If you’re not sure what to do or you’re worried about missing an opportunity, you need an advisor.

When it comes to the money being printed and pumped into the economy, quantitative easing, the value of a dollar keeps getting lower and lower. So, where do you turn to make sure you don’t lose your money to inflation? There are only two answers: the stock market and real estate. I want all of my money moving to keep as little cash as possible, but I want to do it in a very safe way.

Questions

I’m looking to sell my condo in Olympic Village. Would you suggest selling now or 6-12 months from now?

Typically, the spring gets the highest sale prices in a market when you don’t have things like COVID-19. I personally think you may see more price appreciation in condos if you wait, but my crystal ball is as good as yours. I would consider what’s going on with the condo, it’s size, and what you want to do with the money. Look at the market dynamics of where you are and where you want to be. If you’re selling in a soft market and buy in a hot market, it might make sense to wait until the market for what you have heats up and the market for what you’re buying cools down. Also, what’s going on for you personally? Maybe you have a fantastic opportunity to sell now – or not. But given what I’m seeing now, Olympic Village will probably get better going forward. Nobody can know though – we couldn’t predict COVID, September 11, or other events. 

It’s like any other purchase. If you’re happy with the selling price and the conditions it comes with, and you’re happy with your plan to buy or cash in and reinvest, then sell. Otherwise, you’re speculating. When you speculate, you get burned because you’re trying to hit the top of a market which is like trying to hit a perfect bullseye. Maybe you bought your Olympic Village place 7 years ago and made $250,000 which you’re happy with, along with the conditions of sale. So, sell it. Maybe you haven’t made enough or have nowhere to go after – then, hold on to it until the conditions are ideal. But it’s dangerous to cherry pick the top of a market. 

Do you still see downward pressure for condos in the downtown core?

No. I don’t see downward pressure in any market; I just don’t see as much upward pressure in the downtown core for properties over $1 million than I do for single-family houses outside the downtown core or one-bedrooms in the downtown core.

Do you have info on the condo market in Victoria?

I just work in the Vancouver area, but I’m happy to connect you with my colleague in Victoria who can help. I can also provide the Victoria stats in the meantime.

What are your thoughts on listing a single detached home in East Van now vs. the summer?

The summer can be difficult – it really depends what’s going on. If the weather is super hot or smoky, it can be really bad for selling a property. Spring is good and single-family houses in East Van are going crazy right now. You could see more money if you wait but, again, there are so many things out of our control. It’s difficult to tell.

Yes, and I’d be careful because once those rates go up, the over-bidding will cool. Maybe today you list at $1.5 million and in the summer you list at $1.6 million, but you might get more than $1.6 if you list now. People holding onto these low rates are very anxious. 

Also, you might list now and get an amazing offer you want to take, or you could get poor or no offers at all. You could then change your mind and do it in the summer. You have that power.

 Rates could go up, who knows. The best way to decide is to look at your personal needs and goals.

Where can I buy a one-bedroom condo for under $400,000? Is Maple Ridge the best option?

I’m more of a city-core guy than a suburb guy, but I do think you can get something under $400,000 in Maple Ridge. Port Coquitlam has options – a client bought two full-sized one-bedrooms with parking for $385,000 at a project called Otto. The Fraser Valley and Surrey have great options. It depends if you want to buy presale or resale. If you’re looking at this purely for investment, I’d check out the Okanagan for higher cap rates, maybe Nanaimo. You’ll get better cap rates in Kelowna, for example, than in the Lower Mainland. I can connect you with people in these markets.

I own properties in Abbotsford-Chilliwack and there’s a lot going on there, if you need to be closer to Vancouver – infrastructure, hospitals, airport, universities, and a lot of jobs.

Connect with me to see how I can help you out – it’s free for an initial consultation. For real estate statistics or market connections, or to explore buying or selling, give Mike a shout.

Contact information card

 

April 1, 2021

The fast pace of Victoria real estate market surges on

A total of 1,173 properties sold in the Victoria Real Estate Board region this March, 92.9 per cent more than the 608 properties sold in March 2020 and 35.9 per cent more than the previous month of February. Sales of condominiums were up 111.8 per cent from March 2020 with 377 units sold. Sales of single family homes were up 88.2 per cent from March 2020 with 574 sold.

“Limited supply with overwhelming demand has been the story for the first quarter of 2021,” said Victoria Real Estate Board President David Langlois. “This time last year was the beginning of the pandemic and most everything was shut down – so we cannot compare year over year numbers – but if we look at longer term trends, the average number of sales from the month of March in the past ten years before 2020 was 715 properties. Numbers from last month are close to the market trends we saw in 2016, but with an even greater imbalance in inventory due to a surge in consumer demand for homes in the Victoria area.”

There were 1,310 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of March 2021, 41.8 per cent fewer properties than the total available at the end of March 2020 and 0.6 per cent properties fewer than the 1,318 active listings for sale at the end of February 2021.

“The underlying issue is a deficit in supply,” explained Langlois. “Supply needs to be addressed by all levels of government and particularly by local governments which control land use policies and development processes. Equally important, governments need to ensure that measures they make to moderate the housing market do not exacerbate the problem by attempting to suppress demand by adding costs or qualification barriers. These sorts of measures raise the overall cost of housing and add even more challenges for first time buyers. We need to continue to push for both increased supply and sensible government policies around housing.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in March 2020 was $879,600. The benchmark value for the same home in March 2021 increased by 10.1 per cent to $968,700 a 2.2 per cent increase from the previous month of February. The MLS® HPI benchmark value for a condominium in the Victoria Core in March 2020 was $531,800, while the benchmark value for the same condominium in March 2021 remained close to last year’s value at $529,100 a 0.5 per cent decrease.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Victoria Real Estate Market demand surges against limited supply

A total of 863 properties sold in the Victoria Real Estate Board region this February, 53.3 per cent more than the 563 properties sold in February 2020 and 33.6 per cent more than the previous month of January. Sales of condominiums were up 65.7 per cent from February 2020 with 290 units sold. Sales of single family homes were up 43.9 per cent from February 2020 with 390 sold.

“Our early spring market is in full swing carrying on from a fast start in January,” said Victoria Real Estate Board President David Langlois. “Our market remains one with tightly constrained inventory and high demand. The good news is that we have seen some stabilization in listings and condo pricing between January and February, but we continue to see huge pressure on single family homes – new listings are snapped up as soon as they are listed. As a result, the pressure on single family homes continues to ramp up. There is significant competition for desirable homes – and in our marketplace most homes are desirable – and people competing for properties pushes prices up.”

There were 1,318 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of February 2021, 38 per cent fewer properties than the total available at the end of February 2020 and three properties fewer than the 1,321 active listings for sale at the end of January 2020.

“The theme for 2021 is going to be inventory – where does it come from and how much new supply can be approved – so that this situation does not persist,” adds Langlois. “We’ve seen the government attempt to influence the housing market in hopes of dampening the demand for home ownership. The foreign buyer tax has changed nothing – our market continues to zoom forward with almost no foreign buyers. The government adjusted mortgage qualification rules, those are absorbed by the market and buyers adjust. Demand suppression measures have not worked and their failure to moderate housing prices in our community has only exacerbated the pressure on the supply that was constrained ten years ago but is now at historically low levels. If you are concerned about housing prices and availability of housing in general in our community, please support development in your municipality. Be vocal with your local council or neighbourhood association – these stakeholders hold the power in these negotiations – and help to make space in your community. Gentle density and the building of new homes are the only pathway to moderate housing prices in our area.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in February 2020 was $870,300. The benchmark value for the same home in February 2021 increased by 9 per cent to $948,200, a 1.7 per cent increase from the previous month of January. The MLS® HPI benchmark value for a condominium in the Victoria Core in February 2020 was $525,600, while the benchmark for the same condominium in February 2021 remained close to last year’s value at $525,400, a 0.38 per cent decrease.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

 

Hot Areas to Invest in Vancouver

February 11, 2021

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

Real Estate Hot Areas Vancouver Market Title Card

Disclaimer Reminder

Market update

  • January 2021 listings were up 86% from December, one month prior. This is 15.7% higher than in January 2020, so the year will be busy and we’re already off and running strongly.
  • Analysts predict sales prices trend downwards when the Sales to Listings ratio is below 12%. When this ratio is above 20%, sales prices will likely trend upward.
    • November 2020: we had detached homes at 27.9%, townhomes at 40.1%, and condos and 23.9%
    • December 2020: detached homes were 35.2%, townhomes were 50.4%, and condos were 33.1%.
    • In January this year, we went to 26.3%, 37.6%, and 27.8%, respectively. Although this is cooler than December, I think that’s because a lot more active listings have started to come up.
  • There are no signs of prices going down, but we do see a lot more listings coming on the market which is a good thing for buyers who want options, and for those who want more confidence when looking to sell because they’ll have something available to buy.

The Real Estate Board of Greater Vancouver provided the below stats. Connect with Mike to get a copy of the full report. The one-year change average was positive across the board and is trending up. The three-year was flat in some areas, at just 1-2%, but that’s because if you draw a straight line you can see we really peaked in 2017-2018. Now, we’re reaching or surpassing those peak prices.

Real Estate graph

Yes, it’s interesting what’s happening with a real change in the market and we’re now seeing it in the stats. Keep in mind when looking at stats is that it’s very much like using a rearview mirror to drive: you know what’s behind you and what’s happened, but you can’t look too far down the highway to see what’s happening. My crystal ball is as good as your crystal ball and anyone else’s. What we do know is what’s happening right in front of the car, or in the market right now.

We’re seeing a very active market, but it’s somewhat uneven. Certain markets are on fire and others are relatively soft. Single-family houses in Vancouver are extremely hot, particularly East Vancouver because there’s a broader audience of people who can afford it compared to the West side. The North Shore is extremely busy for single-family houses, but we’re not necessarily seeing that for condos, which were fairly soft during COVID-19. Where we saw downward price pressure, we saw big, big drops in volume, but now those volumes are back up and at prices higher than they were before COVID-19. This is the case for properties in some cases. We’re now seeing upward pressure and multiple offers for properties that are priced well, presented well, and easy to show – particularly larger condos or attached houses.

I wanted to do a comparison between single-family detached houses and condos. The one-year change for single detached houses in Greater Vancouver was 11%, North Vancouver was 12%, and Port Moody 14.5%

Real Estate graph

The same thing for apartments in these locations was 2.2% for Greater Vancouver, 5.9% for North Vancouver, and 2.9% for Port Moody. This is a lot less across the board, and condos just aren’t as hot right now.

Real Estate graph

Do you think there is an opportunity in the condo market, or is there a reason they haven’t gone up that much?

There absolutely is an opportunity with condos right now. Because of COVID-19, everyone wants larger spaces to work from home, but I don’t think people will be doing this forever. People will want to be in urban, high density neighbourhoods once the vaccine is widely distributed. People will get sick of being by themselves – a lot of people are struggling with mental health and isolation. What keeps people from that struggle is a community feeling, friendship bonds, and companionship they get from going to the office or to work. Many people aren’t happy working from home. I think we’ll see people in condos again, either renting or buying, throughout the region and they’ll be less excited about large, further out and isolated properties because they want to go to the office. Employers will change their tune because they’ll want their staff to come in to work. From what I’ve read, businesses and institutions do best with people close together who can interact quickly and efficiently in ways where you can see body language and understand what people are getting at in ways you don’t get from a Zoom meeting.

So, I think we’ll definitely see upward pressure on prices when condos come back. The thing to think about is the Bank of Canada has said they’ll keep interest rates incredibly low, at least until 2023. Once the COVID vaccine is distributed throughout the population, those super low interest rates will still be there. Two other things will happen: immigration and tourism will start up again and create massive demand for high density, urban properties because when new immigrants come to Canada, they typically rent or buy apartments. Same with tourism – many people stay in short-term rentals when they come here. Now is definitely an opportune time to buy a condo.

Absolutely. I’ve pulled this real estate forecast and I tend to agree, the markets will continue to go up for all the reasons you’ve mentioned. We’re in an interesting position.

Real Estate Forecast

Things change so quickly, which is why we do a monthly update. Every single month, something has changed. What have you seen change, even from just a month ago?

Real Estate Title Card

There’s an interesting meme on social media with two pictures of a Barbie doll. One is the type of realtors in our current market. The Barbie on the left was the sellers’ agent and looked perfectly groomed. The buyers’ agent had a black eye, a face mask, and her hair was askew. What it meant was that sellers’ agents are having a relatively easy time because their listings are selling quickly, whereas buyers’ agents are getting beaten up if they’re not prepared to move forward with a subject-free offer, because of the multiple offer situations we’re seeing.

All of my colleagues are having challenges. We’re putting deals together, but it’s more difficult when you’re representing buyers. In this market, particularly for single-family houses, large condos, and high-demand properties, you need to do your due diligence beforehand. This means getting your mortgage broker all the paperwork they need, so you can put in a subject-free offer. If the property is competitive, do your home inspection and read those documents beforehand. Typically, we get an accepted offer and you have 7 days to get your financing and home inspection and read the documents. In this market, for single-family houses and condos in many areas, you better do this stuff first and then submit your offer subject-free.

It’s an ugly time to be a buyer that needs to buy, for instance someone who sold two months ago and is looking for something else amid this frenzy. I feel for these people – they need to go in with heavy offers. Even in one month, things are going for well over asking, like $50,000 to $100,000 over. But, is there an opportunity for people, such as retiring parents, who are downsizing from a house and want to potentially go into a condo?

Yes, if you’ve got a single-family house in a hot area, buying first and selling after can often be a good way to dramatically increase your equity (if you’re going to take this course of action, be sure to consult with a realtor beforehand because there is an element of risk). In the past, I’ve bought first – I was in an expensive, dramatically rising market going up by about 20% per month – and then got my property ready to sell. I sold it with about a $400,000-500,000 gain because property prices were going up so quickly. If you’re in this situation, speak to your realtor, financial planner, mortgage broker, and accountant to make sure it’s a sustainable, low-risk plan. Buying first or buying a presale in a rising market can be a great way to do well in real estate. People usually sell first and then buy, but it doesn’t have to work that way.

Consider this: you have a single-family house worth $2, which is going up by 20% per year, and you want to buy a condo worth $1. You could buy a condo now and wait a year for your house to increase by 20% to $2.40, but if you sell right away you miss out on that $0.40 gain. But, again, this is very high risk, so you need to consult with your team of experts.

You definitely do if you’re going to do something like that because of the high cost of bridge financing.

Where are some areas you’re seeing deals or undervalued properties that may not last too long?

It’s getting challenging to find this now, since interest rates are so low. You can get an insured variable rate mortgage for 0.99%, which is amazing! Or, a 5-year fixed mortgage for 1.59% (which I’ve seen) or 1.49% or even 1.39% (which I’ve heard about).

If you’re an aggressive investor, the real deals would be assignments of contract which are difficult for people to sell. I have an accepted offer on an assignment; we’re waiting for developer permission and it’s a very good deal. Another option is condos that may be dated but in a good building, particularly in the downtown core or the West End. Pretty much all single-family houses across the region are in a strong seller’s market, which is very challenging – the deals are mostly in condos.

Is it a good time to upgrade? If you sell your place and it’s your primary residence, you still need to move elsewhere. Should the person considering that be someone who’s upgrading or downgrading? Should they buy first and then sell, or the opposite?

What I’m telling people is to start looking for something to buy now. It’s kind of a wash if you’re making a lateral move because you’re basically buying the same thing. In a market like this, it’s typically easier to sell and harder to buy, whereas in a soft market it’s harder to sell and easier to buy. So, make sure you go out and look for what you want to buy, so you can get what you want when you sell. The last thing you want is to sell your property and not find something you want, so you’re sitting on cash, because in a rising market, the value of that cash goes down every time the value of real estate goes up. You’ll lose out.

Upsizing right now is relatively challenging because condos aren’t as hot as single-family houses, but it’s been the opposite at different times. Right now, people want big spaces. I think that will change when the vaccine gets rolled out, and maybe that will be the right time to upsize to a single-family house because condos will get really hot once things go back to normal and houses may soften. There are opportunities but, again, my crystal ball is as good as yours.

Latitude West

Real Estate graph

Our philosophy is to not put all of your money in the stock market. Many financial advisors work this way, but not us. We love real estate and believe in a mix of it with stocks and cash reserves or fixed income. If you’re incorporated, there are even more opportunities.

An example of the types of clients that we serve include newlyweds, each of whom own a condo. They want to start a family and upgrade their home and face the following options:

  • Sell both and upgrade
  • Keep both as rentals and save up for a down payment on an upgraded home
  • Keep one as a rental and sell the other for a down payment, but which one?

So many financial advisors can’t help with this question. They can’t do the analysis well enough and just speculate with their opinion. But, me and my advisors do a cost-benefit analysis to figure it out. This example is just a personal home, but if you have investment real estate or want to try to build a real estate portfolio, you need someone who’s qualified to do good real estate analysis compared to what your money would do in other investment vehicles like the stock market.

Real Estate graph

We tell clients not to try to time the market. Right now, rates are staying low but demand will end up being high. We review strategies for our clients, and if you’d like to talk please reach out – it doesn’t cost anything to see if there’s a fit and if I can help you out.

Conclusion

How has the downtown condo market been since September 2020, specifically for one-bedrooms?

Typically, in a normal, non-COVID market, one-bedrooms are the hottest first because they have such a broad audience: first-time buyers, investors, etc. A lot of people like them. But they’re not as hot as single-family houses right now because of COVID. That is starting to change and we’re seeing multiple offer situations for high-quality, well-priced product.

But, in certain buildings and areas, particularly more expensive options around the high $600,000s to the mid-$700,000s, there’s a lot of supply. At a personal favourite of mine, Arc by Concord Pacific, there are about 21 listings in its two towers and most are one-bedrooms. So, one-bedrooms are doing okay and are selling for fairly good prices, but they’re a little softer than what they could be and compared to what’s happening with single-family houses in Vancouver, the Fraser Valley, and other places.

Is Vancouver West still pretty hot for single-family houses below $3 million?

Yes, 100%. That market is very active, and we’re seeing the [rice point going up. For a while in Kitsilano, you could get an old single-family house in pretty rough shape for just under $2 million. Now, it’s $2.3-2.5 and up. There is lots of local demand. Markets have picked up for premium places, such as West Vancouver and the west side of Vancouver for properties over $3 million, but it’s not like it was before the foreign buyers’ tax, which is now 20%. We don’t have a lot of active foreign buyers right now (despite what some media outlets say). That under $3 million mark on the west side is quite active, and it’s definitely a seller’s market there – quite challenging if you’re a buyer.

