Sales drop in Vancouver but prices continue to rise?

New statistics released by BCREA has shown that sales of homes in Vancouver have dropped 8.8% from last year, but prices have actually increased by 2.2%

This actually makes sense because the supply is still at an all time low in the past 10 years. Less supply, more demand, higher pricing. We are seeing almost all neighbourhoods in Vancouver to be the same in pricing, as well as parts of Burnaby. Is demand strong enough that Richmond is next to be on par with pricing?

Read more about this article here. Let us know what you think!

Lift on 15% Foreign Investors Tax to come?

One of the most major things that we’ve all been talking about regarding real estate last year was the 15% Foreign Investors Tax. Did it slow down the market? Did it do what it was meant to do? What will we do with all that extra tax income? Although the answers to some of these questions will still remain unclear, Christy Clarke believes that the tax has done its duty to help correct the prices in single detached homes. Therefore, if there is a foreign investor planning on working in BC, and will be paying taxes, they can be exempt from the tax.

We are still unsure on when this exemption will start taking place, as well as any details that go along with it, but be sure to check in again soon!

Read more about this here.

Did the foreign investor’s tax really hurt our market?

Ever since the 15% tax on foreign investors, we have been hearing constantly about how the average price of a home in Greater Vancouver continues to drop. This is, in fact, true, we have seen a significant drop in the average price of homes, particularly on the West Side, and in surrounding cities that are further out. But, was the 15% tax really the cause of this drop? To be fair, the tax probably helped accelerate the rate of prices dropping, but we were already seeing some adjustments before the tax.

When the market is in such a frenzy, it grows at exponential rates. People start to get desperate after losing out on offers so the next one they see, they will bid for it and with a non-subject offer. But at the same time, prices will eventually get to a point where more and more people will feel that it just is not worth it anymore. The market for single detached homes definitely reached that point, and we were able to see a slowdown in the market. Right afterwards, the 15% foreign investor tax came out, which most likely accelerated this decline in demand.

Nowadays, we see the pricing adjusting to a more ‘acceptable’ pricing, but keep in mind, prices are still higher than what it was just 5 years ago. We still see condo prices continue to grow, though, and with some highly desirable units or lower priced units, there are still multiple offers and the units would sell for over list price. In the end, the single detached homes are still listed for millions of dollars. Townhouses are all close to $1M and up, and with an average salary, condos are still the way to go for most people. For foreign investors, 15% on $750,000 for a 2 bedroom condo downtown is a big difference compared to a $4,000,000 home, so it just directs their attention elsewhere. If we are still seeing a steady growth in the condo market, did the 15% foreign investors tax really help adjust our market?

It’s always good to consider both sides of the argument, so read more about that here.

Real estate developers donor list for BC Liberal party

The Liberal party has released their donor list as a statement of transparency, and not surprisingly, the top donors are real estate developers. Last year, $400,000 has been donated to the Liberal party by the developers of the popular building Wall Centre in Vancouver. Another large donation includes $260,000 from a developer that just finished a new building in Kitsilano just a couple of years ago.

Over the past while, the media and public have been blaming foreign investors for the unaffordability of homes in Vancouver. They claim that these investors are swiping up every home possible and causing the prices to spike to unrealistic levels. Even the Liberal Government came forward with a 15% tax on foreign investors when purchasing a home. Despite what most people thought, foreign investors only take up a small percentage of the population that purchases homes in Vancouver. So what else can be driving our pricing to such soaring heights? Many new presale projects pop up constantly all over Vancouver and surrounding areas. Developers price their condos on a predicted pricing of when the building would be sold. Currently, new projects along the Cambie Corridor are listing 2 bedroom condos at mid $900,000s and higher. In a typical market, nearby buildings will see this pricing and think to sell their own place for a similar price, and so the cycle continues. Developers purchase land years before they start building because they need to go through planning and permits from the City. So land purchased in 2010, will have sales around 2015, with projected pricing around 2020.

Why are there no discussions on how the developers drive our market?

Read more about this here.

New Year, New Market?

After the tumultuous year we’ve had in 2016, what will 2017 bring us? In December, the average price for a home in Vancouver was $948,246. This is a 3.4% drop from December of 2015. But is this a good determination of the next months to come in the new year? It’s hard to say, as demand for a home in Vancouver is still immensely strong. The Vancouver market has always been ‘ahead’ in a sense that many locals feel their pay is not enough to keep up with the rising prices. Along with this, December ’16 has seen a 34.5% drop in the number of listings compared to ’15.

So what will this mean? Prices of homes are falling, the supply is also falling, but demand is still strong. To put it simply, these are the basic building blocks of a market that will continue to soar. However, this simply cannot be, right? It’s already been so hectic over the last year, we need some time to adjust! What we have been noticing is that people are starting to feel tired of the high prices, and the clamoring of people whenever something cheaper is listed. If demand slows down, we may see the market adjust some more.

For now, we’ll have to see what the spring time brings us.

Read more about this here.