The Vancouver housing market has been out of control since last year. After implementing the 15 percent foreign buyer’s tax on July 2016, the market trend is obviously stretching downward. This information was taken from the MLS Price Index by using traditional tools to monitor price fluctuation.
Aside from the foreign buyers’ tax, Federal Government also proposed a new mortgage rule wherein stress test is included for uninsured mortgages. This is to aid future risk of financial system instability. The loan amount range of a potential borrower is restricted on how much they can afford a house based on the combined family income. Therefore, people can only borrow enough to buy cheaper houses they could for now.
Currently, two real estate markets in Metro Vancouver continues to trend. The cooling market of detached homes and the surging condo market. In comparison to the given data as of July 6-13, the two markets are clearly moving in opposite direction. There are 11 detached homes sold in Vancouver. Three from West Vancouver which sold above $2 million while there are 8 in East Vancouver sold between $1.3 million and $1.8 million respectively. In this period, the average sale price for detached homes in Vancouver is $1.56 million. But it’s a different tale with the market activities for condominiums. In this period, there were 34 units sold in West Vancouver & downtown peninsula with an average sale price of $512,500. And there were 14 units sold in East Vancouver with an average sale price of $712,500. Summing up an impressive 48 total units sold.
“The two specific markets have emerged this summer as detached home market has seen demand ease to its normal level while condominium market competition is creating various offer scenarios putting upward pressure on cost for the property type”, as stated by the president of the board, Jill Oudil.
According to a Vancouver Realtor, Steve Saretsky, condo prices in Vancouver have been surging at 2.2 percent a month. So what possibly be the instance of the inflating condo market?
The condo market heats up mainly because of buyers’ competition in the market. Condominiums are in high demand right now and it pushes up the price. Despite the decline of sales at 8.5 percent year over year in June, still, there is a tight competition for supplies as seen in the current listing. It even reaches 93.2 percent in June according to Oudil.
Due to the fueling demand for condos, flipping rates are also starting to surge. Because of the price movement since early 2017, people tend to speculate about jumping into the market. And this is where speculators go. Mayor Gregor Robertson quoted that “Housing is first and foremost for homes and not to be operated as business”.
Therefore, the government should provide housing projects in order to suffice the increasing demand for condominiums in Greater Vancouver. This should be imposed in order to sustain the soaring condo prices in the city.