Basically, when you have a government that doesn’t want to see large upzoning and development, it just restricts the supply of housing and pushes up the prices of properties. A single-family home on the west side is a fantastic thing to own and a great asset.

Yes, the challenge is the bidding. If something is hot, especially at a price point a lot of people can afford with the new lower rates, I think finding the right property is the toughest challenge. But, if you’re a seller and you have a place to go or have your eye on a market that’s a bit cooler, you’re probably in a pretty fantastic position.

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Victoria real estate market sees strong start to 2021

A total of 646 properties sold in the Victoria Real Estate Board region this January, 57.2 per cent more than the 411 properties sold in January 2020 and 2.4 per cent more than the previous month of December. Sales of condominiums were up 83.1 per cent from January 2020 with 216 units sold. Sales of single family homes were up 48.5 per cent from January 2020 with 297 sold.

“Our bustling market continues to be fueled by strong consumer demand to own a home in Greater Victoria, driven in part by low interest rates and by the overall desirability of our larger community,” said Victoria Real Estate Board President David Langlois. “This continuing demand, coupled with our record low inventory, has resulted in competition for desirable properties. The competition for sparse inventory has pushed both pricing and activity up and has created the very fast-paced market that we’ve been experiencing for the past several months.”

There were 1,321 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of January 2021, 32.5 per cent fewer properties than the total available at the end of January 2020 but a 3.3 per cent increase from the 1,279 active listings for sale at the end of December 2020.

“The luxury home market continues to significantly outpace previous years,” adds Langlois. “For example, in January 2020, four homes over two million dollars sold. This January, twenty-five sold. We also see a continued strengthening in the condominium market across all price points. Right now, navigating both the buying and selling process is challenging. With many moving pieces and in such a fast-paced market it’s important to leverage the experience and expertise of your trusted local REALTOR®.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in January 2020 was $860,700. The benchmark value for the same home in January 2021 increased by 8.3 per cent to $932,000, a 1.8 per cent increase from the previous month of December. The MLS® HPI benchmark value for a condominium in the Victoria Core in January 2020 was $523,400, while the benchmark for the same condominium in January 2021 remained close to last year’s value at $518,800, a 0.9 per cent decrease.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,401 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

The 2020 Victoria real estate market year in review

A total of 631 properties sold in the Victoria Real Estate Board region this December, 57 per cent more than the 402 properties sold in December 2019 and a 20.6 per cent decrease from November 2020. Sales of condominiums were up 61.2 per cent from December 2019 with 195 units sold. Sales of single family homes increased 58.6 per cent from December 2019 with 314 sold.

A grand total of 8,497 properties sold over the course of 2020, 17.1 percent more than the 7,255 that sold in 2019. 2020 sales came in close to one thousand sales over the ten-year average of 7,329 properties.

“This has been an unexpected year on many levels,” says 2020 Victoria Real Estate Board President Sandi-Jo Ayers. “The onset of the COVID-19 pandemic in March and April quickly swept away any illusions that our normal seasonal market patterns would persist. Equally surprising was the resurgence of our market in early summer when restrictions lightened and pent-up demand began pushing sales beyond expectations. The combination of the ongoing pandemic, historically low interest rates and a shift in consumer priorities towards properties that cater to a more home-based work / life / retirement balance resulted in record setting sales for the last several months of 2020.”

There were 1,279 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of December 2020, a decrease of 29.5 per cent compared to the previous month of November and a 34.5 per cent decrease from the 1,952 active listings for sale at the end of December 2019. This represents the lowest inventory of active listings at month-end in at least the last 25 years.

“The other side of our local story was the inventory,” adds Ayers. “We ended the year on a record low of properties available in Greater Victoria. This means that the huge demand we see for homes in our area is not being met by supply and prices are being pushed upwards as buyers vie for homes. Even historically lower- priced markets like the Highlands and the Westshore are seeing pressure as buyers adjust what suits their needs and focus on home ownership. What remains consistent is that in this complex market, your REALTOR® can help to navigate one of the biggest purchases most will make in their lifetime.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in December 2019 was $857,200. The benchmark value for the same home in December 2020 increased by 6.8 per cent to $915,100, slightly more than November’s value of $903,100. The MLS® HPI benchmark value for a condominium in the Victoria Core area in December 2019 was $520,100, while the benchmark value for the same condominium in December 2020 decreased by 0.9 per cent to $515,600, slightly less than the November value of $516,600.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,401 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Hot Areas to Invest in Vancouver

December 17, 2020

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

Hot Areas to Invest in Vancouver: December Title Card

Photo of Disclaimer reminder

Market update

  • Real estate in Vancouver is doing very well.
  • November sales are up 24.6% above the 10-year average. Only twice in the past 10 years has this actually happened.
  • Analysts are predicting sales prices will go down when the sales-to-listing ratio (sales divided by listings) is below 12. The higher the number, the greater the upward pressure on prices. Right now in Vancouver, we’re at 27.9% for detached homes, 40% for townhouses, and 23.9% for condos.

What does this mean for 2021? With the low interest rate environment, prices shouldn’t be going down. Things are heating up; I’ve got clients getting outbid right now. The market is trending up for those looking to sell. 

As compared to the stock markets:

  • 2020 was a fantastic time to be in the markets if you were putting new money in when COVID hit from March-June, but the markets have really recovered and we’re back to pre-COVID levels.
  • If you need to move money, is the stock market good for new money right now? Tom Lee from Fundstrat says there will be a cooling pulling back period in quarter 1. This makes sense because so many things went up so much, so fast (e.g. Disney, Tesla). He believes by the end of the year, we’ll be back to normal market conditions and finish strong by quarter 4.
  • But I’m looking at real estate—I think it’s the better opportunity in 2021 especially with the low interest rates.

 Real estate prices in the Lower Mainland

List of Real Estate Prices in Vancouver

If we look at the statistics of benchmark residential prices right now compared to the one-year change, every single one-year change is up from last year. The three-year change is up and down but mostly hovers near zero. Depending on the area, we’re kind of at 2017 pricing—for example, Vancouver East at -1.1% is basically what we had back then. However, West Vancouver is actually down 11% from three years ago. So, there are opportunities out there for some fairly good deals. If you’re wondering whether we’re headed for a crash, take a look at the five and ten-year changes—in the short term there could be some volatility, but in the long term, our market has always been strong and not in the negative over this time period.

Yes, in 2017 many markets peaked. Some markets, particularly West Vancouver, the west side of Vancouver, Richmond, and other places highly affected by the overseas money flowing in before the foreign buyers’ tax was implemented, experienced price declines from 2016 and 2017 . The west side of Vancouver has really picked up. Even though Richmond and West Vancouver haven’t, I do think they will too because of what’s happening in markets like East Vancouver, North Vancouver, and various other single-family home neighbourhoods.

We’re seeing competing offers and these markets going absolutely crazy—I had a client looking at a 1985, 3,500 square-foot three-bed, two-bath house on a 6,000 square-foot lot in the Grand Boulevard area in immaculate condition, listed at $1.599 million and sold for $1.905 million. Just last week, I had clients purchase a house in East Vancouver in the Broad View area—it was 1,912 square feet on a 33×122 lot  with water views—listed at $1.399 million and bought for $1.635 million.

The single-family house market is on fire right now, though we’re not seeing that across the board.

I think it depends on the area and on what it is. Just this last week, a family member put in an offer on a house, and she fits the profile of many people: lived in a townhouse that’s probably worth $850,000 and wanted to upgrade to a house that’s listed at about $1.3 million. She knew there would be multiple offers and put her best foot forward by offering $100,000 over asking, but she was out-bid. It depends on how things are priced; this is just one story about one person, but it is an indication of what’s going on.

 Slide of questions - Real Estate

What is happening right now with Vancouver real estate?

We’re seeing a very uneven market situation. For anything that’s low density and offers people the opportunity for physical distancing, we’ve seen significant rises in sales and sales ratios. The most recent stats mention areas we’ve discussed before, like the Sunshine Coast and Gulf Islands—we’re seeing the largest year-over-year increase in demand on the Sunshine Coast. This past November, it saw 106 home sales – an 82.8% increase from November 2019. There are huge surges in sales and prices there and in places like the Fraser Valley, Squamish, and the Okanagan.

Locally-oriented markets like East and North Vancouver are seeing multiple offers on single-family houses, whereas condos in downtown Vancouver have been very soft until quite recently. I do a lot of business there and up until about three weeks ago, listings were dead and people were getting very good prices downtown.

We’re basically seeing high-density places with lower sales ratios than low-density places, but, interestingly, it isn’t uniform. Huge demand is in places more affordable to the local market, whereas places like West Vancouver and the west side of Vancouver aren’t so hot – particularly West Vancouver, which is a soft and quiet buyers’ market right now – you can negotiate on price. You can also negotiate on price for downtown properties—one-bedrooms were very slow and now the sales activity is at a lower price point than it would have been in 2017 and, unfortunately, late last year. 

For properties that are priced right, how are discounts looking? Should we be going in at asking? 95% of asking?

It really depends on the property. You can negotiate more on larger condos than smaller ones. If you’re not competing, there’s no need to go in over-asking. Talk to your realtor and let them help you understand what’s happening in the market and the particular situation of the place you’re looking at. A good realtor can advise you on how to get the property in the way you want to—not everyone wants to be involved in a multiple-offer situation. Some do, but the key is to talk to your realtor.

Get out and look at places over the holidays—it’s a good time for buyers because many sellers still out there are extremely motivated. A lot of people just aren’t doing much because of COVID and the holiday season; they’re distracted by family stuff.

If people are considering a purchase but aren’t pre-approved, they should do so to get these low interest rates! For 120 days from pre-approval, you still get the lower rate even if it goes down further. It also helps because you’ll know what you qualify for—there’s no sense in putting in a bid otherwise.

For the 2021 future outlook, there’s no sign that prices will go down, but which areas of the Lower Mainland will be strong? Where should people be nervous about where bidding wars could start up again?

I think across the board, everything will boom and see increased demand. Right now, high density stuff has a lower sales ratio but once the vaccine rolls out, many people will be tired of low density living and feeling isolated and bored. They’ll want to live in the downtown core and we’ll see a revitalization there. Right now, you want to buy stuff people don’t currently want but that they do normally want, which is in the downtown core.

HSBC came out with a 0.99% mortgage, which is unprecedented. It is an insured mortgage, so you must put down less than 20%, but still! They are also offering a 1.395% fixed, and 1.595% fixed mortgages are everywhere. With these ultra-low interest rates combined with the amount of stimulus going into the economy in the form of quantitative easing (basically, printing money and massive deficit spending of the provincial and federal governments), the real estate market can really go nowhere but up.

So, even though low density is currently in higher demand than high density, that could change with the vaccine and people feeling more comfortable living downtown. Another reason why apartment condos are a really good deal right now is because the people who own and rent them out, particularly furnished rentals, are having issues because:

  • They typically rely on a lot of immigrant tenants who tend to rent and live in the core of a city before getting to know it and purchasing property in the suburbs—but there is no immigration right now. This also applies to international students, who rent suites in the core of the city near educational institutions, but we don’t have these students right now, and
  • Since there is no travel, there are currently little to no Airbnb or other vacation rentals.

So, it’s a good time to buy a revenue property in a location with immigration, foreign students, and Airbnb. Sellers are having trouble but still might have to sell, so they’ll go for less than what they would have in 2017 or 2019.

Detached houses are a great bet because they’re not making any more of them or building on new land. If anything, the amount of lots is constricting every time a condo building is constructed because they’re primarily built on assembled single-family house lots.

With the unprecedented stimulus going into the economy, you’ll see the real estate market boom. I’ll be buying revenue properties in the next few months, along with a larger house. If you get a $600,000 revenue property at 1.59% with a 25-year amortization, just your principal payment will pay down almost your whole down payment in five years (about $100,000 or $20,000 per year in principal). It’s shocking.

I want to expand my portfolio and take advantage of these rates and the wonderful things going on. Take a look at what people don’t want right now—the problem is when people chase the things that everyone else wants because that’s when you see bidding wars and upward prices. The cycle will shift again.

Yes, it will. I’ve seen it shift so many times.

This is the time to buy condos. We’ve also been looking at single-family houses in the Okanagan—in Kelowna, you can get them for $750,000 and if you’re lucky, you’ll earn $3,500 in rent each month. With 20% down, it’s cash-flowing. The reason why these low interest rates are so powerful is they’re making housing so much more affordable for so many people—the principal paydown on these 1-1.59% mortgages is unprecedented. It’s better than renting, because you’re getting back 70% of your mortgage payment.

Latitude West

Real Estate Graph

To accelerate your wealth, my philosophy at Latitude West is not putting all of your money in the stock market. Some people at high levels do make money this way, but I think the average person will do best using this formula with some money in the stock market and some in real estate, and not just in your own property but in more than one property. You also need access to cash in reserve to take advantage of opportunities either in the stock market (like we did in March) or in real estate, like I think we’ll be doing in 2021.

I invite you to look outside your narrow view of investing and to talk to and work with someone like myself.

Here are some case studies of my typical clients.

  • Newlyweds, each of whom own a condo
  • They want to start a family and upgrade their home
  • Options:
    • Sell both and upgrade
    • Keep both as rentals and save up for a down payment on an upgraded home
    • Keep one as a rental and sell the other for a down payment, but which one?

This is a perfect example that’s literally valued at hundreds of thousands of dollars if they make the wrong move or make a mistake!

There is no clear answer unless they do a cost-benefit analysis with multiple pieces of information, such as interest rates, growth rates, and locations, which is something I do with my clients. They know the options but aren’t sure what to do. I wouldn’t take any advisor’s advice without a cost-benefit analysis to back it up.

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Another example is with the many professionals I work with, like dentists and doctors. They may own a successful practice, be personally incorporated, and have two real estate properties and some stocks. They want to buy more real estate, but they also fall into a high tax bracket and would like to see it lower. To obtain a down payment, their options could be to sell stocks, sell an existing property, or leverage off of existing real estate. They also need to decide whether this gets done through a holding company, a joint venture, or owning the property themselves.

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These are smart people who may not have the background or analytical experience to know the best option, and this goes far beyond mutual fund investing—it’s high-level analysis and it’s what I do for my clients who mostly come to me for my real estate experience. This analysis is what professionals are there for and I encourage you to contact me if you’re in this type of scenario.

Cost Benefit Analysis chart

You may have exhausted the resources of your financial team and need someone more specialized who can, for instance, show you the value of having two properties vs. three depending on your financial and job situations, and your goals.

Real Estate graph

Real Estate graph

I invite you to use not just an advisor but the correct advisor—statistically, people’s wealth goes up further when they don’t try to do things on their own and use an advisor. There have been numerous studies showing this. I show clients strategies that they’ve never even heard of, especially if they’re incorporated with an operating company they’re turning into a holding company.

Final thoughts:

  • Don’t try to time the real estate or stock markets – instead, use good advisors with strategies to guide you.
  • Because interest rates will stay very low, demand for real estate will be very high in 2021, and I can’t see prices going down.
  • I review my clients’ strategies to ensure they’re taking advantage of opportunities in a safe way. Set up a phone call with me to see how I can add value and if what you’re currently investing in makes sense.

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Victoria real estate market continues to experience strong demand, low supply

A total of 795 properties sold in the Victoria Real Estate Board region this November, 37.8 per cent more than the 577 properties sold in November 2019 but 19.7 per cent fewer than the previous month of October 2020. Sales of condominiums were up 62.7 per cent from November 2019 with 262 units sold. Sales of single family homes were up 21.8 per cent from November 2019 with 375 sold.

“Once again, we’ve tracked an unexpectedly busy month for the Victoria area real estate market,” said Victoria Real Estate Board President Sandi-Jo Ayers. “With near 800 total sales last month, we came close to the record for sales in a November – which was 892 sales in 1989.”

There were 1,813 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of November 2020, 24.4 per cent fewer properties than the total available at the end of November 2019 and a 14.6 per cent decrease from the 2,122 active listings for sale at the end of October 2020.

“I expect the question on most people’s minds is – how long does this last, and is this sustainable,” adds Ayers. “The fact is, the market has out performed anyone’s expectations in the midst of this pandemic. There is a chance we will see a slow leveling of activity over the winter – which is what we would expect seasonally. However, because of our consistently low inventory, pressure on pricing and multiple offer situations will likely continue as we remain in a demand-heavy environment.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in November 2019 was $857,600. The benchmark value for the same home in November 2020 increased by 5.3 per cent to $903,100, a 2.7 per cent increase from the previous month of October. The MLS® HPI benchmark value for a condominium in the Victoria Core in November 2019 was $517,400, while the benchmark for the same condominium in November 2020 remained close to last year’s value at $516,600, a 0.2 per cent fluctuation.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Stocks vs. Real Estate

Stock Vs Real Estate Title Card

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What are the pros and cons of stocks vs. real estate? Which is the better investment, and where should our money be?

It really depends on your time frame, initial capital (you need significantly more money to invest in real estate), and knowledge base (are you good at researching stocks or do you pass things over to an advisor? Do you come from a background of managing or researching good quality real estate?) 

  REAL ESTATE STOCKS
PROS Real estate has long term stability, can be leveraged (especially if you don’t have, say, $500,000 to put down on a property, as you’d need this up front for the same amount in stocks). With real estate the banks are willing to lend you this kind of money with 20% down on your own personal property, as little as 5% down. Because of this, you have a much higher capacity for an investment at a similar ROI. In real estate, you also have the ability to re-leverage capability. This means when your real estate is showing, say, $100,000-200,000 of equity, you can use that to purchase more real estate or stocks. You can’t do this with stocks—it’s very rare that a bank would allow you to borrow against your stocks without selling them. In the short term, you can see some fantastic returns. For example, we were talking to clients about strategies to get into real estate when COVID hit in March and markets were down 27%. This included leverage strategies. Clients leveraged in $100,000 to the markets and are now up by 80%, though some are just up by 10-20%. You would very rarely get that in the real estate market in just 5-6 months. You also get better diversity capability with stocks over real estate.
CONS High initial investment — with a 20% down payment, it will be in the tens of thousands of dollars, and you really need a long time frame horizon. If you need to liquidate your real estate in a year or two, you may not see any of the value you thought you’d get. Stocks are difficult to leverage. If you wanted to use them to buy something else, you’d likely have to sell them, which means a taxable consequence. There is also a significant amount of volatility – you won’t get real estate going down to -32% one year and up to +54% the next.

Stock vs. Real Estate information card

What is happening right now with Vancouver real estate?

