Detached Houses: Detached houses are now consistently in a strong Buyer’s Market with sales ratios* in the Westside neighbourhoods dipping below 10%. (remember Seller’s Markets beginning at 21% SR). The hottest neighbourhood in the Westside is Kitsilano with a 21% sales ratio. So, in actual fact houses in Kits are in a Seller’s Market and the rest of the Westside is in a Buyer’s Market for houses. Go figure?
Detached houses on the Eastside are on average in a sales ratio of 17% just hitting a more balanced market.
Condos & Townhomes: Condos and Townhomes on the Westside of Vancouver are in a hot Seller’s Market with an average sales ratio of 44%. Kitsilano once again leads the pack for activity with an 86% sales ratio followed by Fairview at 72%. The Downtown condo and townhome market is even hotter with an average sales ratio of 53%.
Condo and townhomes on the Eastside are even hotter with an average sales ratio of 72%.
Summary: So, in summary right now is an excellent time to buy a detached house to live in or investment. It is also an excellent time to sell a condo or townhome.
The bottom line is the government intervention programs have hit the upper end of the market hard causing a softening in demand and in turn prices. The consumers, who are mainly locals, have for some time been forced down in the market. They have had to reconsider the definition of a family home to now include half duplexes, townhomes, and condos. The detached home is no longer the goal of the majority of young families wishing to settle in Vancouver. The banks are just not able to make it work for most of them. The new Stress Test launching this spring is not helping the matter making it even more difficult for young families to afford homes in Vancouver. The affordability has instantly dropped by 20% through the introduction of this program.
With the provincial budget coming out as we go to print on this newsletter we wait nervously for what surprises our current government has in store. Whatever it is, rest assured it will not be to improve affordability or to positively assist local families to buy their first or second home. It will likely take more of a negative spin, a new tax perhaps, new restrictions. The current political trend seems to be to ‘take’ or ‘penalize’ rather than ‘assist’. And unfortunately, all these programs cost millions of dollars to implement and administer. Over the long haul they stifle the market making it more difficult for investors to invest, buyers to buy, and sellers to sell. None of the current programs from Municipal to Federal make housing more affordable. They lead you to believe that they do, but they don’t. Housing prices will only fluctuate mildly. Certainly not enough to have any impact on affordability for local families. This can be clearly see in the MLS Housing Price Index Benchmark Price Graph below. Even the 15% Foreign Home Buyers Tax had a marginal impact on price and only on detached. Attached product weathered the storm with only a temporary delay in appreciation. So prices are not being impacted, only market activity.
So, this too will pass. The government will at some point realize that stifling one of our largest industries might not be the best thing for the province. Real estate contributes substantially to our economy. And maybe, just maybe they will begin to loosen their grip around the neck of the market, so it can catch its breath and resume a natural growth pattern.
*Sales Ratio –
The monthly absorption rate of the current inventory of homes.