The week’s top stories focus run the gamut on the state of Metro Vancouver’s residential real estate. Analyst forecasts predict that though sales and prices are on the decline, a rebound may be on the slate for next year. Meanwhile, some areas in Metro Vancouver still demonstrate record-breaking, high-per-square-foot prices, despite the overall decline.
Here is Western Investor’s pick of the top real estate stories published this week.
Housing market in 2019 and 2020 will be characterized by slower sales and more home inventory, says CMHC.
The next two years in B.C. residential real estate will continue to see lower sales and higher inventories of homes available for purchase than in recent years, according to a forecast released November 6 by the Canada Mortgage and Housing Corporation (CMHC).
This will cause average home prices across the province to “hold steady” over the next two years, said the federal housing agency.
The CMHC said in its report, “Shifting market conditions across B.C.’s large urban centres is resulting in movement back towards balanced or even buyers’ market conditions in some cases, which is beginning to flatten price growth or, in some areas [such as Metro Vancouver, see below], result in price declines.
“Overall, we anticipate MLS® sales to trough in 2018 and see some recovery in 2019-20 while MLS® average prices will see a relatively flat growth profile with some risk of decline as demand and supply find a new balance.”
CMHC expects MLS resales across B.C. to drop from 103,759 units in 2017 to between 76,600 and 83,400 sales this year. Sales are then expect to increase somewhat in 2019 to between 79,100 and 87,900 units, and then in 2020 to range between 81,500 and 92,500 sales. They are not expected to return to the 100,000 mark seen in 2016 and 2017.
The agency is forecasting the average B.C. MLS home sale price to be between $683K and $749K this year (2017 average sale price was $709,597). It is then expected to range from between $681,800 and $756,200 in 2019, and then hit somewhere between $675,400 and $758,600 in 2020.
The CMHC added in its report, “Housing starts activity in British Columbia should moderate as economic and population growth slows.”
The agency also predicted the next two years for the rental market in the province. It said, “Rental market conditions across B.C. are anticipated to loosen as a result of slower growth in demand and a significant amount of new rental units set to enter the market. However, demand for rental is anticipated to remain fairly robust and result in the apartment vacancy rate for the province increasing gradually through to 2020. Meanwhile, average rents for purpose built apartments are anticipated to continue to see increases stronger than inflation in both 2019 and 2020.”
Metro Vancouver outlook
Metro Vancouver real estate will continue to see a steeper drop in sales than the rest of the province, said the CMHC. This will cause average home prices across the region to keep “softening” over the next few years, said the federal housing agency.
CMHC said in its report, “While existing home sales are expected to rebound in 2019 from the trough in 2018 in order to be more in line with the region’s growing population, resales will remain below the levels seen in 2015-2017.”
“Strong economy, favourable demographics” will push market to recovery, asserts B.C. Real Estate Association.
Although home sales on the MLS across B.C. are expected to be 23 per cent lower in 2018 than last year, they will bounce back by around half that in 2019, according to a November 8 forecast by the B.C. Real Estate Association.
Having topped 103,000 sales in 2017, this year’s transactions are predicted to total around 80,000 by the end of December, said the BCREA. Next year, however, the association expects a rise of around 12 per cent to total 89,500 home sales across the province.
That figure would be a healthy annual sales total, with the 10-year average of provincial home sales standing at 84,800 units.
The graph above shows that the bulk of the sales recovery is expected to be seen in the Lower Mainland/Southwest region, with more incremental increases across the province.
The association also said it expects the growth of the average home sale price to steepen again, after a relatively modest 1.3 per cent annual increase in 2018 to $718,600. It is forecasting a record $760,000 average sale price next year, which would be a 5.8 per cent year-over-year rise.
The BCREA said that its bullish forecast was based on a strengthening economy and a surge of demand from the two largest buying groups – Millennials entering the market, and downsizing Baby Boomers.
