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- 1/36 36
Active$999,000
2 Beds2 Baths1,081 SqFt6588 BARNARD DR #42, Richmond, BC V7C 5R8
Townhouse
MLS# R2928544
Listed by Royal Pacific Realty Corp.
- 1/40 40
Active$2,299,900
6 Beds4 Baths3,106 SqFt3860 KILBY CT, Richmond, BC V6X 3M9
Single Family Home
MLS# R2926615
Listed by Royal Pacific Realty Corp.
- 1/40 40
Active$2,320,000
3 Beds3 Baths2,670 SqFt10540 GAUNT CT, Richmond, BC V7E 5E9
Single Family Home
MLS# R2909935
Listed by Royal Pacific Realty Corp.
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Market Updates
Real Estate Market Intelligence October 2024
Real Estate Market IntelligenceOctober 2024 Fall has fallen and the wreath of foliage has adorned the streets. As the weather turns much cooler, the Vancouver real estate experienced a phenomenon of the decade: last September had the highest inventory (14,496 units) for the month since 2014. It was also +16.7% above the 10 year average. At the same time, despite the Bank of Canada continual rate cuts and the US Feds jumping onboard with a jumbo 0.50% cut, it has still failed to reel Buyers off the sidelines, with the September sales coming in at -26% below the 10 year average. As the opposing forces continue to pull harder, so the market continue to stretch with Buyers and Sellers views polarizing further. This may seem puzzling but when we look back only a year ago, in 2023, the Vancouver real estate market was in a under-supplied market, and at one point the inventory was the lowest in 20 years. Rate were elevated back then, but Sellers weren't selling. Fast forward to now, we have a healthy housing supply and highest inventory in a decade, yet Buyers aren't buying. Confusing? Indeed, and I think the answer is multi-fold. Firstly, the typical Canadian real estate prices has had a long history "going up fast, coming down slow." This mainly has to do with Sellers motivation, whom have purchased 5, 10, or 15 years ago, and they have built enough equity into their home that they can weather any short term downfalls. I've reiterated before that these Sellers sell when they want to, not because they have to. As for Sellers (or investors) who have to sell, they may be an estate sale (inheritance) who are looking to cash out, or over-leveraged investors who can no longer hold on. Thus, the prices on the way down is usually sticky. Secondly, the lagging effect of interest rate cuts / hikes are taking much longer to filter through the economy. Back in 2022-2023, most economist predicted that higher interest rates would cause inventory to rise. That didn't happen. Sellers were patient as some of them had locked in their rates. Again, fast forward to now with rates coming down, and most economist predicted that second half of 2024 real estate market would pick up as lower rates would spur activity. Now that didn't happen either. In fact, we saw the exact opposite. Ever since the pandemic, many traditional prediction methods are off, and more contrarian theories arise. Thus, it is possible that the prices may be flat for the next 12 months due to the healthy supply, and Buyers may still not come off the sidelines as prices remains elevated and affordability remains weak, despite rates dropping further. Thirdly, the Canadian economy is still weak, with unemployment rate at 6.6% (and rising), and 1 in 20 Canadian business have shut down (worst since pandemic). If the average household is concerned about keeping their jobs and putting food on the table, then real estate is really just an afterthought. As we edge towards the end of the year, and with two more rate cuts on the horizon, just how much these cuts will move the needle in real estate? I believe it won't have too much of an effect based on recent statistics and trends showing sales trending around -26% below 10 year average. For Sellers, most were optimistic about next Spring, but again what if the prices remain flat till then? For Buyers, perhaps the true question remains around affordability, and unless a huge price correction occurs, some will remain on the sidelines no matter how deep the rate cuts are. With the latest September inflation rate coming in at 1.6% (mainly driven by lower gasoline prices), all indicators now point to the Bank of Canada's anticipated rate cut of 0.5%. Let's see. Some of the unique trends I've been observing:1. Canadian business are shutting down at a frightening speed, with seasonally adjusted data showing 46,354 business closed in June. This is the largest scale of business closure since the pandemic in 2020. What is more worrisome is that business closure and unemployment rate tend to have a downward spiral effect. For example, when businesses close, unemployment rate goes up. People spend less as they lost their jobs, and causing more businesses to close. Are rate cuts the answer to help Canadians climb out of this hole? 2. The US Fed's jumbo rate cut of 0.5% in mid September has surprised many (myself included). Structurally, the US is in a much better condition than Canada, and for them to cut 0.5% most likely mean they already see financial cracks (possibly global) that is deteriorating at a faster pace than expected. Having said that, the currency devaluation (increasing money supply and lower value of cash) is spurring the NASDAQ to hit all time high recently. It would be interesting to see if real estate be the next investment option. 3. In another political move, the Canadian government has increased the uninsured mortgage limit from $1m to $1.5m, and also expanding the 30 year amortization period to first time home Buyers. Just when the government is saying they are helping young families with affordability, keep in mind that this "uninsured" mortgage limit increase will most likely get the Buyers' parents to co-sign on it, and not the mention the high monthly mortgage payment that will sure cripple the family's spending. The government is encouraging those to risk it all to own a home, while having a hard time putting food on the table. Binge on debt, they recommend. Simply put, the true solution to providing affordability is providing more new housing supply and not further stoking demand. 