The week’s top stories primarily highlight the contrast between rising home prices in Metro Vancouver, and dwindling sales volume and listings. According to new Real Estate Board of Greater Vancouver statistics, March 2018 home sales are down 30 per cent year-over-year across the region, while West Vancouver sales took a drive of nearly 70 per cent. Still, Metro Van home prices remain the highest across the nation, as Vancouver prices continue to trend much higher than the national benchmark price, and leaps and bounds ahead of East coast cities such as Moncton.
Here is Western Investor’s pick of the top real estate stories published this week.
If the government plan was to gut sales in Metro Vancouver’s most expensive detached housing markets, it has been a spectacular success, believes Western Investor editor Frank O’Brien.
A sustained attack on buyer demand in Vancouver’s detached housing market has decimated sales and is leading to “unbelievable” price reductions. If government plans were to crush sales in the city’s premiere residential market it has been spectacularly successful, according to recent real estate data and frontline agents.
“Detached house sales on Vancouver’s west side are down 70 per cent in the first three months of this year as compared to 2016,” said Brent Eilers of Re/Max Masters Realty of West Vancouver, who has been active in the local real estate market since 1983.
West Vancouver detached sales, estimated at 59 so far this year, are now at the lowest level in 30 years, he added.
“As Don Meredith from Monday Night Football used to say ”turn out the lights, the party is over,” Eilers said.
The party ended early, he said, for high-end builders and investors, with sale prices for Vancouver detached houses priced at $5 million or more down 15 per cent to 18 per cent this year compared to 2017.
There were 2,517 home sales in March across the Metro Vancouver region, the Real Estate Board of Greater Vancouver reported. That’s nearly 30 per cent lower than the same month a year ago, and around half the number of transactions in the heady days of March 2016. It’s also 23 per cent below the 10-year average sales for the month.
In February, the B.C. government introduced Canada’s first foreign-home buyer tax, and added restrictions on assignment sales of Metro Vancouver residential real estate transactions.
In February 184 Vancouver westside detached houses were listed for sale on the MLS of the Real Estate Board of Greater Vancouver at $3 million or more.
Just 13 of them sold.
Overall, the benchmark price of a detached house on Vancouver’s westside last month was $3.4 million, down an average of 2 per cent – that is $68,000 – from three months earlier.
Eilers suggests that many of Vancouver detached houses are now selling for less than assessed value, set on the valuation date of July 1 2017.
He, and other agents, say the crunch will come this spring with the traditional flood of listing onto the market as the first-quarter statistics are released.
“It will be hard to hide what is really happening,” Eilers said.
Eilers said the federal government stress test and higher mortgage rates have frozen first-time buyers out of the market, while B.C.’s foreign buyer tax, school tax and speculation tax have driven away foreign buyers. “So, unlike in other downturns, we don’t have fresh money coming into the market.”
The B.C. school tax alone works out to an extra $2,000 for the first $1 million in value in excess of $3 million and $4,000 per million on assessed values of $4 million or more. If a foreign buyer were to purchase a $4 million Vancouver house this month, for instance, he or she would face a tax bite of at least $806,000; $120,000 more if the house was left vacant, due to the provincial speculation tax and Vancouver’s empty home tax.
“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” said Phil Moore, the newly appointed REBGV president. “High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.”
There is a $900,000 benchmark price difference between Vancouver and Moncton, highlighting an ever-widening gap between West and East pricing.
It’s more than 4,000 kilometres from Vancouver to New Brunswick, but as far as house prices ago it is light years in distance.
The benchmark price for a Canadian home was $609,700 in February, reports the Canadian Real Estate Association, but the data shows that there is a cavernous west-east price gap in the country.
Benchmark urban home prices now range from a low of $174,800 in Moncton, New Brunswick to $1.07 million in Metro Vancouver. The city closest to the Canadian-wide benchmark is Greater Victoria, with a typical home price of $642,800.