COVID-19 is affecting everything. Starting in the 1980s until prior to COVID-19, people were going from lower density areas of the city, the suburbs, and moving into the core. This was a shift from about 1945-1985 of people going from the city out to the suburbs and low density places. Once COVID struck, everyone wanted to be away from other people—they don’t want to be stuck in elevators, hallways, or close proximity to people. People have been leaving condos in high density areas, like downtown or Metrotown, whether they’re renting or owning. The reason we know this is because of a concept called sales ratios. Say, for example, in a given month you have 100 listings in a market. Of these, you have 20 sales or a 20% sales ratio. We’re seeing much lower sales ratios in high density areas than we are in low density areas.

Areas and property types that are very busy include single-family houses in the suburbs, cabins, vacation properties, located further out from Vancouver, say, 45-90 minutes to get downtown. Maybe you have to take a ferry, but you can still get downtown. These are places like Victoria, Nanaimo, Squamish, the Fraser Valley, and Bowen Island. They’re very, very busy. At the high end of the market, single-family houses on the west side of Vancouver are very active.

Properties that aren’t doing so well include condos in the core of downtown Vancouver, and, to a lesser extent, Metrotown, Burquitlam town centre, and places like that with higher density where people need to share spaces like elevators, because they’re worried about COVID. Secondly, people are working from home and want more space to do so, especially couples. Two people working from home in 500 square-feet gets tight and tiresome very quickly.

These things are really changing the market, but I see opportunities in this situation. For example, some people looking to the future are getting some very good deals in downtown Vancouver. Rents across Canada, and especially in downtown Vancouver, are actually falling. As an investor, that might make you uncomfortable but it’s actually an opportunity because there are people in high density areas getting less rent who have had enough and want to sell, so you could get a very good deal on these properties. Rents have gone down for a few reasons:

  1. COVID has stopped immigrants from coming to Canada, and new people to the country usually start with a rental and very rarely buy.
  2. There are no foreign students coming here because of COVID.
  3. With travel restrictions due to COVID, there are little to no Airbnb rentals. People aren’t going to places like Tofino and Whistler. So, furnished rentals have hit the unfurnished rental market and these properties will likely go up for sale.

In a year or two, when we have a vaccine widely distributed, these properties will see a huge rebound in terms of rental rates, vacancies, and price surges once people realize COVID-19 is under control and they can live in high density areas. We all know why people live in high density areas: to walk to work, great restaurants and shopping, clubs and bars, and the seawall without having to get in your car and sit in traffic.

I concur. I’ve seen this type of thing before in real estate investing. People panic. Whatever situation we’re in, whether it’s the 2008 crash or the 2001 tech bubble, people think it will last forever. We’re already seeing signs of the vaccine coming. I’m completely ready to pull the trigger as soon as they say we can travel—I’m on a plane, with the kids in a hot destination at an Airbnb, VRBO or a hotel.

Seeing those discounts is one of the great things about working with someone like Mike who knows what’s going on for investment opportunities. Each month we do this webinar, it shifts and isn’t the same every time.

What’s pricing like right now? Are properties going for under-asking, over-asking, or as listed?

This goes back to sales ratios. In hot markets like North Vancouver, the west side of Vancouver, the Fraser Valley, Squamish, Victoria, and Nanaimo, properties are going for asking and sometimes above asking. The reason is we have ultra-low interest rates, with the Bank of Canada encouraging real estate investing. In these places with more space, where people can get more distance from one another, markets are doing fantastically well. Condos downtown and in high density places are challenged. The market isn’t dead, but it’s not as strong as low density areas. Overall, prices are and have been rising, and sales volumes are up about 29% from this time last year and are above the 10-year average, but this activity is from lower density areas.

For people that are waiting on the sidelines, what are the predictions for 2021?

Your crystal ball is as good as mine, but I think we’ll see a continued increase in property prices across Canada, and in Vancouver particularly, because the Bank of Canada and Federal Government use real estate as a way to reflate the economy. Right now, there’s talk of Canada being a 90% economy: 90% of people are working, and 10% are not. We can’t do all that we want and spend all that we want because of COVID restrictions. Once those restrictions go away, we’ll see the real estate market boom because there will be a lot more people wanting to come and stay here, by renting Airbnbs and unfurnished rentals. Also, the Bank of Canada has explicitly said they will keep the ultra-low interest rates for a significant period of time after the recovery has begun, which we’re just starting with. The low interest rates will make the cost of owning a property very low — you can get mortgages for under 2%, even as low as 1.6-1.7% on a five-year fixed, which is fantastic! If inflation goes past 2%, you’re getting paid to borrow that money.

You have tons of clients as investors, very wealthy people who invest in the stock market, so what’s your take on the pros and cons of real estate vs. the stock market?

I like that real estate is a tangible asset that will never go down to 0. With the stock market, we’ve seen scandals where a company we thought was great goes rotten and its value goes down to nothing. This doesn’t happen with real estate. Secondly, you can live in your real estate asset as it increases in value, which is lovely. Better to get the upside of capital appreciation than to pay someone else’s mortgage. What I really love about revenue properties and single-family houses with a suite is there are a lot of tax advantages, particularly for people who are self-employed or earn a high income. Check in with your accountant on this.

Yes. Except for the tax-free savings account, which is a small amount, any stock, mutual fund, or RRSP investment will eventually see a capital gains tax. But your own personal property is totally capital gains tax-free. This analysis is what my financial practice does for our clients. People still come to me saying they’ll rent and invest in the stock market because, come retirement, they’ll do better because of Vancouver’s high real estate prices. But that math is wrong — the capital gains savings, the leverage, and the amount of rent won’t put you ahead.

Return on Investment (ROI) is the annual interest rate of return compounded. All investments, including real estate and stocks, are measured by ROI.

If you look at the S&P 500, the 500 largest stocks in the US and the biggest stock market in the world, their ROI over the past 20-80 years has hovered from 8-10%. However, there are management fees and other factors, so a really good rate of return is a solid 8%. Some people get 12% and others are okay with 5%.

As an example, if I had $60,000 to invest, should I put it into a one-bedroom $300,000 condo or in a consistent 8% return stock? Both options are on a 25-year time frame. I would assume the condo appreciates at the same rate of return over the 25 years and that I’m starting with a 3% loan rate (which the very low rates we have now could easily increase to). I would also have a renter who would pay off a portion or the entire mortgage. A good advisor can calculate the vacancy and any fees.

I’m using a financial calculator, which you can download.

For the condo:

  • Present value (mortgage)= $240,000 after putting $60,000 down on the $300,000 condo
  • Monthly payment is about $1,600 per month ($1,133 per month to own the condo plus assumptions of extra fees)

Real Estate Calculations Real Estate Calculations

 

Real Estate Calculations

 

 

 

 

  • You might be getting $1,400 in rent, plus maybe a vacancy period and property management fees

I tell clients not to get a property with too great of a shortfall in terms of monthly subsidy for the property. A small one is alright because rent goes up and mortgage goes down, which means in, say, five years, that shortfall of the subsidy is covered. 

For the $60,000 stock:

In order to match the condo comparison, I need to contribute $200 a month for five years. After five years, I’ll have $102,748.61. For the next 20 years, there’s no more $200 deposit and I don’t owe more money, so I’ll have a little under $500,000. This is on the best day, as it’s a consistent 8% over 20 years.

Real Estate CalculationsReal Estate CalculationsReal Estate Calculations

What is the value of the condo at this time, and how does that compare to the $478,907? History has shown that a Vancouver condo will probably be around a 4% (ROI) growth rate, while a house with land is about 6%. This brings it to about $800,000 in 25 years at 4%, or $1.288 million in 25 years at 6%.

The stock was at $479,000. Even if I brought the number down further, the condo would win out for other reasons:

  • Tax deductions: you can deduct the mortgage interest, strata fees, property taxes, and any form of vacancy
  • You can leverage it to reinvest — say after five years you have $80,000 of equity, you can pull that out and reinvest it in other real estate or the stock market
  • Future rents are infinite cash flow unlike stock (you could get a dividend but it wouldn’t be as high as rents) – in the first year, rent was $1,400 and, based on past analysis I’ve done, we can assume about a 3% per year increase on average (this is market rent for a new tenant, not year to year with the same tenant, as the government dictates how much you can increase rent by in that case).

Real Estate Calculations

I’d get $2,900 per month in 25 years for a fully paid off piece of real estate, and this will keep growing year after year!

I own multiple pieces of real estate for this reason. Especially for people who are self employed, this is your own self-funded pension.

These are some reasons why I love real estate, but don’t get me wrong — I also like the stock market, and in 2020, we had a fantastic opportunity there that many of my clients and I took advantage of.

The philosophy at Latitude West has always been a mixture of stocks, real estate, and a form of reserve (for instance, the equity within real estate itself). I invite those that love real estate and have some money in the markets, but don’t have a financial advisor combining these together to contact me.

Don’t try to time or predict the market – instead, create a strategy that will work in any market. I review the strategy with clients to see if it makes sense. I always like a long-term horizon, which is probably why I like real estate so much.

At Latitude West, you can book a Discovery meeting which doesn’t cost anything and is just about us getting to know each other.

Latitude West Process Graph

We assess multiple real estate properties to see how many properties make sense — one, two, leverage off the first, or even get a third down the road.

Stock vs. Real Estate

Stock vs. Real Estate

Manulife Financial found that when you use an advisor, your wealth multiplies compared to when you don’t. This isn’t because you can beat the markets, but because the advice and strategy is about things you may not have otherwise known about. This isn’t just financial advice, but real estate, too. Someone like Mike can help to see if you should be buying multiple properties or, say, upgrading your condo to a house or keeping a tighter cash flow and owning both.

Stock vs. Real Estate Graph

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Questions

What is the best percent allocation of stocks, real estate, and reserves?

It really depends on what stage of life you’re at. But, the wealthiest investors in the world are part of a group called the Tiger 21. Every year, there’s a study on them, as everyone wants to know where their money is. It’s found that 40% of their net worth is either in the stock market or their own business, 38% is in real estate, and the remaining 22% is in reserve. I personally have a lot of my wealth in real estate, so I am a bit biased, but my knowledge base of real estate is very high, as is Mike’s. So, for the average person, I would not put the majority of their wealth in any sector they’re unfamiliar with. As your knowledge increases in any sector, you should put more into it and your earnings increase, too.

When my kids hit their twenties, my advice will be to start with the stock market until they can afford a down payment, then put that into real estate. Then, grow the real estate, pull the equity out as soon as they can, likely in 4-5 years, to reinvest in more real estate. However, if the stock market is down or crashes — which is rare, like once every ten years — take some short-term 1-2 year gains off of the leverage. The deal of a century happens once in a lifetime, and you only lose money when you sell, so try to hang on during a crash.

If the stock market is down 20% ROI from its peak, you have a sale. If it’s 30%, you have the sale of a generation! Historically, if this happens, on average, it will take 1-2 years to get back to its original location which means a 30% gain within one year at that point. That’s why I say all investors should understand all of the pieces and take advantage whether it’s a sale on the stock market or real estate.

So, everyone is different but you’re doing yourself a disservice if all of your money is tied up in one sector and not the other.

As an investor, is it better to purchase property as an individual or through a holding company?

Although there are significant advantages to buying through a holding company for the right circumstances and businesses, I would definitely talk to your accountant and financial planner to determine how to best structure it. They know your financial situation best, so work with them and your mortgage broker on this. Christian or I can recommend an accountant if you need one.

I echo that. I wouldn’t buy real estate through a holding company without getting professional advice—it’s dangerous advice to follow just from a recommendation. Even accountants don’t do what financial advisors do with cost-benefit analyses to see, mathematically, what makes the most sense. As a quick example, if you’re incorporated and can quickly move money from an operating to a holding company, you have a lot of retained earnings, and you’re in a very high tax bracket, a holding company will probably make sense, especially if the place is cash flowing. But this is very rough and I’d need to look at your situation more closely.

People are working from home now, but in the future do we expect more people to come back downtown? Where is the better investment for the future, downtown or the suburbs?

I’ve been thinking a lot about this and believe people will come back to the office, but certain people will still work from home. The COVID-19 pandemic has proved to more senior, older, or mainstream-minded people in organizations that it is possible and effective for people to work from home, but the office and working together in close proximity has distinct business advantages. Once we have a vaccine, I think a lot more people will be coming back to the office. We won’t see the end of the office, but we will see certain businesses and more people still working from home.

In terms of opportunities, I see the core as a really good one right now, along with other places that were really busy before COVID-19 and aren’t now. Things will change back to normal, though maybe not 100%, once we have a vaccine. A lot of things not happening now will happen then, and the core of the city is somewhere you should look. I think the suburbs are expensive now and will soften when a vaccine comes.

I remember in 2008 a lot of clients thought there was opportunity in the stock and real estate markets and wanted to know which direction to take. In 2008, it didn’t matter what piece of real estate you bought in all of the Lower Mainland or the Fraser Valley—10 years later, it all went up! So, now, if you have a 10-year time frame, the answer is you’ll make money.

My concern as a financial advisor is what the cash flow will look like in the short term—will you be -$1,000 because you bought a place you didn’t know how to assess? Will you be over-leveraged to death and living off of mac & cheese? I care more about whether you can afford what you’re planning to buy, if it has good appreciation, and if the vacancy will be low. You can’t go wrong with real estate.

But when you’re looking at a revenue property, you’ve got to buy it right. Cheap, simple, and high quality. You don’t want fancy, beautiful, or what blows someone away. You want one of many, so if it breaks, it’s easy and cheap to fix and doesn’t break your heart.

What is your opinion on investing in real estate vs. a REIT (real estate investment trust)?

A REIT is another category of a stock. There’s healthcare, there’s consumer staples, and others, and REITS is one of them. You own a piece of different real estate properties and get an ROI from it all. It’s basically saying you want to invest in the stock market and is very different from what we’re talking about today. It’s a diversification of your portfolio and if you want exposure to all of the advantages we’ve talked about — like rental cash flow, capital appreciation, or tax deductions — then you’re not doing REITs.

But, you also need to consider your lifestyle when making this decision. Everyone is different. Are you super busy? Do you have time to deal with tenants? These are not one-size-fits-all pieces of advice, and you’ll want to talk to an accountant, financial planner, mortgage broker, and realtor to get a customized solution for your personal retirement plans, investment plans, and so forth.

Is the North Shore a good investment at the moment?

The North Shore is good. I like it and live on it, and I think there are some good presale condo opportunities there. Some projects in Lynn Valley and elsewhere pre-sold and are worth less than what people originally paid, so there are sellers you can do really well with by buying on assignment. It’s such a big area and there are so many types of properties.

I also live on the North Shore and my property values have gone up quite a bit since I moved. I was looking at other areas but noticed the North Shore tends to always hold its value. If the real estate market takes a hit, the North Shore will maintain or won’t get hit as hard. Plus, when things go up, the North Shore tends to be about 1-2 points above everywhere else. It’s a great place to live, but for investment purposes, again, I would get a good financial advisor to do an analysis of a cross-section: North Shore, Burnaby, Chilliwack, etc. Sometimes the best deals are in places which you would never live, but that doesn’t matter if it’s just an investment.

Case in point: in the Fraser Valley, you’ll get cap rates and capital appreciation that is far higher than anywhere west of Surrey. The key to look at with all of this stuff is what your personal goal is (e.g. capital appreciation, revenue, tax efficiency, etc.), what age and stage of life you’re at (as you get closer to retirement, you’ll want more certainty and cash flow, but younger people don’t necessarily need that). Talk to the professionals we mentioned and come up with a solution that works best for you to help reach your financial goals—that’s what this is all about.

Hot Areas to Invest in Vancouver

October 15, 2020

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

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This Vancouver real estate stats report from Mike and his team shows a dramatic increase in average price in September 2019 compared to September 2020 at 13.9%. This is an average across different pieces of real estate but active sales listings’ average has declined. What is your opinion on these statistics?

Hot Area in Vancouver to Invest Graph

It’s been interesting. If you’ve been listening to our previous episodes, you’ll know that the Bank of Canada and Federal Government have been doing things to stimulate the economy, and this is basically the result of that stimulus. It’s why we’re seeing the increase in price and reduction in listings. You’re seeing demand stoked by government action and confidence in the Canadian economy. That 13.9% varies depending on where the listings are. Areas further up from the core with larger spaces closer to lifestyle elements people want to enjoy, for instance, Bowen Island and Squamish, have seen significant price and sales demand increases. However, closer into the core, higher density options have seen less price appreciation along with a lower sales ratio. I would argue this is completely to do with COVID-19: people are moving from higher to lower density living to decrease exposure to the virus, but more and more people are also able to work from home that couldn’t have before COVID-19.

We’re seeing a change in the Vancouver real estate market in terms of what is popular and what isn’t. High-end, single-family houses on the west side of Vancouver are on fire – which is totally different than when we spoke 3-4 months ago. West Vancouver is also seeing price and demand increases. Will this continue if we get a vaccine? I don’t know. We may see a move back to higher density housing options back to the core. That said, I see the higher density cores of the region being quite good-value options with good deals, particularly downtown Vancouver.

Yes. We’ve kind of gone through the worst of the storm, and prices went up! The dollar volume statistic from 2019-2020 shows a massive amount of volume of money changing hands in real estate, and you have sales going up as well. If the sales hiccup in March-April but then a straight increase was our worst, we’re getting out of it and it’s blue skies from here – eventually there will be a vaccine and things are starting to open back up. Am I being naive? What do you think?

I don’t think it’s naive to think that. There’s a lot of talk about the 90% economy we’re in right now, where certain sectors like travel and restaurants can’t open back up but real estate is doing well. When we have a vaccine and get back to a 100% economy, I think we’ll do even better. Overall, unemployment is going down – there’s a lot of positivity and good things happening.

An email came out from the BCREA today that said sales volumes are up 25.1% compared to this period last year. But, the thing that shocked me was that MLS sales from September 2019 to Septembre 2020 are up 63.3%. You’re seeing a lot of make-up transactions now from people who couldn’t buy during the spring. It’s all very positive and even with talk of a second wave, I think we’ll power through it. The Vancouver/BC real estate market is a pretty powerful beast.

I actually have some statistics here that say, “Aren’t we in a recession, and in a recession don’t we typically have pullback from buyers?” The report goes on to say (which you’ve echoed in past talks) that, yes, businesses are failing, there is high unemployment and reduced income, but the unemployment mainly affected entry-level and service sector workers the most. Most mid- to high-income earners were not hit as hard or at all. What’s more, is there was a record level of household savings, up to 28.2%! No one was travelling or buying like they were before. So, now we potentially have people with their down payment that wouldn’t have had it before. I know several people who have gone from a two-car to a one-car family – that’s $400-600 a month right there. I can’t see it going back down.