4. Much in line with the trend in the past few months, the September Vancouver real estate market continue to face more supply (+16.7% above 10 year average) and substantially less sales (-26% below 10 year average.) Last month's sales count was the lowest of the year since January 2024, and is the fifth consecutive monthly decline. Detached homes sales were performing the worst, with condos and townhouses following. In general, the Greater Vancouver market fell into a Buyer's market for the first time since April 2020 (pandemic shutdown), with 8.1 months of inventory. Detached homes make up most of that scale, with 11.4 months of inventory. Apartment and townhouses segments are considering in a balanced market. 5. The Canadian rental market saw the slowest growth since October 2021, at +2.1% year over year. This was mainly attributed to less foreign students now (half from record high) and the stoppage of temporarily working permit program. Ontario and B.C had the most significant annual rental decline, at -9.5% and -8.1% respectively. Contrarily, the annual asking rent in Saskatchewan surged +23.5%, making it the fastest growing province in Canada. 6. The latest September inflation came in at 1.6% and was mainly driven by lower gasoline prices. While this downside surprise was welcoming to many, keep in mind that other indicators of underlying price pressure were held steady. Also, the Canadian dollar took a hard hit (steepest drop in 7 years) from the weak economic data. Tread carefully. Here are the 3 highlights for September:- Total inventory has spiked to 14,496 units, which was the highest for the month of September since 2014. - September sales of 1,838 units was another dismal month, and is the worst for the moth of September since 2018. - The surge in inventory combined with weak sales has been a steady trend since the summer. This seems poised to continue into the fall and possibly winter. - September home price saw the most significant annual monthly price drop, at -1.4% (August's price drop was -0.1%). If September was an indicator of what the remaining of the year has in store, then we will most likely see further price drop, and possibly accelerating at a faster pace. Here are the in-depth statistics of the September: - Last month's sales were -26% below the 10 year September's sales average.- Month by month residential home sales remain nearly flat at +1.1% from August 2024.- Month by month new home listings surged by a whooping +33.3% compared to August 2024. - Last month's price dropped of -1.4% was the most significant monthly drop for the year. (compared to -0.1% from August) - Sales-to-listing (or % of homes sold) ratio is dipped further to 12.8%. (compared 14.3%% in August). By property type, the ratio is 9.1% for single houses, 16.9% for townhouses, and 14.6% for apartments/condos. Download September 2024 Vancouver Real Estate Market Report Single House Market Last month, the single house market feels like it's at a standstill, with sales ratio (% of homes sold) dipping further to 9.1% (compared to 9.6% in August). Monthly price took the biggest plunge of the year at -1.3% (from -0.1% in August). Typically, September is the month where Buyers return to the route and may resume their buying/selling plans. Contrarily to the traditional trend of increased sales in September, we saw sales nearly flat at 518 units (compared to 512 units in August). If summer was dull market, then the fall market for single house looked like a continuation of that. More importantly, the Buyers and the Sellers are moving further apart on price evaluation. For example, even when the Seller's (and their agents) are proactive in pricing their home BELOW their previous similar sold price (for example, a month ago), offers are still coming even lower. This has created this new reality for the Sellers, where they have to continually chase the downward market to make a sale happen, and they feel like they are losing as the months go on. As mentioned, most single house Sellers whom have bought 5, 10, 15 years ago have accumulated enough equity in their home that they do no need to fire sale. Some may choose to hold off till next Spring, where activities may pick up. However, it is also very possible that price may just stay flat till next Spring, albeit there would be more traffic. In other words, the difference is the same. If the fall-winter trend of over-supply continues for single house, I would expect the negative price growth to pick up. The Canadian's government latest program of increasing the uninsured mortgage to $1.5m may spur activities for single houses priced under that. However, keep in mind that in the Greater Vancouver area, there is very slim pickings for these homes priced under $1.5m, but the Fraser Valley such as Surrey and Langley has much more selection. This program may drive up the demand and price of entry level single houses in affordable neighbourhoods in the Fraser Valley, while the affluent neigborhoods like Vancouver Westside will see little change. For the month of September, the neighorhoods that registered most price growth are Ladner, Bowen Island, and Port Moody, at +3.1%, +2.8% and +1.8% respectively. Conversely, the neighborhoods registered the most significant price drops are Burnaby South, West Vancouver and Pitt Meadows, with -4.3%, -3.3% and -3.2% respectively. The detached home market continue to dip into the Buyer's market, with average days on market further slight improved to 39 days (compared to 41 days last month), and month-to-month average price took the biggest hit of the year at -1.3% (compared to -0.1% in August). Sales-to-listing ratio (% of homes sold) slipped further to 9.1%. (compared to 9.6% last month). Townhouse Market For the past few months, the townhouse market has continue to