Cameron Muir, BCREA’s chief economist, said, “The marked erosion of affordability and purchasing power caused by the mortgage stress test and rising interest rates continue to be a drag on the housing demand. However, continuing strong performance in the economy combined with favourable demographics is expected to push home sales above their 10-year average in 2019.
A survey of home costs per square foot reveals gaping bang-for-buck differences between neighbouring areas.
Despite the recent market slowdown, condos in downtown Vancouver and detached houses on Vancouver's West Side are the most expensive homes in Canada on a per-square-foot basis, a new national survey reveals.
The average price of a downtown Vancouver condo is pegged at $1,345 per square foot, which is a staggering 39 per cent higher than one year previously, according to the Century 21 Canada report released November 7.
Since last year’s survey, downtown condos have overtaken West Side houses as Canada’s priciest per-square-foot home type. West Side detached homes slid nearly five per cent year over year, but followed close behind at $1,147 per square foot.
Stepping over the border into Burnaby offers much more living space for your money, with per-square-foot house prices averaging $599, up 1.91 per cent from the same period in 2017.
At $898.50, West Vancouver’s house prices were the fourth priciest homes per square foot in Canada, beaten out – as they were last year – by downtown Toronto condos. The West Vancouver per-square-foot figure is a 10 per cent increase over the same period last year, despite absolute home prices dropping in that time.
So why are West Vancouver’s notoriously expensive houses so much less expensive than the West Side’s, on a square-foot basis?
“In West Vancouver, most of the homes are on considerably larger lots than the 33-foot lots that are typical for the West Side,” Brian Rushton, executive vice-president of Century 21 Canada, told Glacier Media in response to last year’s survey, which saw similar results. “That means when you break the numbers down on a per-square-foot basis, it’s the West Side that’s more expensive.”
Per-square-foot house prices in Richmond also increased by more than 10 per cent year over year, to $677. And in Delta, they were up 14.3 per cent to $423.
Century 21 acknowledged that because the survey compared price data in the first six months of 2018 with the same period in 2017, price declines since that time are not taken into account.
Rushton said of this year’s survey, “It is no surprise that Vancouver’s downtown and West Side once again topped the list of Canada’s most expensive properties per square foot, even with a small decline over the last year. Looking across B.C., the price variation is remarkable. Going out just one or two suburbs cuts your price in half, while prices in more rural areas are closer to a quarter or less of those in Vancouver.”
More than nine out of 10 plan remain in their own homes during retirement – but some may not be by choice.
Stubborn seniors are skewing the outlook for the retirement residences market in Canada by opting to stay in their own homes when they retire.
In Metro Vancouver, rising debt and the scarcity and soaring cost of seniors’ housing add a dark tinge to the trend, however.
A recent survey done for HomeEquity Bank by Ipsos found that 93 per cent of Canadian homeowners aged 65 or better said they want to live in their current homes in their retirement years.
The survey, conducted between June 15 and June 18, found that 69 per cent of senior homeowners in Canada wish to maintain a sense of independence. Meanwhile, 51 per cent said that they want to stay close to family, friends, or their communities, and 40 per cent pointed at emotional attachments and memories as their motivation for staying in their own home.
This desire to age in place has resulted in higher renovation spending among older adults.
Altus Group found that homeowners aged 65 or older account for 25 per cent of all renovation spending in Canada where home equity lines of credit were used, while another 38 per cent of such spending was made by those aged 50 to 64 years old.
Separate studies suggest, however, that financial headwinds may be keeping seniors from moving on. In the Lower Mainland there are an estimated 211,000 people aged 75 or over, but there are only 15,421 rooms available in the 141 retirement homes. The resulting vacancy rate for “independent living in seniors’ residences” this year is 1.8 per cent, down from 3.1 per cent in 2017, according to Canada Mortgage and Housing Corporation’s (CMHC) Senior Housing Report 2018.
The average monthly rent in the Lower Mainland for “heavy care” retirement homes, where medical supervision is provided, is now $7,419, up from $6,852 in 2017, CMHC reports, and this spikes to an average of $8,808 per month in the city of Vancouver.