Agreed; I’m seeing the same thing. We can’t travel internationally with COVID-19, so we’re saving that money. My business has changed – we had a big office with 10 desks but my team decided they didn’t want to come in anymore, which I was fine with. Now with it tapering off, I asked people if they wanted to come back to the office but they’re happier working from home. So, we got rid of the office and are saving that money.

Hot Area in Vancouver to Invest Graph

Hot Area in Vancouver to Invest Graph

This graph shows prices spiked high in the past few years and then dipped down, but now they’re aggressively making their way back up.

What is happening now in real estate with buyers and sellers?

There are more buyers. Depending on where you are in the region and the type of real estate you have, you’re dealing with a mild to strong sellers’ market. This means there are more buyers than sellers and the demand for housing is higher than the supply. Buyers have less opportunity to negotiate, while sellers have more power to get what they want. It’s an interesting market dynamic. It’s quite positive and comforting, given what we’ve just come out of.

When someone sees a price, is there even a point in asking for a discount? Could this be 5 or 10%?

It depends on the product. The key is to get your realtor to inform you about what’s happening in that particular market. Look at the data before deciding what to do with your offer. In certain areas with certain property types, you can absolutely negotiate. Maybe you’ll get 5% if it’s rough or overpriced, and there’s not much competition, but a single-family house on the west side of Vancouver on the lower end of the price spectrum, for instance, will have stiff competition. You may have to go above asking with a subject-free offer once you’ve done your due diligence. It really depends on the type of property. Check-in with your realtor; they should know and give you that advice.

 Is there anything out there right now you think is a bargain or undervalued?

I really like one-bedrooms in downtown Vancouver for investments. Because of COVID, many people from the Downtown Eastside have been pushed to places they normally don’t go downtown, though this will likely change when COVID-19 is over. Certain buildings have a lot of supply of units. Plus, many people want to move into lower-density housing because of COVID-19. However, once we get a vaccine people will want to live in the higher density core again. So, this might be a good opportunity to look at higher density options – if not downtown maybe in other dense urban cores throughout the region, particularly on SkyTrains, like North Surrey, New Westminster or Metrotown, Burnaby. Once we have a vaccine, people will be more comfortable on transit and these places may significantly increase in value.

Tell me about presales – the whole idea is I get in now and don’t have to pay the full ticket price until it’s completed in a couple of years. By that time, it’s hopefully a perfect storm with COVID-19 finished and the place is worth more. What are your thoughts? Are there any discounts on presales to be had? Are they flying off the shelf?

Presales are flying off the shelf, but if you look at certain developments in certain areas there are still some good deals. A project in North Vancouver called Apex where you’re getting one-bedrooms in the high $400,000s is great – this is air conditioned, high-end, waterview stuff. There’s Loma in Burquitlam, where you’re getting options for $310,000 – fantastic for investors. What I love about presales is that interest rates are low and, right now, there’s some uncertainty in the market so people who would normally be more active aren’t as much right now.

The Bank of Canada said they will keep an accommodative policy even after economic recovery is well underway. I think federal authorities will say nothing about housing affordability right now because they want to use housing to reflate the economy. If you invest in that, you could do well. We’re starting to see talk of housing affordability in the BC provincial election, but the BC government has less power over what happens with real estate prices than I would argue the Federal government does. Right now it’s an election cycle and they’re talking about this sort of stuff.

Presales are a good thing to buy and we’ve been doing a lot of stuff at Apex and Loma, along with Habitat in East Vancouver and Format by Cressey, which is a fantastic value with one-bedrooms in the mid- $500,000s. We’re working on that one right now.

How does Vancouver and its core compare to outlying Lower Mainland areas? Where do you see value there?

The Fraser Valley is still a fantastic option with very inexpensive options and good cap rates out there. This area is booming because it’s a local economy. Victoria and the Okanagan are good, though the Okanagan is having a tough time because of what’s happening in Alberta, but it will turn around. Also, if you look at BC, where do people want to live? They will likely choose Nanaimo or Calgary over Prince Albert, SK or Winnipeg. People want to live in BC and they will move here.

This seems to change almost monthly, but what’s higher in demand or hotter with over-asking prices – houses, townhomes, or condos?

Right now, it’s houses in areas further away from the core in places like Squamish, Nanaimo, Bowen Island, West Vancouver, the west side of Vancouver, or the Fraser Valley. Places that are lower density are really active and busy. Across the spectrum and different types of housing – you have single-family houses, condos and townhouses, in the core and further out. The closer into the core you get, the lower the sales ratio – this is the percentage of sales compared to the number of monthly listings. For instance, if you have 100 listings and 20 sales in a month, you have a 20% sales ratio. If you’re above a 12% sales ratio for an extended period of time, you will see price increases. The sales ratios of townhouses and houses are higher than that of condos right now. I would argue this is because of COVID-19. This will change as it always does, but right now it’s less dense housing options that are the most active.

Hot Area in Vancouver to Invest Graph

Questions

Where’s the best place in terms of liveability and affordability right now? I’m looking for a presale townhouse and planning to transfer from Toronto.

It really depends on what your lifestyle is like and what’s happening in your life. For townhouses, the city of Vancouver will probably be one of the most expensive places, but it will have fantastic liveability, proximity to great restaurants, shopping, and the downtown core. There are presale townhouse options across the region ranging from $400,000-500,000 in the Fraser Valley up to $2,000,000+ in the city itself. If you reach out to me directly afterwards, we can have a more meaningful discussion and I can make better recommendations with more detail from you.

Having a $500,000 budget (and as a first-time buyer), what’s a better buy: a 2-bedroom apartment in Coquitlam, or a 3-bedroom townhouse in Langley?

The answer to this depends if you’re looking for investment. For investment purposes, I always suggest smallest, cheapest, simplest, newest. So, instead of buying a big three-bedroom townhouse that you’re only going to get, say, $2,000 for, take that money and buy something smaller where you get a higher rent. Look at what gets you the most rent or highest return. I’d say a two-bedroom condo in Coquitlam is probably better than a three-bedroom townhouse in Langley, unless you get a townhouse near where the SkyTrain is going in Langley – always go near a SkyTrain if possible.

Also, if you’re a first-time buyer and you plan to live in the property, it’s also a bit of a lifestyle decision. If you know you could live in the two-bedroom or three-bedroom and are looking for the most bang for your buck when you sell the place, you’ll want to do a cost-benefit analysis based on history. You should know the ROI on the growth rate of two bedrooms in Coquitlam vs. three bedrooms in Langley, and if anything new is coming in – for example, the SkyTrain to Langley. Take a deeper dive and compare the products themselves – you need to know the age of the place, what the location is like, the contingency inside the building, etc. This is why I encourage people to work with an advisor.

Yes. And if you reach out to me afterwards, I can look at historical data and help you answer these questions much better.

What is the price range of both a one-bed, one-bath condo and a two-bed, two-bath condo downtown right now?

For a good quality, one-bedroom place that won’t cause you a lot of hassle or costs for maintenance, you’re looking in the low $500s, and a two-bedroom about $800,000. For investment purposes, a one-bedroom is better than a two-bed, two-bath. Think cheapest, simplest, smallest, best quality. If you have a choice between a two-bed with a terrace or two studios or one bedrooms lower down in the building that aren’t as nice, go for the two studios or one-beds. Your rent will be higher for a smaller unit than for a bigger unit on a per square-foot basis, and your rent will be the same for a plain unit or for a fancy unit because people don’t pay enough of a premium in rent to have a big balcony or a nice view that would make up for the cost of those things.

I 100% agree. I own multiple properties and if I have to pay an extra 20% for something with a better view, I won’t make an extra 20% in rent to cover it. The bang for your buck really will be on cash flow. Again, you can work with an advisor to help you compare, and it boils down to the capitalization rate.

Mike mentioned presales (Habitat, Apex, etc.) and one-bedrooms in the downtown core as good options. Which is a better investment in the long term (cap rate, appreciation, etc.)?

The thing I like about Habitat is it’s super close to the SkyTrain, and that area of East Broadway is basically becoming part of downtown Vancouver. If you look at what’s happening with Midtown Central, Midtown Modern, and all of the buildings along there – it’s all about the SkyTrain, and with it going to Main & Broadway, there are some good options in the area. Habitat is more expensive because of its location, but it’s pretty good stuff. Apex is good because it’s in North Vancouver and people want to be there, but it doesn’t have SkyTrain nor does it look like it will get it. But it’s inexpensive and it’s new. In terms of capital appreciation, before COVID-19 it was the core and further out wasn’t as good, but COVID has flipped that script. It really depends on what happens with the COVID vaccine, but, quite frankly, with anything in Greater Vancouver or the Fraser Valley, you’ll do okay especially if you’re holding for the long term.

I agree. With capital appreciation, it’s not the stock market, it’s not a quick fix for six months or a year. You’ve really got to be in it for a minimum of three to five years if you’re an investor over here and you’ll lose so much in so many different ways if you’re not.

Do you have conversations with investors or Airbnbers about whether the end of their mortgage deferral has forced them to sell or if they’re willing to ride out the pandemic?

It’s not affecting prices of real estate; it’s affecting the rental market. What’s happened is the owners of properties are getting a huge discount on their interest rates, which pushes up the value of properties. Anyone having trouble renting their place can sell it in a market with lots of demand, but if they’re holding and renting they’re having issues as rents are going down right now. In the core of the city, there are very few furnished rental options with a cap rate that cash flows or makes a profit. There are so few Airbnbers because they’re so restricted, so Airbnb rates are getting cheaper, too. You’re not seeing people who are screwed and fire-selling their units; they’re selling into an active market with demand so they don’t have to give a huge discount to sell the property. We’re not seeing an issue with the end of mortgage deferrals or the CERB because these owners have a higher income – the people who lost their jobs were mainly low-income earners and not property owners.

Were the prices quoted about downtown Vancouver based off of new properties?

No. They were for built, existing properties. There are very few presales in downtown Vancouver due to the market, the cost of land, and the political impediments to developing there. There are currently two presales downtown, but they’re ultra-luxury, high-end and make zero sense from an investment perspective. Others do exist, but they’re on hold because of COVID.

You can email Mike to ask him for the stats report I showed two pages of today, or call him up to ask your real estate questions. We’re doing another webinar this month or next about getting financially organized and integrating real estate, and whether you should park money in the stock market or in real estate.

Contact information card

Don’t try to time the market. If you’re at the right place and time in your life and finances, think about buying your own place or investing, or at least starting the process. From what I’ve heard, it’s predicted that interest rates will stay low. Right now, the 5-year fixed rate is under 2%! It’s shocking – I’m looking at a 10-year fixed rate at 2.8%, and I heard of someone who got a 10-year at 2.5% a couple of weeks ago. Because these rates are so low and they’re expected to stay that way, I can’t see real estate not going up in the short term.

I do have my financial practice but am big into real estate. I own multiple properties and encourage my clients to also buy more real estate. I work with clients to review their strategy, ensure what they’re doing is taking advantage of opportunities out there but in a very, very safe way.

My process is as follows:

Real Estate Process Graph

If you’re thinking you need to get organized, whether in real estate or the stock market, it doesn’t cost anything to have a Discovery meeting to figure out if there’s a fit between us and for me to point you in the right direction or take you on as a client.

I do a cost-benefit analysis about owning properties, maybe 2 vs. 3 properties, to see if it makes sense and integrates into your plan.

Real Estate Process Graph

Real Estate Process Graph

 

I encourage you to use an advisor – this is how people get wealthy!

Should I be an Advisor Graph

Victoria Real Estate Market continues to outperform in unpredictable times

A total of 990 properties sold in the Victoria Real Estate Board region this October, 59.9 per cent more than the 619 properties sold in October 2019 and 0.1 per cent more than the previous month of September 2020. Sales of condominiums were up 70.8 per cent from October 2019 with 304 units sold. Sales of single family homes were up 53.1 per cent from October 2019 with 487 sold.

“Once again, another month concluded with numbers that surprised many of us,” said Victoria Real Estate Board President Sandi-Jo Ayers. “Sales for October broke the record for the month and inventory continues to be snapped up quickly. Due to this high demand, low supply environment, we are seeing many multiple offer situations. Condos and single family homes both continue to be popular choices for buyers.”

There were 2,122 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of October 2020, 19.7 per cent fewer properties than the total available at the end of October 2019 and an 11.2 per cent decrease from the 2,389 active listings for sale at the end of September 2020.

“We have mentioned previously the pent-up demand – how sales that were depressed over the spring because of the pandemic occurred later during the summer. These delayed sales resulted in higher than average numbers for our summer and early fall market,” adds Ayers. “We may also be seeing some brought-forward demand – where people are making their future moves now. In part this may be to take advantage of lower mortgage interest rates. It may also be because of our current public health situation. Some people may be anticipating a slow down in general activity over the winter months due to the course of the pandemic and so are accelerating their plans. This may mean continued heightened sales activity through the fall and early winter, which is contrary to our normal market trend. In a normal year, we would see a tapering off of activity leading to the winter season, but thus far we have seen sustained sales and demand through October. Check in with a local REALTOR® to ascertain the to-the-minute market environment if you are considering buying or selling a property.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in October 2019 was $859,900. The benchmark value for the same home in October 2020 increased by 2.3 per cent to $879,600, virtually the same value as listed in September. MLS® HPI benchmark value for a condominium in the Victoria Core in October 2019 was $512,500, while the benchmark for the same condominium in October 2020 remained close to last year’s value at $512,300, 0.3 per cent more than the September value of $510,600.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

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What we are going to discuss 

We are going to discuss the process of buying and owning residential properties in Vancouver and British Columbia, for Canadian citizens who are end users and for investors who are non-residents of Canada. We’ll also talk about the process to rent out properties before moving in or to keep them as investments, along with taxation.

What we are not going to discuss:

  • We are not going into minute detail on tax, renting, and purchasing as we’re talking about an entire province with a lot of variation and many, varied types of properties. Instead, we are going to give an overview of the process of buying, holding, and taxation of real estate in BC.
  • For more detailed questions, myself and all of the panelists have plenty of time after the webinar to answer all of your detailed questions at length. Furthermore, if you have any questions that we cannot answer because it is outside of our area of expertise, we will find those who can answer those questions after the webinar.
  • We are not going to discuss purchases by non-Canadian citizens, due to BC’s 20% Foreign Buyers’ Tax.

I will start with a discussion of current market conditions across British Columbia with a particular focus on the Vancouver area, but at vancouvernewcondos.com you’ll find a network of 10 realtors who cover Greater Vancouver, the Fraser Valley, southern Vancouver Island, the Okanagan Valley, and Northern BC. I will also discuss the effect of COVID-19 on the market here in BC.

Please do keep in mind that British Columbia is a province of over 5 million people and almost a million square kilometres, so we will be discussing generalities in this webinar. We are keen to answer all questions, so if you are not able to have your questions answered here, feel free to reach out to any of us after, at any time.

Next, Adam Scalena, a Vancouver Realtor, will discuss the process of purchasing a property in BC as a non-resident (by visiting or doing so remotely) and how we can make it a simple and easy process for buyers who are not located in BC.

Then, Klaus Rode will discuss the process of renting a property once you have purchased it. This will include a discussion of how Klaus finds and qualifies potential tenants, how rent collection is now automated, and how he helps with taxes on rent. We will also touch on what happens if there are issues with a tenancy.

Finally, Ruby Chouhan, will discuss non-resident property purchase and ownership taxation, and taxation issues around purchasing and owning properties as a non-resident Canadian citizen in BC. 

Once we have heard from our panelists, we will have 20 minutes for your questions. If we cannot answer a question you may have, rest assured we have a network of real estate, mortgage, rental, and tax professionals across BC who can answer any questions after this webinar.

Keynote

Mike Stewart – Founder, Vancouver New Condos

Market Conditions and Overview

What was happening in BC real estate before COVID-19?

market conditions graph - population vs year

Strong, stable economy with low unemployment – BC has had, and continues to have, a growing population. The BC economy was growing by just over 2% prior to the COVID-19 crisis, which is good for a mature, advanced industrialized economy. Unemployment in the province in 2019 was quite low at 4.9%, and was trending down.

In terms of real estate sales volumes, using Vancouver data, we saw a surge in late 2019 from a bit of a lull in early 2019 and 2018. 2019 was a bit of an anomaly as the spring was slower than the fall and winter, which saw significantly increased sales volumes and upward pressure on prices.

This happened because of:

Constrained supply. Particularly in the Vancouver area, many municipal and city governments do not see increasing the supply of new homes as a solution to high housing prices. The development of new homes is a highly politicized process with NIMBYs and progressive politicians who don’t want to see more density successfully opposing new housing developments across the region. This has resulted in not enough new homes being built not only in Vancouver but in other BC cities, as well.

Ever-increasing demand. BC’s population continues to grow, but lifestyle changes have dramatically increased housing demand. As more people forgo marriage and having families, there is demand for a higher number of smaller studio or one-bedroom condo units for individuals or couples to live in, as opposed to larger properties to accommodate families with children. The demand for different types of housing is increasing faster than population growth.

metro Vancouver housing starts and population change

The elephant in the room is COVID-19: How is it affecting the real estate market in BC?

What happened in BC real estate during COVID-19?

Sales volumes dropped around 45% in the spring, starting from March. Lockdown was a major contributor to the fall in transactions.

Real estate prices were stable during COVID-19. Although unemployment surged, it didn’t have a big impact on BC real estate prices. With the exception of the odd panicked sale, real estate prices remained stable.

Bounceback. The bounceback in sales volume began in April/May and by July 2020, the Real Estate Board of Greater Vancouver (REBGV) sales volumes were 22.3% higher than July 2019 sales volumes.

Sales volumes continued to rise. Sales volume for properties listed by the REBGV for August 2020, the most recent data we have, are up 36% over 2019. This is a continuation of the rising real estate market we saw across BC that started in mid-2019 after a soft 2018.

number of jobs and home sales by region graph

Why were prices stable and continue to be so? Why have volumes bounced back?

Bank of Canada & federal spending

Central Bank and Central Government injections of huge liquidity – The Bank of Canada issued rate cuts that have pushed 5-year fixed rate mortgages below 2%. This is very common across the country now, but not historically.

Quantitative easing has allowed the Bank of Canada to commit to keep rates low over the medium term, and massive federal spending for income support across the economy have worked to avert a deflationary spiral in Canada. This has pushed up the value of real estate assets and the stock market: if people holding these assets feel wealthy, they will continue to spend.