lead the charge in negative price growth, and in September it was no different as it took a -1.8% hit (again the most significant monthly drop for the year.) The ironic thing is, even though September's month-over-month townhouse inventory was nearly flat at +0.9%, the prices came down the most. Underneath the surface, the townhouse has the lowest days on market (29 days), compared to single house and apartment (39 days and 31 days respectively), and the least number of active listings (2,241 units). The townhouse stats do look like the strongest segment of all, but deep down, I believe that its prices are already out of the reach for most Buyers. This is especially true for the Greater Vancouver area, with average townhouse price at $1,099,200. For the same reason, many Buyers are choosing to scoot over to Fraser Valley, where average townhouse price is much more affordable at $834,400. For young families (such as those who just had a baby), the decision to move out to the Fraser Valley is much more financially logical. They can make a lateral movement from selling their Vancouver condo and adding less than $100k to upsize to a Fraser Valley townhouse. I still believe that Greater Vancouver townhouse, which once was dubbed the "next best thing" besides a single house, is simply facing a short term phenomenon. I am a believer that the pent-up demand for townhouse is there, just that once the market activities pick up (whenever that would be), this segment would likely be the first to take off. In September, the areas with the most townhouse price growths were Maple Ridge, Burnaby North and Richmond, and registering +0.8% & +0.5% (tied for 2nd and 3rd) respectively. Conversely, the neighborhoods with the negative price growth are Port Coquitlam, Vancouver East, and North Vancouver, at -5.5% and -5% and -4.3% respectively. The townhouse market stays in a balanced market, with average days on market remaining flat at 29 days (same as last month). Month-to-month sale price dipped further by -1.8% (compared to -1.2% last month). Sale-to-listing (% homes sold) ratio remain the best among all segments but dropped slightly to 16.9% (compared to 181% last month). Apartment and Condo MarketThe apartment market is easily the stickiest market now, despite its had the least monthly price drop (-0.8%) compared with other segments. This past month's stats are partly skewed due to the fact that highest monthly price growths were all in the outskirts (Squamish, Sunshine Coast, and Whislter at +13%, +12.3% and +11.7% respectively. If we strip out the outskirts, the Greater Vancouver area apartment market does feel much weaker. In nature, the apartment market is where end users and investors come together. However, in the current environment where investors are far and few between, and end users are still staying put, the accumulation of medium to luxury condos have driven to a Buyer's market and have further downward pressure on the prices above $800k. However, the entry level apartments between $500-$600k are still popular and stays in a Sellers market. As the Canadian economy trails down the weaker path, the Vancouver condo market will continue to be polarized. Have a look at Toronto, where it's currently the epicentre of the condo storm. In 2022, a report by Statistic Canada stated that 2 out of 5 (38.9%) are investments, and in Vancouver it is estimated 1 out of 3 (34.2%). Based on that, the investors who bought a pre-sale back in 2022 are now getting 15-20% less in market value. Their cash flow is now negative, and if they sell, they may have to take a $100-$150k loss. Even when the interest rate start to come down, these inventors are emotionally damaged, and it may take some time for them to return. It is also equally possibly that they may never return. Either way, the apartment market is now highly driven by end users, and as the investors are "cleansed" from this market, it awaits to be seen how the inventory will play out in the next few months. I believe there will still be more negative price growth in store, especially in the medium to higher priced segment. For the month of September, the best performing neighbourhoods for apartments are all in the outskirts, in Squamish, Sunshine Coast and Whistler, at a whooping +13%, +12.3%, and +11.7% respectively. Conversely, the areas with the most significant price drops were Tsawwassen, Ladner, and Coquitlam, with -11.4%, -11% and -2.3% respectively. The apartment and condo segment has slipped further down but remain in a balanced market, with average days dropping slight to 31 days (compared to 35 days last month). Month-to-month sale price growth remained flat at -0.8% (compared to a flat 0% last month). Sale-to-listing (% homes sold) ratio remained dipped slightly to 14.6% (compared to 17.2% last month). Here are the Three Trends I'm Observing: 1. Cold SummerFor the summer and the past three months, the Greater Vancouver market saw sales trend that were nearly -26% below average. Coincidentally, inventory is at its highest level since 2019. Many had predicted that lower rates should rekindle demand. However, that has yet to show in the current market. As we know that it takes time for any monetary policy (i.e rate cut) to filter through the economy, just what if lower rates continue to fail to entice Buyers to come off the sidelines? Would lower sales persist for the another 4-6 months? (Source: BCREA) 2. Loonie TunesAfter reports of weaker economic data and consumer spending, the Canadian dollar is set for its worst run of losses in 7 years vs. the US dollar. No matter it's gas, stocks, or real estate, there seems to be barely anywhere to hide from the heightened volatility on a global level. (Source: Bloomberg) 3. Shrinking Middle Both globally and in Canada, the gap between the rich and the poor is widening at an alarming rate, with Canada at its highest in 25 years. Ever since the pandemic, Canada's middle class is shrinking and we are heading towards a polarized society with the extreme rich and the extreme poor. No wonder many Canadians are upset with the government. (Source: Statistic Canada, Better Dwelling)
