Detached Home Market Cools Down While Condo Market Continues to Rise

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.

Unaffordable Housing and Condo Market in Vancouver, a Squeeze for most Vancouverites

Unaffordable Housing and Condo Market in Vancouver, a Squeeze for most Vancouverites

Vancouver City is one of the most ethnically diverse and desired cities to live in Canada. In a city with the largest industrial centers, this is where unaffordable housing problems took place. Engaging in a lifetime home investment is a demand not only for those millennials who wish to buy their own houses or condo but also to that medium earner person who cannot afford to downpay them. Is owning a dream home in Vancouver today impossible? In an instance where housing is unaffordable, many will opt to just move to another place where living is possible. And it is very unfortunate for people to do that. In some cases, engaging into brokered nonconforming mortgage, allowing lenders to sidestep ordinary loan prerequisites. And brokers are earning incentives in this kind of market. But what about low-income earners? It could even take 5 years or longer to save for a 20 percent downpayment for the desired home that suits every lifestyle and needs. The earnings are eaten up for the mortgage payments.

Vancouver Skyline

In the issue that condo and housing market is way too high to be reached, how does government take action to the overheating crises to the local community?

Federal government implemented the 15 percent foreign buyer’s tax to address the lack of rental and housing affordability. This is a good start in viewing the fundamental change of real estate. In this way, the first-time buyers or primary residences can have a chance to invest in a more comfortable home especially when there is a need to invest in a fitted, bigger house. However, this way of helping primary residential buyers may have a negative impact on real estate agents and house flippers who buy and resell units for a profit.By some means, benefiting to the continued housing crisis. Real estate should not be viewed as a market for profit, but a home instead for community residents.

In early 2017, the government implemented a 1 percent tax to owners of thousands of vacant or empty apartments and houses (for at least 6 months of the year) persuading them to put on sale or rent. Apart from this, a random audit will be done penalizing owners who refuse to follow.

Another way to ease housing market problem is to expand affordable housing units and rental buildings for median earners. Jonathan Hayward/The Canadian press says “current number of listings haven’t been this low” and that based on March 2016 record, transactions are almost 31 percent below still. Shortage of property listings will have to be addressed. I think the government should allocate budget for building and organizing efficient and effective working methods to increase supply. Why? Because the lesser units built, the higher the demand. And probably the prices will continue to increase not until supply comes due to homebuyer’s competition in the market.

People have been speculating possible causes and solutions of this serious real estate issue, yet- Vancouverites are still squeezed. After all, Vancouver should bring back its people and let them live the way they have to be.

Canadian Real Estate Bubble: 5 Symptoms It’s Crashing Now

Canadian Real Estate Bubble: 5 Symptoms It’s Crashing Now

The days are over when investors used to see Canadian housing market through rose-tinted glasses. And it has left the trade pundits scratching their heads over confusion.  The skyrocketed housing prices of central cities like Montreal and Toronto, despite economic slump, defied sound judgment.  But 5 times it’s showing- how the end of Canadian real estate is near-

Chaotic foreign investments

The convenient immigration policy and work opportunity for students also propelled the housing price growth. The prevalent real estate trend is- a house is purchased at an inflated price. It becomes inhabited by the proprietors for few months. Then again, it gets vacated or lays empty for no apparent reason.

Not only this practice is changing the neighborhood character of Vancouver but also increasing the housing price. Additionally, the banks have lifted up the cap of loan mortgage for new immigrants. This also paved the way for the housing bubble.

Warning from CMHC

CMHC is the national mortgage insurer and only recently it has acknowledged the reality of housing marketing going bonkers. Earlier 2017, CMHC have published its study of over-valuation in 11 out of 15 Canadian metros. Among them, Ottawa, Toronto, and Montreal have shown over-saturation in the condo segment.

The chief economist of CMHC Bob Dugan had revealed in a recent interview his surprise too. How come the high pricing of housing is flouting every textbook rule of economic as well as demographic growth?  Now, only a tighter leash on valuation can put things in place.

Mortgage fraud is rising

Borrowers are aiming for houses that are beyond the reach of their spending and economic capacity. An extensive number of mortgage brokers in cohort of borrowers, have been submitting forged income documents to the bank. The buyers, who are capable of bearing higher rate of premium, are altering the bank statements. Doing this, they could qualify for the least expensive mortgage. No big surprise that, it led to inflated prices for apartments, condos or houses.

Shorting in real estate

This is a hopeless loop where the investors are selling (shorting) the stocks of prime financial lending institutions- without investing on them. Home Capital Group, Canadian Western Bank, Genworth MI Canada – the leading names in Canada’s mortgage lending industry is witnessing monstrous slips in stocks. With a puffed up housing market, it appears that, even the seasoned global investors are finding it hard to buy land properties. Rather they seem to be waiting for the bubble to burst!

Topping the ‘bubble’ index

A rational investor tends to take what’s written in popular media- with a pinch of salt. Be that as it may, when a reputed publication like The Economist calls out Canadian housing market– the topper in the bubble chart, one must take note. This is also supported by Deutsche Bank that, Canadian real estate is mostly over-estimated. So going by the trustworthy media, the housing bubble in Canada appears legit.

As stated in the above, tight regulation will halve the job of slicing inflated housing prices. This and a positive economic growth can only steer the market back into normal.