Unemployment is up to around 11.5% because of COVID, but the job losses tend to be among lower-income earners and renters rather than mid or high-income earners and prospective property buyers. Furthermore, unemployment peaked in BC during spring at around 13%, and it’s currently falling.

All of this has been very effective in keeping the real estate market strong. 

British Columbia Unemployment Rates

Source: https://www2.gov.bc.ca/assets/gov/data/statistics/employment-labour-market/lfs_highlights.pdf

What is happening now in BC Real Estate?

BC Real Estate

Making up for lost time. Sales continue to rise across BC as people who wanted to buy or sell in the spring couldn’t do so. COVID-19 didn’t destroy demand; it deferred demand.

Sales volumes in Victoria in August 2020 are up 29.1% for condos and 45% for single family houses compared to August 2020, and prices are roughly stable. The Fraser Valley had the second busiest month of property sales in the past 20 years in August 2020, and prices are stable to slightly rising. Greater Vancouver sales volumes were 19.9% above the 10-year August sales average. For August 2020, the Vancouver sales ratio (the ratio of  sales to active listings for each month) was, depending on property type, 21.6% to 30.7%. Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

For certain property types, there is upward pressure on prices. You hear doom and gloom from the media and other sources, but take these predictions with a grain of salt as their crystal ball really is as good as mine or yours. For instance, the CMHC predicted in May 2020 that sale prices would fall 18% across Canada this year, but it isn’t happening. You can also look at the sale prices from 1977 to August 2020 to compare.

Residential Average Sale Prices Graph

Houses slightly favoured over condos, due to COVID. Sales ratios are higher for single family homes compared to condos. This could be due to COVID-related factors of not wanting to be in high density housing or the need for more space to work from home.

Opportunities

BC Regional Overview

While Greater Vancouver has a lot of potential for capital appreciation, you won’t see a lot of gross revenue (maybe 5%). Southern Vancouver Island is similar. The reason is likely because many high-net worth people move to these areas, not for economic reasons but for lifestyle reasons. In the Fraser Valley, which is close to Vancouver, you’ll see relatively high rental revenue and more capital appreciation than in Greater Vancouver. For example, a colleague of mine sold their clients a Fraser Valley property for $283,000 with a gross cap rate of 6.7%. The Okanagan offers relatively high rental revenue but with less capital appreciation. Northern BC is similar with revenue, as people move for the short-term to work. But, it does have large capital appreciation potential from large-scale natural resource and infrastructure projects. We work with a client in Fort St. John who has furnished rental options with shockingly high cap rates.

Presales

Presales (Off-Plan) Across British Columbia

Buying a presale is a very straightforward process and there are lots of opportunities in BC. You’ll get a lot of documentation with floor plans and information on finishes and other things, and doing a transaction remotely is very simple with DocuSign.

Some benefits of presales include:

Low hassle and easy to purchase from overseas. Presales offer non-resident buyers a relatively simple and easy opportunity to invest in the Vancouver market, with typically a 20-30% deposit payable (wire transfers are mostly used for non-residents) over 18-24 months and the balance payable upon completion of the project. 

Detailed digital renderings, floor plans, and documentation of the projects and their features and finishings. This allows for a hassle-free experience and expectation of a perfect, brand new property upon completion of the building with a full government-regulated 2-5-10 third-party warranty.

No need for a mortgage right away. You have flexibility for your intended return to Canada to get better financing or for other personal and/or financial needs and requirements.

Available incentives, although typically prices for presales are not negotiable. These incentives vary by project and can be quite generous depending on the developer’s requirements.

Some options for customization, especially for more expensive, higher-end presale options. 

Less labour required, as existing properties are somewhat more labour intensive for a prospective non-resident buyer. Existing properties are typically less expensive than comparable presales but are not as uniformly perfect and hassle-free. 

More flexibility in terms of price and completion dates as you negotiate with individual needs and requirements. 

Rental revenue and/or the opportunity to take advantage of the ultra-low sub-2% rates currently available in BC.

We have:

  • Early access to presales of every size and configuration for both end users and investors across Greater Vancouver, the Fraser Valley, southern Vancouver Island, the Okanagan, and Northern BC.
  • Great email lists for presales for all of the above regions that we can add you to.

What is happening going forward in BC real estate?

The governing NDP has called an election for October 24, 2020 and based on current polling is expected to win. What that means for the real estate market in BC remains to be seen. John Horgan has positioned himself as somewhat of a pro-business Premier during the current minority government, but one could assume that will continue given Horgan’s success in assuaging the electorate’s past concerns about the NDP’s record on the economy. Immigration is expected to resume.

Beware of future predictions!

A perfect example of what to be wary of in terms of a future prediction for the Vancouver and BC real estate market was the Canada Mortgage & Housing Corporation’s prediction that prices in Vancouver would fall by 18% in 2020.

The CMHC was a venerable and credible institution that most Canadians, until quite recently too what it said quite seriously.

Fortunately for homeowners and current investors the CMHC was wrong. (Though unfortunate for the owners of the CMHC – all Canadians – who have to contend with a serious decline in CMHC credibility with its irresponsible and consistently inaccurate predictions)

Real estate prices in BC and in the Vancouver area are stable and are actually rising for certain types of properties (lower density options further from the core and closer to recreation and lifestyle options – think Nanaimo, Bowen Island, Squamish and single family houses).

Beware of future predictions on the BC real estate market!

Panel

Adam Scalena, Scalena Real Estate

Purchasing process and areas that are popular with investors

Adam and I have both lived overseas and we have many clients throughout the UK, Europe, Asia, and North & South America. We are familiar with the needs of people buying properties from overseas and have a whole suite of research tools and resources to help Canadians who want to buy properties in BC.

Adam Scalena bio 

How can we buy a property in BC from the UK or Western Europe?

Tools for Buyers

  • Private Client Services: we helped with beta testing and research for this tool and have used it with clients for almost a decade. You can set search parameters by geographic area (even down to address or neighbourhood), property type, and price. You’ll get realtor-level information like sold prices and days on market. We can also communicate with you directly from its own portal. It’s a great tool, especially to start out while abroad and monitor the market. It typically also avoids the lag you see on Realtor.ca so you can see listings before the general market. 
  • Presale email lists and real estate statistics: if you join our presale email lists, you’ll get sales ratios and benchmark price index stats to broadly monitor the market or submarkets, so you can see if we’re in a buyers’ or sellers’ market. There are lists for all cities in Greater Vancouver, the Fraser Valley, Victoria, Nanaimo, the Okanagan, and Squamish. Sign up at VancouverNewCondos.com or MikeStewart.ca.
  • VancouverNewCondos.com: this site tracks new construction condos across BC and offers early access and incentives for projects, often before the general market.
  • VancouverRealEstatePodcast.com: I’ve co-hosted this podcast on the Greater Vancouver area for 5 years, which has over 200 hours of content. We talk to economists, urban planners, developers, politicians, and industry experts, and we were featured in the top 10 business podcasts on Apple Podcasts Canada.

What’s the process to buy a property here from, say, London?

We would start with a phone consultation to discuss areas you’re interested in and Greater Vancouver areas that would fit your lifestyle, as well as your goals. If you can’t come in person for property tours, we can arrange for tours via Zoom or FaceTime, which we’re now doing more often. Our presale or pre-construction resources, such as floor plans and models, are online. It’s really easy to buy off-plan because of developers’ amazing resources. We can walk you through the paperwork and provide a location overview. Recently, we’ve been FaceTiming clients from the future building site to give a better sense of the surrounding area.

There is also the option to fly into Vancouver, once COVID restrictions are over, so we can hit the ground running in person and make really efficient use of your time. We can get you set up with the tools above so that you can do your research and prepare far in advance of your visit to buy, or get up to speed on the market and options to buy, from the UK or other points overseas.

Should you want to come to visit BC, we can introduce you to colleagues who specialise in the areas above to help with a purchase. If you would like to purchase remotely, we can also introduce you to area specialists who can help with a remote purchase.

–

Klaus Rode – Associate Broker, Century 21 In Town Realty Vancouver / Salesperson/Property Manager, Century 21 Percy Fulton Toronto

Your Rental Resource – specializes in rentals and property management

Klaus Rode bio

What is happening with the rental market across BC?

While rents are down in a few markets across BC, cap rates are between 3% and 5% in most markets. Places like Kelowna or Prince George may have lower rents, but purchase prices are also less. Cap rates tend to be higher further away from larger centres, like Vancouver, and in smaller towns.

In Vancouver, the average one-bedroom rent is $2,000, and purchase price will depend largely on the neighborhood in which you are purchasing, which affects your cap rate.

What has been the impact of COVID-19 on rentals across BC?

The impact has been less than we anticipated at the beginning of COVID. Initially, we didn’t know what to expect, and everyone was in a bit of a holding pattern. After the first month, the initial hit was on furnished rentals, some of which were used as Airbnb-type rentals. The demand just was not there any longer, and the number of furnished suites available saw a sharp increase in most markets. Slowly, as corporate transfers started up again, we saw a slow recovery in the furnished long-term rental market but with slightly more competitive pricing. On the unfurnished rentals side there was a slight rent reduction on the larger suites, as demand went down. On one bedroom suites, everything was stable and demand was good, as couples downsizing from a two-bedroom suite were driving a bit of the demand in order to save some money.

We now seem to be stable in Vancouver with one-bedroom rentals going between $1,900 and $2,100. Two-bedroom suites are a bit more varied in price, based on location, view, and amenities. We are seeing ranges from $2,400 to $3,200 a month. This seems like a large spread; however, you have to keep in mind that two-bedroom suites in Vancouver also have a big size range, and that is reflected in the pricing. In other areas like Kelowna, demand is still high for rentals. This can be in part attributed to professionals being able to work from home and relocating into smaller communities that offer a quieter lifestyle, still with some of the “big city” services they are used to. In the Lower Mainland, we are seeing more demand for the outlying areas for rentals, as some people prefer to live in smaller buildings.

BC's Rental Market

If a non-resident is to buy a property here in BC and wants to rent it out, what are the next steps when working with you?

If you need help with property management or just want to double check what the estimated renal rate would be on a property, you can call or text me at 604-760-5856 or email klaus@klausrode.ca. I can review the agreement with you by email, phone, or Zoom call. If the property is vacant, my team will need to schedule professional pictures and a virtual tour for marketing.

How do you screen tenants?

With COVID, we have streamlined our process. If the suite is vacant, we have professional pictures and a 360-degree virtual tour done, and use this for advertising and the initial showing. If a tenant is interested, we send out the link from our partner site, liv.rent, and ask the tenant to apply for pre-approval. We do this partly to make sure that the tenant is qualified and interested in the rental, and also to cut down on the number of in-person viewings. We will only confirm an in-person viewing once we have an application, in order to minimize contact. Once this is done, and the tenant wants to proceed with a lease, we sign the paperwork virtually with DocuSign, and then set them up on our payment platform, RentMoola. This gives tenants a variety of ways to pay their rent.

How do you screen tenants

What system do you use to collect and disburse rents?

Rent collection is done online through our partnership with RentMoola, and owner payouts and statements are tracked in our accounting software, Yardi. This enables us to set up the landlord in an owner portal, and they have access to monthly owner statements. Payouts are done by the 17th of the month and directly transferred into the owners’ bank accounts.

What system do you use to collect and disburse rents

The whole rental management process is taken care of for our clients, from screening to dealing with issues to finding new tenants, so you don’t have to do anything.

Do non-resident property owners need a bank account here in Canada for their rental income?

Owners will need an account in Canada. First, we need to deposit funds into a Canadian bank account and second, the owners will likely find it more convenient to set up monthly payments on strata fees or yearly tax bills through a Canadian account. 

As a segue to hear from Trowbridge’s Ruby Chouhan, our tax specialist, do you help with BC and Canadian tax on rental income?

We do monthly submissions to the CRA for non-resident tax on rental income. This is typically 25% of gross income. At the end of the tax year, we provide owners with the NR4 form so they can file their Canadian tax return with the CRA. Owners are also responsible for filing declarations for the Vancouver Empty Homes Tax and the BC Speculation and Vacancy Tax. Ruby can discuss tax implications in more detail. 

 

Ruby Chouhan – Associate, Private Client Non-Resident Real Estate Services, Business Development, Trowbridge

Tax issues with purchasing and owning a property in BC as a non-resident

Ruby Chouhan bio

Do non-residents who own property and collect rent in British Columbia need a bank account? Does this have an impact on their non-resident status from a tax perspective?

Bank accounts are seen as a secondary tie to Canada; most property owners will have Canadian bank accounts to receive payments/pay bills and it’s not a problem at all. In general, residency status/ties are based on a number of other factors like economic ties, family ties, etc. If you have concerns about your residency status, it’s best to call and talk to us about your specific situation.

What taxes are payable on the purchase of a property in British Columbia as a non-resident of Canada or someone from abroad, even if they’re a Canadian Citizen?

In certain parts of BC (e.g. Fraser Valley, Metro Vancouver) there is an “additional property transfer tax for foreign individuals and entities” at 20% of fair market value. This tax is based more on immigration status, rather than tax residency status. Essentially, if you are a Canadian Citizen or Permanent Resident, you are exempt from this tax. It’s important to work with a good real estate lawyer, as they register the tax at final closing. The tax is payable on your proportionate share of ownership of the property.

Otherwise, there are refunds available in situations where you become a Permanent Resident or Canadian Citizen within one year of the property registration, and you must have lived in the property for a certain period of time (over one year as your principal residence).

Tax issues re purchasing and owning property in BC as non-resident

Can you tell us about Vancouver’s Empty Homes Tax?

The Vancouver Empty Homes Tax is issued by the province rather than on an income tax level. It’s for properties deemed empty, which get taxed 1% of the property value. It doesn’t apply to principal residences or properties rented for more than 6 months of the year. If you have a long-term lease in place, you don’t have to worry about this tax. Each year, you must prepare a declaration of the status of the home to the BC government.

Vancouver empty homes tax

Can you tell us about the British Columbia Speculation and Vacancy Tax?   

There is a Speculation and Vacancy Tax in BC designed to turn empty homes into housing and ensure foreign owners and those with primarily foreign income contribute fairly to BC’s tax system. 

For 2019 and subsequent years, the tax rate is 2% for foreign owners and satellite families. A satellite family is considered one that is untaxed on worldwide income in Canada, i.e. a non-resident for tax purposes. If there is an arm’s length tenant in place for at least 6 months, you are exempt from this tax. There are other specific exemptions, also for non-arm’s length tenants.

British Columbia Speculation Tax

The Vancouver Empty Homes Tax and BC Speculation and Vacancy Tax are two individual taxes that each require a declaration to be made.                                                           

How does it work for non-residents paying taxes on rental revenue of a property here in BC?        

As a non-resident of Canada collecting rental income from Canadian property, the CRA requires that “non-resident withholding taxes” be paid on your monthly rental income. The CRA provides two options that are broken down into the three steps.

The first option, which is the CRA’s default requirement, is to withhold 25% of the gross rent on a monthly basis. Once the year is over, you are issued an NR4 slip indicating the amount of tax withheld, and you then have two years to file your Section 216 return and be refunded any overpayment of tax that was withheld.

The second option uses the NR6 form, which allows you to pay reduced tax withholdings based on 25% of your estimated net income. Most people prefer this method because 25% of your monthly rental income can greatly affect your cash flow. You must have a third party, such as Trowbridge, registered with the CRA as a tax withholding agent. Then, once the NR6 form is approved and you make a tax payment, for the rest of the year you don’t have to worry: we prepare an NR4 slip. The CRA has a strict tax filing deadline of June 30th of the following year, and not meeting it results in a hefty penalty of 25% of the gross rental income.

Non-resident tax withholding

What kind of rental expenses are deductible?        

Almost everything related to your rental property is deductible. For example, repairs and maintenance, property taxes, leasing fees, accounting fees, mortgage interest (which is usually the largest expense), and property management fees. The only rental expense, depending on the number of properties you have, is travel and vehicle expenses.

deductible rental expenses

Let’s talk about selling a property in BC as a non-resident. Can you tell us about the 25% non-resident withholding tax on the sale of a property in Canada?                      

  • Certificate of Compliance applications must be submitted to the Canada Revenue Agency (CRA) within 10 days of final closing.
    • Failing to submit the applications in a timely fashion may result in penalties of up to $2,500 per non-resident taxpayer.
    • The processing timeframe is normally 12-16 weeks.
  • Your real estate lawyer is required to hold, in trust, 25% of the gross sales proceeds until such time that final certificates are issued by the CRA. 50% of gross proceeds may be withheld due to the property being a rental.
    • The CRA will request a payment of 25% of your net capital gain; this amount will be paid from the funds held by your lawyer. Upon receipt of payment, the CRA will issue the final certificates.
  • The following year, you’re required to submit a Non-Resident Canadian Tax Return to report the sale and selling-related expenses.
    • The tax paid to the CRA while processing your Certificate of Compliance applications will be reported as a “tax installment” and you will be refunded any overpayment of tax once the tax filing is assessed by the CRA.

selling property in BC non-residents

Consumer interest in homeownership in Victoria unwavering over course of pandemic

A total of 989 properties sold in the Victoria Real Estate Board region this September, 60.6 per cent more than the 616 properties sold in September 2019 and 1 per cent more than the previous month of August 2020. Sales of condominiums were up 26.7 per cent from September 2019 with 280 units sold. Sales of single family homes were 91.9 per cent from September 2019 with 539 sold.

“Another month has passed where we have seen surprisingly high sales numbers – which included quite a few higher end properties,” says Victoria Real Estate Board President Sandi-Jo Ayers. “I don’t think that anyone who was trying to predict market outcomes in our area over the course of the pandemic expected that the pent up demand from dampened sales in April and May would result in this level of market activity. There’s no doubt that buyers are extremely motivated and this increased demand, coupled with limited inventory, fueled the September market.”

There were 2,389 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of September 2020, 15.4 per cent fewer properties than the total available at the end of September 2019 and a 7.5 per cent decrease from the 2,584 active listings for sale at the end of August 2020.

“We had some much-needed new inventory enter the market over the course of September,” adds Ayers. ”But the supply has not been sufficient to outstrip the heightened demand. We continue to see multiple offers and pressure on pricing across many neighbourhoods. Looking forward, it is impossible to determine what our fall market will look like, but if the past couple of months are an indication, we may see higher seasonal numbers than we would have expected in a more predictable year. That said, since our situation can change in a blink, we cannot look at the past months as the start of a trend, but instead as a moment in our market during an unpredictable time.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in September 2019 was $849,100. The benchmark value for the same home in September 2020 increased by 3.5 per cent to $879,200, 1.1 per cent less than August’s value of $889,200. The MLS® HPI benchmark value for a condominium in the Victoria Core in September 2019 was $512,500, while the benchmark value for the same condominium in September 2020 decreased by 0.4 per cent to $510,600, 0.6 per cent less than the August value of $513.900.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Hot Areas to Invest in Vancouver

September 10, 2020

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

Photo of Disclaimer reminder

We’ve seen a dramatic increase in prices from this time last year. Email Mike to get the full report. 