Real Estate Market Intelligence September 2024
Real Estate Market IntelligenceSeptember 2024 Hope you're having a wonderful tail end of the summer. As the weather is starting to cool, kids are back to school, and most are back to their routine. In August, the Vancouver real estate continued the trend of dull summer, where sales have been horrible (-26% below 10 years average). Many Buyers ghosted the market by going summer vacations, or simply enjoying the weather and puting their purchasing plans on hold. One of the major trends has been the surge of housing inventory throughout the year, which in August somehow ironically coincided with +20.8% above the 10 year average. Looking closely, last month was the first month this year that there was a month-to-month decline in inventory. As supply reaches highs not seen in a decade, so is demand sinking to depths not seen since the global financial crisis 25 years ago. As the market continue to polarize, it has also become increasingly difficult for both Buyers and Sellers to navigate. On one end, another rate cut of 0.25% back in early September was another scratch of the iceberg, and only amount to approx $17 less in mortgage payments of every $100,000 borrowed. Even with the rates being reduced, it is still less than the comfortable range (2.5-3%) where the Buyers want to move in. As for the Sellers, pricing the home correctly remain a monumental task in the current volatile market. As inventory piles on, most Sellers now feel like they have more competition and is playing catch up. It does seem like some Sellers are softening their stance a little, given that their home that was listing in the dull summer had no action, abd they may decide to reduce price and give it a good push. For the Canadian economy, the weakness and cracks continue to show with unemployment rate trending up again at 6.6% last month (+0.2% from July). Even with more rate cuts on the horizon, there is structurally weakness in the economy that can't be fixed in the short term. Real GDP per capita has been shrinking for eighth consecutive quarter, and household spending per capita has also been down for just as long. Most Canadian families continue to cut their discretionary spending, and not only on groceries, but even seeping into cutting their kids sports activities. Given the tough times most Canadians are facing now, I do believe there is light at the end of the tunnel. We are seeing the fixed rate have come down substantially in the last few weeks. For example, 3 year fixed mortgage rate was 4.99% in July. Now in September, it's around 4.49%. It may not be much, but these are steps in the right direction, given that only a year ago, the same rates were going as high as 5.7%. As the saying goes that lower rates usually means higher home prices. However, we are still not seeing that materialize at the moment. But when next Spring rolls around, it could be a whole different market. For the remaining of the year, I do believe prices will remain nearly flat, and that is highly dependent on the supply and overall inventory. Let's see. Some of the unique trends I've been observing:1. Canada's latest inflation is 2.5% in July (down -0.2% from previous month). As the inflation continue to ease (aka disinflation), the discussion now has shifted to recession. Even when the Canadian government denies that we are in a recession, but many Canadians (and the economic stats) indicates we have long been in one. If it weren't for the new immigrants propping up the Canadian economy, we would've been in much deeper water. 2. Latest unemployment rate came in at 6.6% (up +0.2% from previous month) and is entering into a alarming territory. If we hit do 7%, I think the Bank of Canada will be pressured to cut rates at a steeper pace. Meanwhile, younger Canadians continue to struggle to find jobs, where they compete with temporary visitors with working permit. 3. Speaking of temporary visitors with working permit, the Canadian government has officially axed the program two weeks ago. As reported earlier, this program was highly outdated (think labour shortage back in 2022) and was being abused by big corporations such as Tim Hortons. As we gear towards an imminent election (which can be triggered anytime between now and October 2025), the Trudeau's government has finally caved into the public uproar, albeit it's a bit too late. 4. The Vancouver real estate in August has been dismal, with sales plummeting -26% below 10 year average, and inventory and new supply coming in at +20.8% above the 10 year average. Needless the say, the candle is being burned on both ends. Even in the best case scenario, if the rate cuts were to suddenly materialize and the Buyers returned in droves, it will still take time for the current over-supply to digest and normalize. Like the saying "a cruise ship takes time to turn", so does the market takes time to normalize. 5. The B.C fiscal year ends with a forecasting a provincial budget deficit of $8.979 billion (+$1.1 billion from previous year), as the provincial economic situation worsens. If the projection is correct, that would be the largest deficit in BC history. Again, politicians blame lower corporate tax revenue and wildfires. How is no one responsible for reckless spending by running a disastrous deficit? If I were to run a private company with a monstrous deficit, I would definitely be on the chopping block. Also, I thought we had more taxes this year than last? 6. In a rather interesting turn of events, the Toronto real estate board has reported that for the first time since 2016, there were fewer real estate agents year-over-year (annual decline of -1,363 less agents). That is somewhat understandable as Toronto is the epicentre of the Canadian real estate plunge. With sales dropping to decade low (less income), and homes taking longer to sell (increased workload with longer sales cycle), one can imagine that real estate agents are no longer perceived as an easy and glamorous profession. Here are the 3 highlights for August:- Total inventory has dipped slightly but is still above 13,000 units. Last month was the first time since January that were was a month-over-month drop in total inventory. - August sales of 1,896 units were dismal by all means and is the worst August since 2012. - August home price remain nearly flat at -0.1% (July's price drop was -0.8%). September will be a key month of how the increased supply and demand play out. Here are the in-depth statistics of the August: - Last month's sales were -26% below the 10 year August's sales average.