Three cities have homes priced below the national benchmark: Regina, at $278,700; Saskatoon, at $292,800 and, of course, Moncton.
Both Ottawa and Montreal are in the middle-range, with benchmark home prices in the $370,000 range.
Greater Toronto, at a benchmark of $751,700, and Oakville-Milton, at $719,600 are the only centres outside of B.C. that come close to the Metro Vancouver prices.
The region posted its quietest March for sales since 2009, BIV reports.
Prices for Metro Vancouver homes rose in March even as sales and new listings sputtered, according to statistics that the Real Estate Board of Greater Vancouver (REBGV) released April 4.
The benchmark price for a home in the region inched up to $1,084,000 in March. That is 16.1% more than March 2017, and 1.1% more than in February.
Compared with February, attached homes led the way with a 2% increase in the benchmark price, to $835,300; while condominiums increased in value by 1.6% to a benchmark price of $693,500. Detached homes increased by a more marginal 0.4% rate to a benchmark price of $1,608,500.
Benchmark prices compare homes based on similar features and are less volatile than average prices, which can swing wildly depending on how many bedrooms a home has or what area it is in.
While prices increased, however, sales were decidedly down.
March home sales were not only 23% below the 10-year average for that month in the region but, at 2,517 home sales, the total number of sales was 29.7% less in March than the 3,579 sales that transacted in March 2017.
“High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today,” said REBGV president Phil Moore, who foresees continued upward pressure on prices as long as the supply of homes remains low.
“Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms.”
Kelowna is exempt from the province’s speculation tax and foreign buyer tax, giving it a marketplace advantage over Kelowna and other interior cities. Agents hope the exemptions will draw buyers to the area and contribute to new listings.
Kamloops Mayor Ken Christian says his city doesn’t have any issue being the odd man out.
The B.C. Interior city was the largest municipality left out of the BC NDP’s foreign-buyer and speculation taxes, and he thinks it will be good for business.
“We have a market advantage being left out,” he said. “Particularly when Kelowna is in, and we’re out, that’s even better because the opportunities for, particularly, Albertans going up to the Sun Peaks area, that’s where this could have been problematic. And if it becomes a problem for Sun Peaks, it becomes a problem for Kamloops.”
Sun Peaks ski resort is about an hour’s drive outside of Kamloops. It is the second-largest ski hill in the province after Whistler. On March 20, Kelowna city council voted to write a letter to the provincial government stating it is “fundamentally opposed” to the speculation tax, and demanding an exemption for the municipality.
Peter Milobar, MLA for Kamloops-North Thompson, said it was a good idea to exempt Kamloops from both taxes but added that changes to the policy have continued to sow confusion within the real estate industry.
“Some of these arbitrary boundaries are going to cause more problems than people realize,” said Milobar, a former mayor of Kamloops. “People don’t know if the boundary is going to unilaterally move, and I think there is still a lot of ambiguity … around certain things like condo rentals and other issues. There doesn’t seem to be a lot of certainty out there right now.”
Brendan Shaw, a real estate agent in Kamloops, said there is some concern the exemption from the two taxes could further affect Kamloops’ real estate supply issue, and he noted the average home price in the area is still low compared with both Kelowna and the Lower Mainland. According to Kamloops and District Real Estate Association (KDREA) statistics, the average price for a property sold in February 2018 was $376,217, up 6.7 per cent from February of last year, and the year-to-date average price rose 11.3 per cent from January to reach $378,951. The dollar value of all home sales in February 2018 was $73.7 million, rising 8.4 per cent from February 2017. This was a record for the month and only the second time that February sales have surpassed the $70 million mark. There were 314 new listings in February, down 5.4 per cent from February of last year, which was the lowest level of new listings for the month going back 14 years.
“Kamloops is kind of a beast of its own,” Shaw said. “Our average home prices are nowhere near where [Kelowna and the Lower Mainland] are at.”
Shaw added he thinks it was a good idea that Kamloops was left out of the two taxes, and noted the lack of new listings is hitting the area hard.