It shows the median detached house price in Burnaby a year ago was $1.457 million, and today it’s $1.56 million. Condos have also gone up. North Vancouver has similar numbers. A couple of numbers are flat but median detached houses have gone up. West and East Vancouver are the same. Last month sales were 19.9% above the ten-year August sales average. August 2020 sales were 36.6% above August 2019 sales. This leads us to believe we’re trending up.

Van Real Estate Stats graph

This graph shows the last 30-some years, with the blue line being detached homes in Vancouver. They have gone up aggressively since 2003. There was some volatility in 2016 but we’re trending back up. Condos and apartments are following suit.

Avg sales price of real estate graph

What is happening now in real estate?

The market is extremely active right now. I’ve talked a lot about how the Bank of Canada helps with ultra-low interest rates and quantitative easing (which is printing money and the Federal Government borrowing mass amounts to backstop and support the economy). This creates the wealth effect, where these actions stabilize or push up the value of real estate across the country. This makes people feel comfortable to continue to spend.

During a time like this – with COVID-19 creating a drop in demand for goods and services – the fact that spending has continued to occur has resulted in prices remaining stable and volumes going up. Volumes dropped when we had restrictions on going out to see properties, but they are now up dramatically. August 2020 saw sales volumes of 36.6% above August 2019 volumes. We are also 19.9% above the 10-year August sales average. The efforts of governments and central banks are now coming to fruition. Now, we’re seeing upward pressure in sales prices, depending on the area and type of property, huge increases in volume, and properties that are selling (in many cases, for significantly more than what they would sell for last year).

It’s incredible we’re seeing recovery so quickly; it reminds me of what happened in 2008. Where are you seeing hot deals that are undervalued in the Lower Mainland at this time?

I’m seeing assignments of contract (a presale condo someone bought several years ago at a lower price). These are great for investors that are okay with a level of complication and complexity. Presale condo assignment is a great way to get value in this market.

Investors are also doing really well with one-bedroom condos in and around the downtown core, especially from a capital appreciation perspective. We’re seeing great deals in the Chilliwack and Abbotsford areas of the Fraser Valley where people can buy decent quality condos that are 10-15 years old, well run and maintained, with a gross cap rate (annual return) of at least 6%. You can also buy a unit and Airbnb it, for dramatically higher income. Also, while it’s rare, you could rent a unit to a furnished rental company that rents to an insurance company that houses people temporarily who can’t stay in their own homes due to emergencies like fire or flood.

Single family house lots on the east and west sides of Vancouver are also hot right now. The west side is more expensive with lower cap rates, but redevelopment options are quite good, though this is more of a long-term goal. There are quite a few investment options for varying budgets, price points, complexity, and time invested. 

What is going on in West Vancouver in terms of deals?

From an owner-occupier perspective, West Vancouver is fantastic and offers good value. West Vancouver, Richmond, and the west side of Vancouver were really hit hard by the foreign buyers tax, and prices in West Vancouver have gone down 16.2% over the past three years. That said, in the past year they’re up 6% and over the past six months, they’re up 5%. In the past three months, they’re up 1.9% and the past month, 0.4%. I still see a lot of upside because the public schools are some of the best in the country. If you follow the Fraser Institute ratings of schools across BC and Alberta, West Vancouver public schools didn’t rank lower than an 8.5 or a 9 out of 10, and many are 9.5, 9.8 and even 10. These public schools are ranked on par with some of the best private schools in western Canada. You also get larger houses and privacy.

Surprisingly, West Vancouver can, in many cases, be less expensive than North Vancouver. This was not the case 30 years ago!

Usually when there’s a downturn in the market, this is the type of place you want to look at. And when the market swings up heavily, it’s the places in West Vancouver that get the 30% jump while everyone else is at, say, 12%.

I agree. If you look at the three-year price pattern for West Vancouver single-family houses, they’re down 16.2%. But to your point, North Vancouver is very much more a locally-oriented neighbourhood and prices only went down 5.2% over three years. The east side of Vancouver is in a similar situation, as prices only went down 3.1% over three years, but houses on the west side of Vancouver went down 15.7% during this time. So, the locally-oriented neighbourhoods are the ones seeing the fastest price appreciation right now, but they’re not necessarily where you want to go — you want to get into areas that are a little bit neglected or missed by buyers, so you can get far better deals. 

Yes, if you can afford it and it suits your family situation, it could offer more significant capital appreciation and a greater investment than the down stock market. So, in terms of investors, capitalization rate, and good cash flows, what’s your opinion? Which areas are you liking?

A colleague of mine that helps clients in the Fraser Valley helped a client buy a two-bedroom, two-bath 918-square foot unit in a 2008 building for $283,000 and they’re getting $1,400 per month on a 10-month fixed term lease with a doctor. In my view, that’s fantastic value! $283,000 is so inexpensive and with a 2% mortgage, it cash flows depending on how much you put down. The Fraser Valley has fantastic deals if you’re looking for revenue.

Another thing is to go where the SkyTrains are going. The new SkyTrain will be going west along Main & Broadway. There are presales, assignments, and existing properties in that area. You buy before the SkyTrain goes in, hold while you wait for it to be built, then sell or refinance and reinvest the money elsewhere. There are a lot of really great options associated with the development of the city, its increasing density, and the development of the mass transit system.

I own in the Fraser Valley, it’s a big place. Where specifically are you seeing the cash flows?

There’s a project called The Georgia, in Langley. A mortgage broker I know bought a presale unit there, and his significant other did the interior design for a furnished rental which they have on Airbnb. This is time intensive, but he’s cash-flowing a few thousand dollars per month which is shocking, as I think he paid $400,000 for the unit.

For something less labour-intensive, you can get good quality product for under $300,000-400,000 in Chilliwack or Abbotsford. These get very high cap rates. What you see out in the Valley is people don’t necessarily make less money, but the cost of housing is so much lower that they can afford to pay more in rent. A two-bed, two-bath in Chilliwack might cost you $1,400 a month, while you might pay the same for something very small in East Vancouver while you make the same income. So, a lot of people would rather be in the Valley and pay that rent.

I can echo what you’re saying from personal experience, as I have rental property in Abbotsford and Chilliwack. You can get some good quality tenants who are working from home, and the areas have everything you need for restaurants and stores. You don’t need to come to the city for a nice dinner.

What’s happening in Surrey and North Delta?

I like Surrey and North Delta. You get a lot of high quality, dense development there, especially in Whalley and anywhere near a SkyTrain where you have easy transportation for people who don’t want to drive. From Whalley, you can easily get to Burnaby or Langley for work, with the SkyTrain now going to Langley, too. I have clients who bought there who have done extremely well and I think the area will continue to do well in future. The numbers, price-wise, are shocking.

Also, the combined price index for North Surrey has gone up 94% and condos have gone up 122% in the past five years. This is fantastic.

It’s so important to work with a realtor who can compare investments in different areas. You shouldn’t have your heart set on one area, unless you’re planning to live there yourself. Realtors can run the numbers for you for different areas and understand them. Staying close to a SkyTrain will not only help with appreciation and rent but also with vacancy — when vacancy is bad, anything next to a SkyTrain line isn’t affected in the same way. During recessions, people always want to rent near a SkyTrain so they can give up their vehicles. 

What’s your opinion on Coquitlam? Coquitlam is also great – again, you have the SkyTrain and people want to live there. The water, mountains, and Port Moody are also really close.

Metro Vancouver wants to see a lot of population growth in the Northeast Tri-Cities area, which consists of Coquitlam, Port Coquitlam, and Port Moody. You’ll see a lot of development there. The density model is very successful because it creates liveable, new neighbourhoods where people want to spend time and walk around. You get the convenience of Burnaby and the West Coast Express nearby along with the natural beauty of the ocean, Indian Arm, Burrard Inlet, and the mountains.

How can you track the developments in these areas?

I can help you with that. I have email lists for presales in all of the cities and municipalities in Greater Vancouver, the Fraser Valley, southern Vancouver Island, and the Okanagan. Email mike@mikestewart.ca or call 604-763-3136 and I’ll get you on whichever presale lists you’d like. 

What’s the future of Port Moody like?

Port Moody is already dense and is a bit different with its natural draw, because you have the water and tip of Burrard Inlet. It’s like White Rock in that way. Port Moody might be the highest priced city in that area because of the water and mountain views.

Is there an advantage to buying an older house that’s been renovated?

Absolutely. Buying anything built by people is like buying an old car: if it was well designed and well built in the first place, but it’s old, it’s reasonable to expect to spend money on it to perform as designed. If you’re buying new, this won’t apply. The good news is the way we operate with a home inspection for clients buying an older home, so you can see quickly and accurately what to expect for costs. Plus, for older condos there’s a document called a depreciation report which gives you a clear idea of upcoming expenditures. 

Assuming unemployment will increase and the economy is stuck next year due to COVID, is now or next year a good time to buy?

The last five months have been a good indication of what’s to come if COVID lasts even longer. The absolute worst we saw was in March where it caught people off guard, there was no government stimulus at the time, and the world wasn’t prepared for COVID. So, a small lull occurred in real estate. This was more of a physical restriction where people couldn’t see places. However, when this restriction lifted and people became more comfortable, those who were able to buy houses and invest still did so.

The stock market is a perfect indication of how the market has recovered. Unemployment numbers will get worse, but this doesn’t mean the economy itself will get worse. Those who were most affected by COVID-19 in terms of employment were probably the same people who already couldn’t afford to buy real estate to begin with. My clients had fairly stable income and were still eating in restaurants and buying or selling homes.

So, do not try to time real estate — it’s a dangerous game especially in Vancouver. If you have the funds and a steady income, whether you’re an investor or owner-occupier, I’m more concerned about what you find as opposed to timing the market. If you find a place you like, buy it. Don’t buy a place you don’t like because you think the market will go up next year. Focus more on the product you’re buying rather than the timing of it.

Whether the market’s up or down, you’re only buying for yourself or your investment. Finding the right product and working with the right people is way more of a determining factor.

I tend to agree. COVID-19 didn’t affect those who were qualified to buy and sell real estate. My job is to talk to these people and I’d say 98% of the people I spoke to were still working. They’re in health care professions or are accountants, lawyers, or business owners who could and did work from home. The interesting thing is they’re still working from home even though they can go back to the office, whereas I think unemployment really affected industries like hospitality, which has incomes too low to allow people to afford properties. Jobs like servers, hotel front desk and cleaning staff, and airline flight attendants were the first to go. Many of my clients are airline pilots who are all still getting paid. If they get laid off, they can’t go back to work because they have to requalify – so they’re still employed and training.

Things won’t get worse, they’ll get better. Back to what I said before, the central bank of Canada and the Federal Government are using real estate as an emergency balloon to reinflate the economy. This was the same as in 2008 – I had a mortgage at 5% and was subsidizing a property. By March 2009, it went to 1.85% and cashflowed around $700 a month. They’re using the same model as before, and I’m an optimist. I think we’ll be okay, and I don’t see a second wave coming.

I agree. Don’t try to time the market. Work with professionals to figure out the best option for an investment or for yourself. We don’t know which way real estate will go in the short term, but in the long term it will go up. We also know that rates are predicted to stay low, which stimulates buying because it makes things a lot more affordable.

I review my clients’ strategies, whether it’s for their own home or an investment. My process is as follows:

Latitude West Process graph

I have a discovery meeting (online, these days) with clients to learn as much as possible about what they’re trying to do. This doesn’t cost you anything. I’m really doing financial planning and I include real estate as part of that along with your other investments. But you don’t have to invest with me. I provide a financial plan to help get you organized.

Total Growth Graph

I do an analysis to see how your assets would look, say, with two vs. one or three vs. two properties. I deal with a lot of sophisticated and first-time investors. If you have good income, steady cash flow, or significant equity in your current home, I invite you to connect with me to set up a time for a free, quick conversation to see how I can help you. 

I’ve found that people who use a financial advisor have significantly more wealth than those who do not:

Should I Be Using An Advisor diagram

Contact info to connect

Victoria real estate market experiences an active summer

A total of 979 properties sold in the Victoria Real Estate Board region this August, 48.1 per cent more than the 661 properties sold in August 2019 and exactly the same total as the previous month of July 2020. Sales of condominiums were up 29.1 per cent from August 2019 with 262 units sold. Sales of single family homes were up 45 per cent from August 2019 with 509 sold.

“Once again we saw a very active month in terms of property transactions,” says Victoria Real Estate Board President Sandi-Jo Ayers. “And once again I will note that this is not a trend, but that this is our market at this moment in time during a unique situation. It is a challenging time to define what is happening in the market given so many factors that don’t exist in a normal year. We have been surprised by the pace of the summer market and are grappling with the evolving socio-economic effects of the pandemic and how these underlying factors will influence our fall real estate market.”

There were 2,584 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2020, 8.9 per cent fewer properties than the total available at the end of August 2019 and a 2.6 per cent decrease from the 2,653 active listings for sale at the end of July 2020.

“What I do know is that our business has changed a lot in recent months,” adds Ayers. “REALTORS® have adapted to health and safety requirements and much more technology is being leveraged to facilitate all aspects of the housing transaction. We can also see that though demand is up, there are fewer listings on the market, which increases demand on desirable properties even more. This is why we saw a lot of competition and multiple offers over the summer. Will this continue into fall? That will depend on how much new inventory comes into the market and how our community continues to manage the impact of COVID-19. This is an evolving and nuanced market. As always, it is a good time to connect with your Realtor if you’re considering selling or buying. If you need us, we are here.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August 2019 was $849,500. The benchmark value for the same home in August 2020 increased by 4.7 per cent to $889,200, 2.3 per cent less than July’s value of $909,700. The MLS® HPI benchmark value for a condominium in the Victoria Core in August 2019 was $518,000, while the benchmark value for the same condominium in August 2020 decreased by 0.8 per cent to $513,900, 3.2 per cent less than the July value of $530,800.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Hot Areas to Invest in Vancouver

August 12, 2020

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

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Mike can provide this report which shows June to July median sales have gone up pretty consistently across the Lower Mainland. For example, in Coquitlam the median price for detached homes went from $1.2 million to $3 million and attached homes went from $829,000 to $860,000. In July 2019 compared to July 2020, it shows the same type of increase. We’re seeing the trend being pushed up.

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

Vancouver Real Estate Stats Report

There was a peak in average sales prices from 2017-2018. It dipped lower in 2018-2019, and we’re now climbing back up. The report also says there’s been a 22.3% increase in sales this July compared to July 2019 and a 28% increase in sales compared to June 2020. Low interest rates and limited supply are the growing concerns. Attached and apartment properties have gone up. In July 2020, there was a 28.9% increase from July 2019. Just since June 2020 to now, there’s been a 2.8% increase.

Please email Mike for the full report.

ancouver Real Estate Stats Graph

What is happening now with buyers and sellers in real estate?

We’re seeing a lot of pent up demand. In late 2019 to early 2020, before COVID-19, the market was very active and volumes were up significantly. When the crisis hit and interest rates went down dramatically, all the demand which would usually be supplied over the Spring – the peak time for real estate in Vancouver – was put on hold.

Interestingly, the people I speak to who are qualified with the means to buy and sell real estate are generally professionals or business owners and stayed employed throughout the COVID-19 crisis. Very few got laid off or had their businesses close. Many people saved money during the crisis and have money to spend now, which we’re seeing in the stats compared to 2019 (which was still a very good year compared to 2018). Prices are stable to rising depending on the area and type of property; sales volume and activity is up dramatically – we’re extremely busy right now. We’re also seeing a lot of pre-sale projects coming back to market in a lot of great areas, from an investment and owner-occupier perspective, whereas in January through March, developers were putting things on hold.

If people were to put in an offer, what type of offer are we looking at? Discounted? Over-asking?

It depends on the situation and property. In certain micro-markets, you’ll be competing for very high quality properties. Single-family houses in East Vancouver is a very hot market, with multiple offer situations for properties appealing to both owner-occupiers and developers. You won’t be seeing 10% discounts in this market, but keep in mind there is a difference between actual market value and the list price of a property. You may see an overpriced property and get it 10% below the asking price, which may just be what the property is actually worth. You can negotiate on some properties, but not much on high quality properties in high demand neighbourhoods and, in multiple offer situations, you may pay higher than asking price.

Where are some examples, especially in the condo market, of this kind of competition?

Some high quality properties that are priced well in both the east and west side of Vancouver, including downtown, are getting multiple offer situations. The key is to be watching the market for when things come up but also to be on a tool like PCS (Private Client Services), which you can sign up for with Mike, so you can see what prices are. It’s good to keep track of what the market is doing by checking what properties like the ones you’re interested in are selling for and how the sale price relates to the asking price.

What is a hot area in Vancouver for an investor or homeowner that has a lot of potential or is undervalued?

Mt. Pleasant is great, for one, because it’s getting a new SkyTrain station at Main & Broadway. The Broadway corridor is also great because of the SkyTrain going to Arbutus and eventually out to UBC. The line is backed by some fairly influential groups (First Nations, developers, and UBC). The area will develop as another like downtown with high density. City Council has been trying to reduce demand from developers, but there’s a great opportunity for smaller investors to buy older units in simpler buildings which a developer will eventually knock down to replace with a tower. Or, a great opportunity to keep for the long term – for instance, there’s a new pre-sale called Habitat with one-bedrooms starting in the $500,000-600,000s. It will complete in a few years with sales beginning in the next few weeks. There’s opportunity for capital appreciation or steady, reliable rental income, which I think has very good potential to increase as the area develops and the SkyTrain development starts.

What areas do you like in the Lower Mainland that might be undervalued?

I like Coquitlam a lot. We just sent out an email today about a project called Loma with options starting at $299,000. There’s a lot of development and employment in Coquitlam and there’s the SkyTrain, which has great access to downtown and other parts of the city and is extending. Richmond is another great option for investors or owner-occupiers because a lot of the mainland Chinese money has been pulled out of Vancouver, so you can get very high quality, new condo developments or pre-sales for good prices. The Canada Line train also gets you into Vancouver quickly and easily. There’s great value for money out there.

Any thoughts on outside of the Lower Mainland but within BC?