- Month by month residential home sales dropped by -22.6% from July 2024.- Month by month new home listings decreased by -35.7% compared to July 2024. - Last month's price dropped was -0.1% from to July 2024. (compared to -0.8% from June-July) - Sales-to-listing (or % of homes sold) ratio is 14.3% (compared 16.9% in July 2024). By property type, the ratio is 9.6% for single houses, 18% for townhouses, and 17.2% for apartments/condos. Download August 2024 Greater Vancouver Real Estate Report Single House Market In August, the single house market price have remained relatively flat at -0.1% (compared to -0.6% in July). With the sales dipping, the single house sales ratio dropped further to 9.6% (compared to 12.8% in July), and is effectively in a Buyers market. The winds has definitely changed quickly, even in as short as 6 months ago when the Spring market had the single house sector tipping towards a Sellers market. For single house Sellers, this has created a lot of uneasiness, which they are definitely not accustomed to. With inventory now near a decade high, it has caught many Sellers off-guard. Some, whom during the summer months have been firm on their pricing, are already rebooting their listings with a lower price in September in the hopes of making the sale before the end of the year. With boots on the ground, I feel that the first 3 weeks of August was soft, with very few Buyers in between. Surprising, the last week of August and first week of September came with much more traffic. Families whom have visiting my open house, whom have been thinking about upsizing from townhouse to single house, believe that now presents an opportunity for them. As previously reported, the Greater Vancouver market rarely see a Buyer's market (9 months in the past 10 years we had a Buyers market, so less than 10% of the time). But even when the rate have been cut 0.75% this year, upgrade to a single house is still a monumental task for Buyers. Ironic part is, even when single houses are "more affordable" with more room to negotiate, most Buyers are still hesitant, with some just outright cannot afford it. For the month of August, the neighorhoods that registered most price growth are Burnaby, New Westminster and West Vancouver, at +3.2%, +2.2% and +1.6% respectively. Conversely, the neighborhoods registered the most significant price drops are all in the outskirts, at Bowen Island, Vancouver West, and Burnaby North, with -4.4%, -1.4% and -1.2% respectively. The detached home market has officially shifted into a Buyer's market, with average days on market further climbing to 41 days (compared to 37 days last month), and month-to-month average price remained nearly flat at -0.1% (compared to -0.6% in June). Sales-to-listing ratio (% of homes sold) slipped further to 9.6%. (compared to 12.8% last month). Townhouse Market Last month, the townhouse market had the minor price drop of -0.5%. Albeit it is not significant, we do see the townhouse negative price growth has become a trend for the past 3 months (at -2.8%). This was somewhat surprising as townhouse had been typically the most popular (and affordable) upgrading option for the Canadian family. Exactly what has caused this segment to drop the most? My understanding is that this is the ripple effect from the apartment sector, where most seller need to sell their apartment in order to upgrade to a townhouse. In short, if these upsizers cannot sell their apartment, they cannot buy, so the delay in the buy-sell process has a domino affect on the the sale of the townhouses. Another factor is that the current mortgage rate is still outside of their comfort zone, so their townhouse purchasing plan is further delayed. One of the interesting facts is that townhouses in the Metro Vancouver area have mainly seen price drops last month, but the outskirts (Squamish, Sunshine Coast, Whistler) have seen significant gains. This can be attributed to the seasonal move for families heading to the outskirts. Thus, if we strip out such gains in these outlining neigborhoods, the Metro Vancouver townhouse should register negative price growth around -3.5%. Since September, we are already seeing a flood of new listings hitting the market. If the townhouse demand doesn't (and most likely will not) match that of the supply, we will most likely see further price drop till end of the year. In August, the areas with the most townhouse price growths were Sunshine Coast, Squamish, and registering +1.7%, +1.2% and +1% respectively. Conversely, the neighborhoods with the negative price growth are Burnaby South, Burnaby East and North Vancouver, at -3.5% and -3.2% (tied of 2nd and 3rd) respectively. The townhouse market has finally entered the balanced market, with average days on market climbing significantly to 29 days (compared to 26 days last month). Month-to-month sale price dipped further by -1.2% (compared to -0.6% last month). Sale-to-listing (% homes sold) ratio remain the best among all segments but dropped slightly to 18% (compared to 20.1% last month). Apartment and Condo MarketThe apartment market is becoming relatively unpredictable compared to other segments. Why? On one end, last month's price was literally flat at 0%, and with interest rate continue to trend downwards, it's