The Frothy Housing Market Of Vancouver : The Problem & Way Out

The Frothy Housing Market Of Vancouver : The Problem & Way Out

What was the costliest city in 2016 as far as real estate? No, it’s not the dashing LA or financial hub Hongkong. Rather it’s Vancouver which nobody so far counted as the top contender in UBS’s index. But what brought about such frothy housing market in Vancouver? Has the circumstance changed in 2017?

Possible explanations

Vancouver has been showing overvaluation in housing from last decade. The biggest driving force? In view of popular media and financial columnists, it’s the group forming Chinese immigrants-cum-investors. To counteract this trend, since August 2016, the foreign buyers have to shell out 15% extra tax to buy a property in British Columbia.

The housing bubble in Vancouver is still rising. So there must be other reasons such as

a) low rate of interests by national banks

b) bad debt practice among domestic buyers and

c) the influx of young professionals to Vancouver in search of jobs- thus soaring rents.

Why Seattle is better than Vancouver?

There are lots to compare between Seattle in USA and Vancouver. But why it’s better to be a landlord right now in Seattle than in Vancouver? The answer is- cap rate. The capitalization rate of a housing property is the outcome of- division of net revenue by the house cost. By mid-June 2016, it was an abysmal 2.32% in Vancouver while it was around 6.11% in Seattle. That’s three times more than the former!

The twisted mortgage system, as well as high expenses of living in Vancouver, makes it hazardous to purchase a residential property here, for anyone. If the chance arises, it’s cheaper to live in Seattle.

Renting is also bad option

Whether to rent or buy a property- it is heavily dependent on the price-to-rent metric. This is what you get after dividing the price of the property by yearly rental fee. The golden rules of price-to-rent ratio are- a) when ratio is 15 or less, it’s better to buy the house, b) when it is oscillating between 15 to 20, you are open to either rent it or purchase and live in the house itself and c) lastly, when the figure is more than 20, it’s wise to live as only a tenant.

The average price-to-rent ratio in Vancouver in 2016 was whopping 36.9%. Forget about buying, it’s not advisable to rent a property here at this moment.

Is the tide turning?

In the first quarter of 2017, the wheel is turning slowly. As indicated by Real Estate board of Greater Vancouver, the property sales dropped by 39.5% in January. The 15%extra tax for foreign nationals contributed most behind this opposite trend. Next, the precarious home loan policy implemented by the federal government, for first-time property purchasers also counts. Lastly, the natives of Vancouver’s are demonstrating the disinterest in putting up their houses for sale all of a sudden.

Though Vancouver is one of the most expensive cities in World, the real estate market is flagging slightly in recent months.  It appears, with more regulations, the housing market is finally steering into the right direction.

Things To Know Before You Buy A Business Condo In Lower Mainland

Things To Know Before You Buy A Business Condo In Lower Mainland

Lower Mainland, British Columbia is booming right now in real estate sector. The skyrocketing demand for its commercial properties is lifting up the lifestyle of this place undoubtedly. Want to know more about what propelling this growth or why you should buy a commercial condo here right now?

Land- the chief reason

The percentage growth of commercial land sales of Lower Mainland spiked an incredible 80% more in the first quarter of 2017 than that of 2016. The lower mainland is expanding, attracting new organizations, young professionals and a flourishing community along with it. The recent report of Real Estate Board of Vancouver has given the similar confirmation for a commercial land property. And if it is to believe, the hoopla around Lower Mainland land is only getting bigger here on.

Other reasons

The scarcity of land is what fuelling the demand primarily. Be that as it may, this is not the only one. Economy and rate of interest are other factors too. The anticipated 3% development growth of British Columbia economy has injected fresh blood into the already ‘alive’ market. In other times, commercial real estate takes a longer time to get sold than that of residential property. But not anymore in the lower mainland.

The optimistic economic growth has brought in the steady line-up of investors. Also, a greater presence of young professionals ensures- that there will be no dearth of talented human resource for the economy to roll along.

Promising real estate future


Historically, it has been always wise to invest in commercial property in BC’s lower mainland. In 2016, this area alone had contributed to most in the aggregate national sales of real estate. With increasing political turmoil in the south of the Canadian border, British Columbia with it’s a stable social structure and hot economy, going to pull in investor in future too.

The real estate bubble of Canada has been a constant bother since 2007. It’s only now that the government is implementing stricter regulation in the market. On off chance, you have been reluctant to purchase commercial property in BC so far, then rest assured. It’s only going to improve for lower mainland real estate.

Suitable for foreign nationals too

To stabilize the real estate bubble of Canada, the federal government has imposed an additional 15% tax for foreign nationals since August 2016. Though it has brought prices slightly down, but also acted as a dampener for non-citizen investors.

 If you are a temporary resident, who has been planning to purchase a commercial condo in lower mainland so far, this piece of news might seem discouraging initially. But fret not, as the British Columbia federal government offers a convenient provincial nominee program for outsiders. Through this, you can easily buy your dream condo without shelling out that extra 15% duty.Lower Mainland is showing a promising future for both the sellers and buyers of commercial property. Read about the market extensively, ask around the experienced brokers and afterward, take an informed decision. With Canadian economy surging ahead, you won’t mourn your choice later. This can be guaranteed.

Lower Mainland is showing a promising future for both the sellers and buyers of commercial property. Read about the market extensively, ask around the experienced brokers and afterward, take an informed decision. With Canadian economy surging ahead, you won’t mourn your choice later. This can be guaranteed.