I like Squamish a lot, and the market has been very active. This is likely because people established in their careers and living in the city are moving out to places like Squamish, Nanaimo, the Okanagan, or Victoria where they can have the same or better quality of life but with far less expensive housing options. They can have the lifestyle they appreciate, like mountain biking, sailing, hiking, snowboarding, skiing, etc. As businesses get more comfortable with remote work, more people are moving out to these places and the markets are doing quite well, both for investors and owner-occupiers.

Compared to any three-month time frame in 2018 or 2019, I’ve never had so many clients tell me they’re buying real estate during the COVID-19 period. These people didn’t lose their jobs and had money but were sitting on the sidelines. I’ve had several clients buy in Nanaimo, Vancouver, Richmond and Coquitlam.

Do not try to time the market. Whether the market’s up or down, you’re only buying for yourself or your investment. Finding the right product and working with the right people is way more of a determining factor.

What are your predictions for the market?

If we continue to see the acceleration of sales volume, price increases are not far behind. The sales ratio dictates price increases (this is the amount of sales as a percentage of listings). If you get above 12% sales of the available listings for a while, you start to see prices rise, and we’re hitting that. With ultra-low interest rates and signals from the Federal Government and Bank of Canada that they’re keeping interest rates low, we’ll see price increases, too. Governments will let prices rise despite what they say about maintaining housing affordability – this helps to reflate the economy quickly, it puts people back to work, and it creates tax revenues – all things we need in the economy because of COVID-19.

Do you work in Squamish for investment purposes?

Absolutely. I work closely with a great colleague in Squamish who is very closely tapped into what’s happening with investors and owner-occupiers in pre-sales or existing properties. I’d be happy to make introductions and add you to our pre-sale lists across Squamish, Victoria, Nanaimo, the Lower Mainland, and the Fraser Valley. Also, PCS is great for monitoring the market and showing sale prices.

With the current low interest rates and majority of pre-sale projects coming back to market, actual possession will still be a few years out with the risk of interest rates going up. Can we expect an increase in pre-sale agreements or contract sales in the short-term?

It depends. We always make sure the people we’re working with can, with 100% certainty, go forward with the contract when it completes. There aren’t too many pre-sales right now with projects still on hold, and developers don’t like to allow assignments, so we’re not seeing many. There are some but not as many as in the past. You may see more as developers become more confident with COVID-19.

For those who are serious about researching real estate, I encourage you to reach out and get the report Mike has. It’s full of great statistics and summaries of what’s happening. What I’m doing with clients is reviewing strategies to ensure they’re taking advantage of opportunities in a safe way, whether it’s in the real estate or stock market. Some of what we do is look at whether two or three property investments make sense, but not a lot of financial advisors have experience or work with real estate. If you’re looking for someone to review your investments, you can contact me for a free initial consultation to see if I can add value to your situation.

Vancouver Real Estate Stats Graph

Statistically, you’re better off with an advisor:

Graph

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Victoria real estate market continues to adapt in the changing times

A total of 979 properties sold in the Victoria Real Estate Board region this July, 38.7 per cent more than the 706 properties sold in July 2019 and 21.2 per cent more than the previous month of June 2020. Sales of condominiums were up 11.2 per cent from July 2019 with 239 units sold. Sales of single family homes were up 61.1 per cent from July 2019 with 559 sold.

“If we look at the numbers alone, June and July were unseasonably busy months and the number of sales this month are on the higher end of our market for a typical July,” says Victoria Real Estate Board President Sandi-Jo Ayers. “But we are not in a typical season. We cannot derive an ongoing trend nor forecast by looking at activity because we know the market is subjected to unusual factors amidst a health crisis. Our spring market was delayed because of the pandemic. It is likely that our spring demand moved into summer now that folks are moving around our community more freely. Time will tell if these factors are resulting in a very compressed cycle of activity or if this trend will persist in the fall.”

There were 2,653 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of July 2020, 10 percent fewer properties than the total available at the end of July 2019 and a 1.7 per cent decrease from the 2,698 active listings for sale at the end of June 2020.

“A big factor in our market right now is that we continue to see this very long term, very low supply of inventory which puts pressure on our market and prices,” adds Ayers. “Though we had a good number of new listings come to market this month, many of those listings were snapped up by buyers. Our average active listings for July over the past ten years is 3,767 but our current local inventory is more than a thousand properties less than that. Right now we have a lot of demand for single family homes – without the numbers to meet demand – prospective buyers are often entering into multiple offer, competitive situations or are unable to find appropriate properties. It’s a challenging market to navigate, but your REALTOR® is standing by to help should you wish to discuss a strategy to buy or sell a home in our current market.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in July 2019 was $861,100. The benchmark value for the same home in July 2020 increased by 5.7 per cent to $910,400, 1.6 per cent more than June’s value of $896,200. The MLS® HPI benchmark value for a condominium in the Victoria Core area in July 2019 was $520,900, while the benchmark value for the same condominium in July 2020 increased by 1.7 per cent to $529,900, 0.8 per cent more than the June value of $525,600.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Statistics for Related Areas

Statistics from Recent Months

Hot Areas to Invest in Vancouver

July 10, 2020

Christian Dy, Latitude West Financial

Mike Stewart, Oakwyn Realty Downtown
Top producing realtor since 2005
vancouvernewcondos.com or mikestewart.ca

Disclaimer Photo

What is happening now with real estate in the Vancouver area?

The elephant in the room right now is the COVID-19 situation. In the past couple of months, we saw sales volumes fall about 45% (this refers to the amount of properties that sell or change hands). But this has passed us and numbers are up dramatically. Interestingly, the sales volumes in June 2019 were lower than they are now! As of June 2020, they are up 17.6% from June 2019. So, that’s a lot of positivity and good news. However, June 2020 volumes are about 21% below the 10-year average for numbers of sales.

 Prices, on the other hand, have been relatively stable. The reason for this is the wealth effect situation: central banks and governments using super low interest rates and quantitative easing (printing money) and massive government deficit spending to increase the value of real estate and stock portfolios. This keeps the owners of real estate and stock portfolios spending. It has been successful because prices are stable or rising, not decreasing. 

It’s great you’re getting to the root of the matter. Prices are holding steady, if not going up. But what’s going on with offers? If people are priced correctly, are we getting any big discounts, or do you have to come in close to asking price these days?  

It really depends on the type of property and where it’s located geographically. For instance, single-family houses in East Vancouver are on fire right now. There is a massive amount of demand and we’re seeing multiple offer situations, they’re selling quickly, and there’s a lot of turnover. On the other hand, one-bedroom condos in downtown Vancouver that aren’t beautiful top-tier, owner-occupier units are quite slow. Segments for properties over $3 million on the westside of Vancouver and in North and West Vancouver are selling slowly and it’s quite quiet, so you can negotiate.

In a hot area like East Vancouver, should I even consider going lower than listing price (for instance, $1.8 million)? 

It really depends on what it is. There’s a difference between asking price and actual value – if that $1.8 million property is really only worth $1.6 million, then absolutely you want to go in low. However, you also see where a $2 million property is listed at $1.8 million to create a multiple offer situation, so you may need to go in at $2 million. It’s very much a case-by-case thing where you need good representation by someone who knows the area and the product who can advise on the value to get you what you want. That is the most important thing.

I agree. I’ve bought so much real estate in my life that I’ve realized there is no one blanket answer. So many realtors use that strategy to get huge lineups because they’ve purposely underpriced a property and it later sells for above asking. Realtors pick a marketing strategy to generate interest and buzz. 

Absolutely. The whole selling process if you’re hiring a realtor is to get you a result you want based on your needs – whether it’s top dollar, selling to the right people, etc. Whether you’re buying or selling, good advice is extremely important. 

In terms of slower products and places – for instance, a two-bedroom condo downtown at $600,000 – what do you see happening and what advice would you give when someone shows interest?

 For well priced places in downtown Vancouver, you can’t go too low. 10% below asking might be seen as insulting and may be problematic, but it all depends on what the property’s listed for. One-bedroom units without a water view or anything fancy are slow right now, but historically they’ve been very hot. So, there are opportunities for investors looking for good product to do well in the medium to long-term. With 7,000 jobs coming into downtown Vancouver from Amazon and Providence Health Care’s hospital going in at Station Street just east of the downtown core, many people with high incomes will want to live somewhere cool. With more basic or non-luxury units downtown, there is room to negotiate and there are opportunities. These might be units in buildings that are 5-15 years old, on the third to 15th floor, with a view of another building, which are great to rent out for maybe $2,000-2,300 per month but maybe not to live in for 10-15 years. You can get these from the high $500,000s to the low $700,000s, so cap rates are not amazing but the units are a nice stable investment with good capital appreciation potential and great in an investment portfolio. It’s odd that demand for them is low right now, but investors may still be on the sidelines. 

What are some other opportunities in the Lower Mainland?

Squamish is on fire right now because of the whole lifestyle shift that’s coming with COVID-19. People established in their careers have demonstrated to more mainstream-minded or older people in their organizations that they can work effectively remotely. Places like Squamish are doing really well with big volume increases and good pricing. You also get a lot of people moving to Victoria because you can have the same kind of lifestyle (climate, outlook and culture) without the extremely high real estate prices of Vancouver. 

In the past month, mortgage rules have tightened up for people, especially those who are putting less than 20% down. What’s going on and how has it affected buyers?

We’ve seen interest rates go to all-time lows. During the COVID-19 crisis, banks weren’t passing on the low interest rates they received from the Bank of Canada in order to build a profit buffer to protect themselves in case things got worse. Now that things are getting better, the banks are passing along these low interest rates. The Department of Finance, which oversees mortgages in Canada and reports to the Federal Cabinet and Prime Minister, have tightened up mortgage rules to throttle back the anticipated market activity from the ultra-low interest rates. It could have been done as a political move to say the Federal Government is doing something about housing affordability. We haven’t seen a huge impact though. It will probably have an effect on other places more so than Vancouver

Last time you shared some stats from the Real Estate Board of Greater Vancouver, from a report release (you can contact Mike for the report). Some things I like is it breaks things down per city (such as Burnaby, Delta, West Vancouver, Langley, etc.) As an example, during January to June 2019 in North Vancouver, the median price was $1.5 million for a detached home and the number of sales was 135. This year during the same period, the median was $1.63 million for the same thing. Just in June 2020, the median was $1.7 for a detached home. Across the other cities, the same trend is happening: numbers from last year to this year have gone up. As well, the number of sales have gone up for the same periods. This data is incredibly important when deciding to buy or sell because it gives us an idea of trends and what’s out there in specific areas, whether it’s attached, detached, or an apartment.

I can definitely forward this report to anyone who’s interested, also the same for the Victoria and Fraser Valley Real Estate Boards’ reports. The basis of making good real estate decisions is having good data and information. I do a market analysis on properties my clients are interested in buying or selling. People need to know what a property is worth to make good decisions, and to plan for taxes and investments, along with lifestyle spending.

To summarize, prices have gone up since last year and have been trending upwards. Sales are going up and certain areas, like East Vancouver, are quite hot in terms of asking, close to asking, and multiple offers. Great investment opportunities exist with single-bedroom, downtown units. 

Questions

How has COVID-19 affected things such as plans for the SkyTrain expansion into Vancouver? Are things still on track?

COVID-19 has delayed everything by 3-6 months but everything is on track. More large government infrastructure spending may be coming to support the economy; the government wants to ensure spending continues. These kinds of projects create massive amounts of jobs. The Broadway corridor SkyTrain is still going forward and we recommend that area to buy. You can get a simple one-bedroom condo, rent it out, and sell it to a developer in 5-10 years. We’ve seen people get a minimum of 50% above market value to 3-4 times the market value for these units.

Over the past couple of years, presale prices have not been incentivized. Developers seem to price any potential gain for when the project is due to complete 2-3 years down the road. Is that still the case?

It depends on the developer, the project, and where it is. You see this more downtown with premium units. The problem now is the business case for developing premium stuff just isn’t there – it’s a tough sale. Developers are going more into the suburbs where they can build and sell cheaper. Presales will always be more than existing property, just like with cars. They are priced at what the future completion value is, but this makes sense. Units in the suburbs tend to be on par with the rising market value by the time they complete. There are often incentives the developer or marketing company don’t talk about that we as presale specialists know about in advance, which we can tell you about if you add yourself to our email lists.

What is the future outlook beyond a few months, into next year? I keep hearing that impacts from the economy, such as COVID-19 and unemployment, are really going to hit property values in about a year or so.

Your crystal ball is about as good as mine, but the jobs that were lost were jobs that were easy to lose and easy to rehire (such as servers, airline staff, and other industries that don’t pay people enough to buy real estate). In my anecdotal experience and from what I’ve seen, the people who can afford real estate didn’t get laid off (professionals like doctors, lawyers, and accountants). You see this in the stats – the people who lost their jobs primarily didn’t own real estate or couldn’t afford to. The Vancouver Sun mentioned this, too.

 I personally don’t see a big crash coming in 6 months to a year or beyond a year, because the government can just continue to spend, print money, and stimulate as they have. Inflation, which would be the big issue, hasn’t been the problem – it’s the risk of deflation. We haven’t seen inflation from the massive stimulus of 2008-2009.

Also, the people who were laid off will work again and the businesses that were shut down will be replaced by new ones that started up. In the US, the job numbers were better than people expected. Many people are still working, doing business, and making money but not spending money. They’re saving and going out less. In the next 3-6 months, a lot of people will have a lot to spend. 

I agree. The Vancouver market tends to hold its value; people tend to want to come here. The 2008 crisis and the tech bubble didn’t stop this. The government keeps stepping in to ensure businesses don’t collapse. 

Conclusion

  • Don’t try to time the market. If you have the opportunity to buy and find something you like, you should buy. Sell if you need to sell.
  • I review clients’ strategies and ensure they’re taking advantage of opportunities in a safe way, both in real estate and in the stock market.
  • We do analysis for and educate clients, such as on buying multiple properties.
  • You should use a financial advisor. Statistics show people who invest on their own compared to those who invest where they have information increase their wealth.
  • If you don’t have a good financial advisor, connect with me to have a conversation. I love real estate and encourage my clients to invest in it.

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Victoria real estate market impacted by many different factors in June

A total of 808 properties sold in the Victoria Real Estate Board region this June, 9.2 per cent more than the 740 properties sold in June 2019 and 76.8 per cent more than the previous month of May 2020. Sales of condominiums were down 3.2 per cent from June 2019 with 209 units sold. Sales of single family homes were up 16.8 per cent from June 2019 with 460 sold.

“This June we saw competing factors from all different sides of the real estate equation,” says Victoria Real Estate Board President Sandi-Jo Ayers. “If all we do is look at numbers, we see a fairly normal June, in the midst of a very not normal world. The impact of COVID-19 on our entire economy continues. And while some buyers and sellers are slow to emerge from isolation, others have been highly active since the start of Phase 2 of BC’s Restart Plan. Because of the pandemic, an eviction order that prohibited a landlord from ending a tenancy was introduced. The order may have kept some homes from going to market. The portion of this order that prevented a seller from providing vacant possession of a tenanted home was lifted late this month, which may bring some listings to market that had been stalled. Due to the pandemic alone, we have multiple factors influencing the inventory and sales in our market.”

There were 2,698 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of June 2020, 11.3 percent fewer properties than the total available at the end of June 2019 but a 6.1 per cent increase from the 2,544 active listings for sale at the end of May 2020.

“Additionally, the Canada Mortgage and Housing Corporation announced changes that start July 1 which will reduce the borrowing power of some buyers who insure through CMHC,” adds Ayers. “This may have pushed some demand forward – although there are alternate suppliers of mortgage insurance. Ongoing low inventory levels also mean that we are seeing a fair number of multiple offers. The condo market is slightly softer in terms of sales numbers. This may be in part due to the recent strata insurance issues which caused concern for owners and sellers. The government promised this month to begin to address the insurance issue, so there may be some relief on the horizon. These are not normal days for local real estate, nor is this month a signal of a return to normal, regardless of the numbers. That said, buyers and sellers are successfully navigating our market with the help of local REALTORS®, who know how to implement health and safety protocols and understand the complexities of our current market. As always, I recommend you consult your Realtor to understand what is happening in the moment.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in June 2019 was $861,800. The benchmark value for the same home in June 2020 increased by 4 per cent to $896,200, 1.2 per cent more than May’s value of $885,400. The MLS® HPI benchmark value for a condominium in the Victoria Core area in June 2019 was $519,100, while the benchmark value for the same condominium in June 2020 increased by 1.3 per cent to $525,600, 1.6 per cent less than the May value of $534,300.

 

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria real estate activity picks up as restrictions ease

A total of 457 properties sold in the Victoria Real Estate Board region this May, 46.1 per cent fewer than the 848 properties sold in May 2019 but 59.2 per cent more than the previous month of April 2020. Sales of condominiums were down 55.7 per cent from May 2019 with 108 units sold. Sales of single family homes were down 42.9 per cent from May 2019 with 254 sold.

“Our market continues to respond to the current health crisis,” says Victoria Real Estate Board President Sandi-Jo Ayers. “Activity in real estate right now echoes the activity in our broader community – as restrictions gradually begin to lift – so too have our sales and listings numbers. Of course, like any industry, we do not expect a sudden shift back to any kind of normal. That said, one theme that persists in our market is that well-priced properties in high demand areas continue to see multiple offers. Demand exists and we continue to have motivated buyers searching for their perfect home.”

There were 2,544 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of May 2020, 15.7 percent fewer properties than the total available at the end of May 2019 but a 10.4 per cent increase from the 2,305 active listings for sale at the end of April 2020.

“If you’re considering buying or selling a property right now you will find the experience different than pre-pandemic,” adds Ayers. “REALTORS® are doing our part to ensure that there is not a resurgence of COVID-19 in our community by following government health and safety guidelines, by leveraging technology to facilitate many aspects of the real estate transaction virtually and by implementing various clean showing protocols. Your Realtor will navigate the new processes and requirements to keep you, your property and our city safe and healthy.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in May 2019 was $863,000. The benchmark value for the same home in May 2020 increased by 2.6 per cent to $885,400, 0.1 per cent more than April’s value of $884,600. The MLS® HPI benchmark value for a condominium in the Victoria Core area in May 2019 was $516,400, while the benchmark value for the same condominium in May 2020 increased by 3.5 per cent to $534,300, 0.1 per cent more than the April value of $533,600.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,380 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria Spring market far from the usual as real estate continues to react to pandemic

A total of 287 properties sold in the Victoria Real Estate Board region this April, 58.8 per cent fewer than the 696 properties sold in April 2019 and 52.8 per cent fewer than the previous month of March 2020. Sales of condominiums were down 64 per cent from April 2019 with 73 units sold. Sales of single family homes were down 55.8 per cent from April 2019 with 163 sold.