feels like there should be more first time home buyer, correct? Well, that hasn't been the case in the past few months. In September, I expect the apartment scene to see the highest activity surge, but at the same time matched by a tide wave of new supply. In nature, the apartment market is especially sensitive the oversupply, where a Buyer can find many identical units within the same area. Thus, in the current apartment market, the decision is much more logical than emotional for Buyers. On the other end of the apartment spectrum, we see investors still treading very cautiously: the formula to generate positive cash flow is still not there yet. Thus, unless we see the first time home buyers really stepping back into the apartment market, I do believe the supply would eclipse the demand and more softness (and downward price pressure) would remain for the rest of the year. For the month of August, the best performing neighbourhoods for apartments are Richmond, New Westminster and Burnaby South, posting +1.6% and +0.8% (tied 2nd and 3rd) respectively. Conversely, the areas with the most significant price drops were all in the outskirts in Squamish, Sunshine Coast and Whistler, with -7.9%, -7.5% and -6.8% respectively. The apartment and condo segment have finally entered a balanced market, with average days further climbing to 35 days (compared to 29 days last month). Month-to-month sale price growth remained flat at -0% (compared to -0.7% last month). Sale-to-listing (% homes sold) ratio remained dipped slightly to 17.2% (compared to 19.3% last month). Here are the Three Trends I'm Observing: 1. Hello Supply, My Old FriendThe Greater Vancouver market has long been an under-supplied market. But not this year. The flood of inventory coming onto the market is matching decade highs, and thus driving some markets from Sellers market in Spring, to Balanced or even Buyers in the Summer. Port Coquitlam has seen as much as 80% inventory growth year-over-year. Downward price pressure will be high in these neigborhoods, at least in the the near future. (Source: GVR MLS & Economics) 2. Relief Since April of this year, the 5 year Canadian bond yield (which affects the 5 year mortgage rates) has been dropping steadily. As of Sept 15, it is sitting -1.1% lower than 5 months ago. As major bank continue to lower their rates, there is a sense of relief for home owners who are about to renew their mortgages soon. There is no doubt that there is weakness in the Canadian economy, but there is light at the end of the tunnel. (Source: Investing.com) 3. Unemployment vs. RentEven when there are signs of relief on the mortgage front, the investors are just not getting any slack. As Vancouver rental rates have dropped -9.4% year-over-year, this lower rents means further negative cash flow for some investors. But, lower rents surely doesn't make sense as immigrants are at a record level, right? Well, the rent drop has more to do with the unemployment rate. If an employee gets a raise, then they may choose to live better. On the other hand, if they got laid off, then they may have to move back in with their parents' home, or move in a smaller unit with a roommate. Noteworthy is that Surrey (rank no.5) was the out-liner, with a +8% rent increase. (Source: Rentals.ca)
Real Estate Market Intelligence August 2024
Real Estate Market Intelligence August 2024 Just like that, summer have passed the midway point, and July was another month of polarity in the Vancouver real estate market, which continues to get stretched on both ends: more supply and less sales. As more new listings pile on to levels not seen since 2019, total inventory are now tipping back into the balanced market. Some segments, like apartments, are really seeing competition going on full swing. Last month's total supply is +12.7% above the 10 year average. On the other hand, demand remain relatively weak and sales are -17.6% below the 10 year average. When combining the difference between the two, we are seeing an astonishing 30.3% gap. With more rate cuts on the horizon, the key difference between the Buyers and the Sellers are how they're interpreting the market in extremes. Buyers' logic are that with more rate drops on the way, they can save more money on mortgage payment if they delaying their purchasing plans. Conversely, Sellers see that rate cuts will mean home prices will bounce back, so they too are waiting. Both Buyers and Sellers are logically sound, but something's missing is the middle, which is somewhere in that 30.3% gap. To make matters more complicated, the Canadian economic outlook has continue to deteriorate, and the latest unemployment rate (June) at 6.4% translates into 1.4 million people unemployed. Temporary overseas workers, which arrived through policies in 2022 during the labour shortage, have now effectively corroded the labour market. On the provincial level, the BC government has quickly back-paddled on their recent tenanted occupancy term for Buyers, going from 4 months previously to now 3 months. As explained before, Canadian major banks provide Buyers with pre-approved mortgage that need to complete in 3 months. The BC government's 4 month policy overreached that date, legitimately broke the timeline to purchase any tenanted properties. This latest mishap has proven once again that such top policy makers do not consult the industry before making decision: they simply shoot first and ask later. At times, it feels like all levels of government, federal, provincial and municipal, are all failing at their jobs at the same time. As we move towards the latter half of the year, I believe the Vancouver real estate market will continue to experience further downward price pressure, which means it will only get worst before it gets better. Best case scenario is that the prices remain flat till end of year. Volatility in other markets (US and world stock market) along with heightened geopolitical tensions in the Middle East and Eastern Europe will like keep investors on their toes. Good news is that the US Feds has hinted their first rate cut may come as soon as September, and that should give the Bank of Canada more breathing room for more (and possibly stronger) rate cuts ahead. In the next few months though, expect more turbulence ahead. Buckle up. Some of the unique trends I've been observing:1. Canadians now are spending more on taxes than on basic necessities like food, housing and clothing combined. In 2023, average Canadian family with income of $109,235 paid $46,988 in taxes, representing 43% of their income. This is effectively one of, if not, the highest in any developed countries. If nothing is certain except death and taxes, then taxing us to death is the Canadian way to go. 2. The Vancouver real estate market in July continues to get stretched on both ends, with sales -17.6% below 10 year average, while total inventory has risen to +12.7% above the 10 year average. Unless something drastically happens, it will take a few months for the exist inventory to be digested. Overall market remain in a balanced market. 3. Canadian real estate investment remain weak, especially in big cities like Vancouver and Toronto. Higher interest rate, weak economy, and stagnating prices isn't an ideal investment environment. Many investors (such as condo or pre-sale Buyers) who made a purchase a few years back, continue to face negative cash flow on their property. All the risk is just isn't worth it for investors, who can elect to just put their money in 1 year GIC (Guaranteed Investment Certificate) around 4.5%, and have a better night sleep. 4. The Vancouver luxury market was once the darling of North America, but that has changed with activities dropping from January-June 2024. Residential home sales over $4 million fell by -16%, and sales of premium luxury properties over $10 million fell by a whooping -50%. Perhaps this has to do with the net loss of over 18,000 residents who migrate away from Vancouver? Whatever the reason is, the wealthy folks may no longer find Vancouver as attractive as it used to be. 5. BC government comically (and quickly) revised the BC tenancy policy after 30 days, with Buyer's wanting to occupy the home needing to provide a 3 months notice (previously 4 months). As most are aware that for a Buyer to wait 4 months is too long to wait, Canadian banks also won't allow such a long time frame of mortgage approvals to close. Now that the BC government has back-paddled on it, I wonder if these policy maker will continue to make decisions drawn on a back of a napkin? 6. Canadian real estate insolvency is set to surpass levels of Global Financial Crisis back in 2019. There will be approximately 240 insolvencies in 2024, which is 57% higher than 2023, and 13% higher than 2019, when a swath of bad debt triggered the global recession. Perhaps this time is different than the previous ones, as the structural problem (higher building costs, taxes, and borrowing costs) are just too much for the developers to handle. Here are the 3 highlights for July:- Total inventory has remain elevated above 13,000 units, marking another highest supplied month of July since 2019. - July sales of 2,325 units were mediocre by any means, but not the worst (compared to the recent low in July 2022 at 1,897 units) - July continue another month of price drop of -0.8% (June's price drop was -0.4%). Negative price growth will likely continue in the near future as inventory accumulates. Here are the in-depth statistics of the July: - Last month's sales were -17.6% below the 10 year July's sales average.- Month by month residential home sales dropped by -3.1% from June 2024.- Month by month new home listings decreased by -2.6% compared to June 2024. - Last month's price dropped -0.8% compared to June 2024. (compared to -0.4% in May 2024)- Sales-to-listing (or % of homes sold) ratio is 16.9% (compared 17.6% in June 2024). By property type, the ratio is 12.8% for single houses, 20.1% for townhouses, and 19.3% for apartments/condos. Download August 2024 Vancouver Real Estate Report Single House Market In July, the single house market price slipped further by -0.6%, even though this is the least in all segments. Once again, the sales ratio remain low at 12.8% (compared to 13.1% in June), and is edging towards a Buyers market, which I believe it is already in one. What was surprising is that single house Sellers, whom have been elusive for the longest time, are now continuing to come off the sidelines and listing their properties. However, Buyers remain hesitant in most neighborhoods such as Surrey, West Vancouver, and White Rock with sales ratio at an abysmal 7%, 8% and 9% respectively. There are exceptions in desirable area where demand is still strong, such as North Vancouver and Ladner (with sales ratio at 26% and 27% respectively). In reality, the market feels much softer than the numbers above indicated; there are much less traffic at open houses and private viewings are far and few between. With the market so slow, some of the Sellers may decide to delist soon, if they don't get the price that they want. As we enter into the tail end of summer, families will go on vacation and I expect the single house market may slow to a crawl. With rates remaining elevated, only the highly motivated Seller will be able to attract offers. Beware though, as my colleagues are reporting collapsed offers are on the rise, and that's usually a sign the market deteriorating further. For the month of July, the neighorhood that registered most price growth are Tsawwassen, Port Coquitlam and Maple Ridge, at +1.4%, +0.9% and +0.5% respectively. Conversely, the neighborhoods registered the most significant price drops are all in the outskirts, at Bowen Island, Sunshine Coast and Whistler, with -5.3%, -3.9% and -1.9% respectively. The detached home market remains in a balanced market but is right at the borderline of a Buyer's market, with average days on market climbing to 37 days (compared to 31 days last month), and