“We continue to see the impact of the COVID-19 pandemic on the local real estate market,” says Victoria Real Estate Board President Sandi-Jo Ayers. “Sales numbers are much lower than what we expected to see this spring and new listings are slow to come to market as owners wait to see what our community’s trajectory is over the course of this pandemic. As a result, the available inventory of properties for sale remains lower than in April last year. Like so many other industries, much of the real estate market is watching, waiting and adapting.”

There were 2,305 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of April 2020, 16.2 percent fewer properties than the total available at the end of April 2019 but a 2.4 per cent increase from the 2,252 active listings for sale at the end of March 2020.

“Real estate services and REALTORS® were declared an essential service by our province in March in order to protect consumers who need to make real estate transactions during this time,” adds Ayers. “This responsibility has opened opportunities for our profession to adapt our way of doing business to ensure our community’s health is protected. Technology has allowed us to move much of our work online. Now you can participate in an open house from the comfort of your couch and manage your contracts and negotiations securely online. Of course, the vast majority of transactions still require an in-person showing at some point and so local Realtors are ensuring they are adhering to the advice of the Provincial Health Officer. We know that we are in complex times, but also that some people need to buy and sell. Our message has been and will be moving forward – if you need us, we are here.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in April 2019 was $843,500. The benchmark value for the same home in April 2020 increased by 4.6 per cent to $882,700, 0.6 per cent more than March’s value of $877,700. The MLS® HPI benchmark value for a condominium in the Victoria Core area in April 2019 was $512,700 while the benchmark value for the same condominium in April 2020 increased by 3.5 per cent to $530,700, 0.2 per cent less than the March value of $531,900.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,380 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria real estate market shakes off winter doldrums

A total of 563 properties sold in the Victoria Real Estate Board region this February, 33.7 per cent more than the 421 properties sold in February 2019 and 37 per cent more than in January 2020. Sales of condominiums were up 35.7 per cent from February 2019 with 175 units sold. Sales of single family homes increased 23.7 per cent from January 2020 with 271 sold.

“February brought the bloom of an early spring market,” says Victoria Real Estate Board President Sandi-Jo Ayers. “Sales numbers are up substantially from last year, which in part indicates that our spring market may have arrived a bit earlier than a lot of our local blossoms. Additionally, we need to consider that last year’s sales activity was quite weak until April and May. Despite a thirty plus percent increase in total sales over last year, our ten-year average for total sales in February is 537, so we are within less than five per cent of our long-term average for the month.”

There were 2,127 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of February 2020, 4 properties fewer than the total available at the end of February 2019 and an 8.6 per cent increase from the 1,958 active listings for sale at the end of January 2020.

“One of the most prominent aspects of our market right now is this continued low inventory,” adds Ayers. “Our ten-year average active listings for the month of February is 3,007. We concluded this month with just over 2,000 active listings, which means a lot less choice for consumers, more pressure on pricing and multiple offers.”

February 2020 Victoria stats

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in February 2019 was $838,800. The benchmark value for the same home in February 2020 increased by 3.5 per cent to $868,100, 1.1 per cent more than January’s value of $858,500. The MLS® HPI benchmark value for a condominium in the Victoria Core area in February 2019 was $503,600 while the benchmark value for the same condominium in February 2020 increased by 4.7 per cent to $527,400, 1.2 per cent more than the January value of $521,000.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,380 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria real estate market returns to traditional sales numbers, but low inventory persists

A total of 411 properties sold in the Victoria Real Estate Board region this January, 24.9 per cent more than the 329 properties sold in January 2019 and 2.2 per cent more than in December 2019. Sales of condominiums were up 6.3 per cent from January 2019 with 118 units sold. Sales of single family homes increased 31.6 per cent from January 2019 with 200 sold.

“Our new year is already showing a strong distinction from the year previous,” says Victoria Real Estate Board President Sandi-Jo Ayers. “We’ve returned to more traditional January sales numbers – which tend to be over 400 sales. Unfortunately, we have not seen a corresponding increase in listings alongside the demand, so buyers in the low- to mid-price segment of our market may find themselves in competition for desirable properties. Our market is challenging and at times like these the services of your local REALTOR® are invaluable.”

There were 1,958 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of January 2020, 6 properties more than the total available at the end of December 2019 and a 4.8 per cent decrease from the 2,057 active listings for sale at the end of January 2019.

“Pressure on our market has been slowly returning,” adds Ayers. “With not enough inventory to satisfy demand, people occupying the middle rung of our property ladder have limited options – which means less movement to make room for those hoping to move or to buy their first homes. Eighteen months ago, the provincial and federal governments introduced demand side measures, which we can now see have not been successful in making homes more attainable in our community. Since demand side measures aren’t working, the Board hopes that all levels of government will turn their attention to supply. Our municipalities working with developers to cut red tape and reduce costs should help to introduce more housing opportunities and alleviate some pressure.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in January 2019 was $846,900. The benchmark value for the same home in January 2020 increased by 1.4 per cent to $858,500, 0.4 per cent more than December’s value of $855,000. The MLS® HPI benchmark value for a condominium in the Victoria Core area in January 2019 was $500,500, while the benchmark value for the same condominium in January 2020 increased by 4.1 per cent to $521,100, slightly more than the December value of $520,700.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,380 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria Real Estate Market wraps up a relatively flat year for home sales

A total of 402 properties sold in the Victoria Real Estate Board region this December, 7.2 per cent more than the 375 properties sold in December 2018 and a 30.3 per cent decrease from November 2019. Sales of condominiums were up 17.5 per cent from December 2018 with 121 units sold. Sales of single family homes increased 13.8 per cent from December 2018 with 198 sold.

A grand total of 7,255 properties sold over the course of 2019, 1.47 percent more than the 7,150 that sold in 2018. 2019 sales came in at slightly under the ten-year average of 7,413 properties sold.

“Overall, our market throughout 2019 can be characterized as still active, slow to grow and low in supply,” says 2019 Victoria Real Estate Board President Cheryl Woolley. “Last year we saw many prospective buyers sit on the sidelines waiting for inventory to be added. As a result of this unmet demand, there was and continues to be a push from consumers to create townhomes and condos at accessible price points. We began 2019 discussing the potential impact of various taxes and lending rules introduced by the federal and provincial governments that were designed to calm housing market activity – although this activity had already begun to slow following our hyper-active market in 2016/17. The most impactful government change we saw was the tighter mortgage lending rules, which lowered consumer borrowing power and made many unable to qualify for the value of mortgages they had in the past, therefore compressing more demand into our mid- and lower-priced property market.”

There were 1,952 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of December 2019, a decrease of 18.6 per cent compared to the month of November and a 1.8 per cent decrease from the 1,988 active listings for sale at the end of December 2018.

“Constant demand on this middle housing segment has put a moderate amount of pressure on pricing,” adds Woolley. “And although we did not see huge price increases though 2019 like we did in the run up through 2016, we do see buyers entering into multiple offer situations and competing for properties. The high end of the market – over $1.5 million – has been softer, which is nice for a very small percentage of buyers in our area, but difficult on sellers who have seen some equity erode. The theme heading into 2020 does for now appear to be the limited selection of single-family homes and growth in pressure for more condos and townhomes. What remains consistent is that in this complex market, buyers and sellers value the assistance of their REALTOR® to navigate one of the biggest purchases most will make in their lifetime.”

Victoria Real Estate Board Dec19 Stats

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in December 2018 was $860,400. The benchmark value for the same home in December 2019 decreased by 0.6 per cent to $855,000, slightly less than November’s value of $855,400. The MLS® HPI benchmark value for a condominium in the Victoria Core area in December 2018 was $503,000, while the benchmark value for the same condominium in December 2019 increased by 3.5 per cent to $520,700, slightly more than the November value of $517,000.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,380 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria Real Estate market remains competitive

A total of 577 properties sold in the Victoria Real Estate Board region this November, 15.9 per cent more than the 498 properties sold in November 2018 and a 6.8 per cent decrease from October 2019. Sales of condominiums were up 5.9 per cent from November 2018 with 161 units sold. Sales of single family homes increased 15.4 per cent from November 2018 with 308 sold.

“We continue to see low inventory and strong demand for low to mid priced properties in our area, which is pushing pricing up on condos and single family homes that fall within that segment,” says Victoria Real Estate Board President Cheryl Woolley. “It is a challenging time for those shopping for properties in that price range as they can often find themselves in a competing offer situation.

” There were 2,397 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of November 2019, a decrease of 9.3 per cent compared to the month of October, but a 2.3 per cent increase from the 2,343 active listings for sale at the end of November 2018.

“The market this year is behaving as we’d expected, in the wake of tighter mortgage requirements and after the rapid pace of price increases we saw two years ago,” adds Woolley. “Appropriate pricing and awareness of market trends are essential right now if you want to buy or sell a home in our area. That is why it is important to have a Realtor guide you through the process. It’s worth getting this professional help, for what likely will be the biggest purchase or sale of your lifetime.”

Victoria Real Estate Board Statistics November 2019

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in November 2018 was $865,800. The benchmark value for the same home in November 2019 decreased by 1.2 per cent to $855,400, slightly less than October’s value of $857,700. The MLS® HPI benchmark value for a condominium in the Victoria Core area in November 2018 was $501,300, while the benchmark value for the same condominium in November 2019 increased by 3.1 per cent to $517,000, slightly more than the October value of $511,600.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,389 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria Real Estate market impacted by low inventory, consistent demand

A total of 619 properties sold in the Victoria Real Estate Board region this October, 3.5 per cent more than the 598 properties sold in October 2018 and a 0.5 per cent increase from September 2019. Sales of condominiums were down 1.1 per cent from October 2018 with 178 units sold. Sales of single family homes increased 10 per cent from October 2018 with 318 sold.

“This month’s overall numbers are very similar to the numbers we saw last year,” says Victoria Real Estate Board President Cheryl Woolley. “It’s interesting that last month we saw a large uptick in condo sales, but this month is fairly flat when compared to last year. This shows that we are not yet seeing a trend in property types.”

There were 2,643 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of October 2019, a decrease of 6.4 per cent compared to the month of September, but a 5.3 per cent increase from the 2,510 active listings for sale at the end of October 2018.

“There has been a slight increase in our inventory from October last year,” adds Woolley. “The current inventory is likely not enough for home buyers to feel they have a lot more to choose from – which in turn puts pressure on pricing for homes in desirable locations and price points. It’s not uncommon to see multiple offers in many of our market segments. Your local Realtor will be able to help you understand the intricacies of our current market and what you can expect at the time you decide to buy or sell a home.”

October 2019 Statistics for Victoria

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in October 2018 was $878,900. The benchmark value for the same home in October 2019 decreased by 2.4 per cent to $857,700, slightly more than September’s value of $846,500. The MLS® HPI benchmark value for a condominium in the Victoria Core area in October 2018 was $503,200, while the benchmark value for the same condominium in October 2019 increased by 1.7 per cent to $511,600, the same as September’s value.

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of Realtors. The Victoria Real Estate Board represents 1,383 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria Real Estate Market shows increased interest in condos and townhomes

A total of 616 properties sold in the Victoria Real Estate Board region this September, 15.6 per cent more than the 533 properties sold in September 2018 but a 6.8 per cent decrease from August 2019. Sales of condominiums were up 48.3 per cent from September 2018 with 221 units sold. Sales of single family homes decreased 1.1 per cent from September 2018 with 282 sold.

“September’s statistics clearly demonstrate that Victoria continues to have a stable real estate sector and is a desirable place to live,” says Victoria Real Estate Board President Cheryl Woolley. “While sales are up compared to the same month last year, our inventory remains low, which may create challenges for people trying to get into the market in certain categories.”

There were 2,823 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of September 2019, a decrease of 0.5 per cent compared to the month of August but a 6.7 per cent increase from the 2,646 active listings for sale at the end of September 2018.

Residential Property Sales In The Victoria graph

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in September 2018 was $878,500. The benchmark value for the same home in September 2019 decreased by 3.6 per cent to $846,500, slightly less than August’s value of $847,300. The MLS® HPI benchmark value for a condominium in the Victoria Core area in September 2018 was $503,600, while the benchmark value for the same condominium in September 2019 increased by 1.6 per cent to $511,600, lower than August’s value of $518,100.

“We saw increased activity in the condo and townhouse market with an almost 50 per cent year-over-year sales increase in condos,” adds President Woolley. “It may be too early to call this a trend towards condo purchases, but this is a number to watch through the fall to see if buyers continue opting for condos and townhomes as more new developments are added to the market in highly desirable locations, with price points often lower than a single family home.”

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of Realtors. The Victoria Real Estate Board represents 1,383 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

Victoria real estate summer sales and inventory levels follow historic patterns

A total of 661 properties sold in the Victoria Real Estate Board region this August, 11.3 per cent more than the 594 properties sold in August 2018 but a 6.4 per cent decrease from July 2019. Sales of condominiums were up 4.1 per cent from August 2018 with 203 units sold. Sales of single family homes increased 15.5 per cent from August 2018 with 351 sold.

“August could be considered a status quo month for real estate in greater Victoria with entry-level homes selling quickly when priced appropriately, and higher-end properties moving at a slower pace,” says Victoria Real Estate Board President Cheryl Woolley. “As expected, we’ve seen relatively stable pricing, with an uptick in sales – particularly single family homes. Unfortunately, summer has been accompanied with a slowing of new inventory coming onto the market, which suggests it is a good time for prospective sellers to consult with their REALTOR® about selling in the fall market.”

There were 2,838 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2019, a decrease of 3.8 per cent compared to the month of July but a 12.7 per cent increase from the 2,519 active listings for sale at the end of August 2018.

Residential Property Sales In Victoria Graphs

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August 2018 was $888,100. The benchmark value for the same home in August 2019 decreased by 4.6 per cent to $847,300, slightly less than July’s value of $858,800. The MLS® HPI benchmark value for a condominium in the Victoria Core area in August 2018 was $503,600, while the benchmark value for the same condominium in August 2019 increased by 2.9 per cent to $518,100, lower than July’s value of $523,400.

“This month the federal government opened its First Time Home Buyer Incentive program,” adds President Woolley. “We’re pleased the government is looking at creative ways to get first time buyers into homes as this program will help some buyers in Canada’s smaller markets. We look forward to hearing how the federal government plans to help first time buyers in larger markets like Victoria, perhaps by adjusting the mortgage stress test parameters and extending the length of mortgage amortizations.”

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of Realtors. The Victoria Real Estate Board represents 1,381 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

A lukewarm spring comes to an end for the Victoria Real Estate market

A total of 706 properties sold in the Victoria Real Estate Board region this July, 8.4 per cent more than the 651 properties sold in July 2018 but a 4.6 per cent decrease from June 2019. Sales of condominiums were up 14.4 per cent from July 2018 with 215 units sold. Sales of single family homes increased 2.1 per cent from July 2018 with 347 sold.

“It’s not surprising to see the numbers trending slightly upwards compared to last year as the market slowly adjusts to government changes like the B20 mortgage stress test and the continuing low mortgage interest rates,” says Victoria Real Estate Board President Cheryl Woolley. “Activity feels more normal now – more like before the real estate market in Greater Victoria saw the huge uptick in 2016 and 2017. It is a good time to buy and sell as consumers have more time to work with their REALTORS® and make decisions. We’ve seen a little more inventory added to the market compared to last year, which means more choice for buyers.”

There were 2,949 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of July 2019, a decrease of 3 per cent compared to the month of June but a 13.1 per cent increase from the 2,607 active listings for sale at the end of July 2018. 

Residential Property Sales in Victoria stats

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in July 2018 was $889,200. The benchmark value for the same home in July 2019 decreased by 3.4 per cent to $858,800, slightly less than June’s value of $859,600. The MLS® HPI benchmark value for a condominium in the Victoria Core area in July 2018 was $508,300, while the benchmark value for the same condominium in July 2019 increased by 3 per cent to $523,400, lower than June’s value of $524,100.

“July’s statistics show that our region’s housing market continues to be fairly active, despite many people being in summer vacation mode,” adds President Woolley. “Realtors continue to report strong interest in entry level homes as well as properties that are competitively priced. High end home pricing is softer, but $1.5 million dollar plus homes account for only 4.6 per cent of the total market.”

About the Victoria Real Estate Board – Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of Realtors. The Victoria Real Estate Board represents 1,390 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market.

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include: Victoria, Vancouver Islands

A lukewarm spring comes to an end for the Victoria Real Estate market

A total of 740 properties sold in the Victoria Real Estate Board region this June, 4.5 per cent more than the 708 properties sold in June 2018 but a 12.7 per cent decrease from May 2019. Sales of condominiums were down 6.1 per cent from June 2018 with 216 units sold. Sales of single family homes increased 10.4 per cent from June 2018 with 394 sold.

“June has trended lower than May for the past few years and tends to signal the end of the active spring market,” says Victoria Real Estate Board President Cheryl Woolley. “The summer months of July and August generally see less activity than the spring, as people’s attention shifts to vacation and away from real estate. This year, we have seen slightly more sales compared to June of last year. We have also seen one hundred fewer new listings enter the market this year, which continues to make a challenging market for buyers who are hoping for more options.”

There were 3,040 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of June 2019, an increase of less than one per cent compared to the month of May and a 17.1 per cent increase from the 2,595 active listings for sale at the end of June 2018.

Residential Property Sales In Victoria

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in June 2018 was $898,500. The benchmark value for the same home in June 2019 decreased by 4.3 per cent to $859,600, slightly less than May’s value of $860,800. The MLS® HPI benchmark value for a condominium in the Victoria Core area in June 2018 was $509,000, while the benchmark value for the same condominium in June 2019 increased by 2.97 per cent to $524,100, higher than May’s value of $519,300.

“It is possible that some buyers are waiting for the federal government’s new first-time home buyer incentive to roll out this September,” adds President Woolley. “The program is intended to assist first time buyers with their down payment. It’s hard to estimate how many local buyers may take advantage of the incentive, but because of the low threshold for maximum purchase price, the program may only help those in our area who seek to buy condos. This could mean a slight uplift in lower priced properties in the fall, if more buyers are enabled to enter the market. If you are interested in exploring options and strategies for either buying or selling, it would be a good time to connect with a local REALTOR®, who has the expertise necessary to navigate today’s market conditions, neighbourhoods and property types.”HPI® Benchmark Price Activity:

*Editor’s note

1. Areas covered by the Victoria Real Estate Board include:

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