month-to-month average price remained nearly flat at -0.6% (compared to -0.1% in June). Sales-to-listing ratio (% of homes sold) slipped slightly to 12.8%. (compared to 13.1% last month). Townhouse Market The townhouse market, once the darling of being the most bullet-proof segment of Vancouver real estate, saw another surprising month in July, with the the most significant price drop (-1.2%) among all segments. Meanwhile, drop in sales and rise in townhouse inventory remain in line with the market. I do feel that the townhouse market has got a drag to it, and one of the main reason is the knock-on effect from over-supplied apartment market. Typically, townhouse market has a good portion of Buyers (young families) looking to upsize from apartments. Such families may just had a second child and is now needing more space, as a 2 bedroom apartment is just too small for a family of 4. When this family do sell their apartment, the current market is just flooded with inventory that will take much longer to sell. Seller, too, have to adjust their mindset and plans accordingly, and that also takes time. When that happens, their upsizing plans are being postponed, or cancelled altogether. Historically, the townhouse segment has been the most resilient, and I think that once Buyers do return (again, question is when), the townhouse market will be the first to rebound. In July, the areas with the most townhouse price growths were Burnaby East, Port Moody and Tsawwassen, registering +1.7%, +1.2% and +1% respectively. Conversely, the neighborhoods with the least price growth are Whistler, Sunshine Coast and Vancouver West, at -3.5% and -3.2% (tied of 2nd and 3rd) respectively. The townhouse market has remains in the Seller's market but at the edge of a balanced market, with average days on market climbing significantly to 26 days (compared to 21 days last month). Month-to-month sale price dipped further by -1.2% (compared to -0.6% last month). Sale-to-listing (% homes sold) ratio remain the best among all segments but dropped to 20.1% (compared to 21.1% last month). Apartment and Condo MarketAfter a sudden surge of apartment inventory created in Spring, this segment seem to have calmed down a bit in July, with apartment's monthly negative price growth (-0.7%) being sandwiched between single house and townhouse. On paper, the apartment is in a balanced market, but in reality, it feels more like a Buyers market. Key difference now is that we are seeing apartment investors continue to exit the scene (and not returning anytime soon). Higher interest rate, stagnant home prices, and dropping rental income are more of the reasons the apartment investors remained sidelined or determined to explore alternative options. As for the pre-sale market, it is just as frothy, especially in Toronto where 70% of pre-sale buyers are investors who have flocked the scene. Vancouver is running along those lines, where both pre-sale and re-sale apartments are seeing a hold-off pattern. The majority of the apartment Buyers now are end-users (such as first time home buyers), and with more rate cuts on the horizon, there is the anticipation that they would come off the sidelines in the Fall. I do believe that the apartment segment, especially the entry level homes, would bounce back quickly and would be able to hold their prices relatively well. However, we do need the interest rates to come down substantially (from current 4.5% to 3.25%) for the market to motivate the Buyers to return. For the month of July, the best performing neighbourhoods for apartments are Squamish, Port Moody and Coquitlam, posting merely +1%, +0.2% and +0.1% respectively. Conversely, the areas with the most significant price drops were West Vancouver, Richmond and Maple Ridge, with -5%, -1.9% and -1.6% respectively. The apartment and condo segment have finally entered a balanced market, with average days climbing to 29 days (compared to 24 days last month). Month-to-month sale price growth continue to dip into the negative territory at -0.7% (compared to -0.4% last month). Sale-to-listing (% homes sold) ratio remained dipped slightly to 19.3% (compared to 20.3% last month). Here are the Three Trends I'm Observing: 1. Same Song, Different TunesWhen we see news regarding the Canadian real estate, keep in mind that is a broad brush to paint. Since real estate in nature is hyper local, have a look at Canadian major cities singing different tunes. Calgary, Edmonton, and Montreal are dancing in the Seller's market, while Toronto, Vancouver, and Fraser Valley are panting around the Buyer's market. (Source: GVR, FVREB, CREB, RAE, TRREB, QPAREB, RBC Economics) 2. Exploited WorkersThe latest UN report has detailed that Canada's temporary foreign workers have many ways been abused, such as used by immigration programs illegally importing them over and exploited them for different jobs. It's not hard to imagine how bringing in over 450,000 temporary workers in 2 years will drive up the Canadian unemployment rate (especially among the younger workers age 18-24). Employers such as Tim Hortons are also under scrutiny, as they have increased their role of hiring the low-wage foreign workers and further exasperating this problem. Now the news has caught international headwind, it's no wonder Justin Trudeau is back-paddling (again). (Source: Bloomberg) 3. Death and TaxesCanada is known for its natural beauty and for its high taxes. According to a study, Canadians now are spending more on taxes than basic necessities like good, housing and clothing combined. In 2023, average Canadian family with income of $109,235 paid $46,988 in taxes, representing 43% of their income. Sales taxes (GST, PST), property tax, income tax, capital gain tax, carbon tax... you get the point. Somehow it feels like there are always new taxes implemented every year, which are meant to fix problems and improve the lives of Canadians. But is it? (Source: Fraser Institute)
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