Spring 2018 Market Update

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.

Home Owner Grant Changes

home owner grant changesAs we all know the provincial government (for the time being) allows homeowners who occupy their property as their principal Residence to claim a ‘Home Owner Grant’. This grant towards your property taxes for people under the age of 65 is $570 in Greater Vancouver. Interestingly enough the province pays $770 for all other areas of BC.

Grant Threshold increased

To qualify for the Home Owner Grant, your property value (assessment) must be below the Grant Threshold. The Grant Threshold has now increased to $1.65M in Greater Vancouver. The grant is reduced by $5 for each $1000 assessed value over the $1.65M. So, properties assessed over $1.714M are not eligible for the grant.

Partitioned Value

Also, here is the interesting part: Did you know you could claim the Home Owners Grant of the partitioned value of your property if it consists of your principal residence and at least one separate residence. The partitioned value of a property is the property’s assessed value divided by the number of residences on that property. To qualify, each residence must have cooking, sleeping, bathroom and living room facilities. Laneway homes, multifamily dwellings like duplexes, triplexes, fourplexes qualify as a separate residence. Unfortunately, a basement suite doesn’t qualify as a separate residence.

Mortgage Update by Paula Siemens

We are 2 weeks into the new B20 mortgage rules. While I am sure we will see further changes as time goes along, here is what we have seen thus far…

• New mortgages with less than 20% down are still qualified using the mortgage qualification rate ( 5.19%) and a 25 yr amortization

• New mortgages with more than 20% down are qualified at 2% above actual rate and a 30 year amortization

• Existing mortgages coming due that were put in place BEFORE October 2016 are grandfathered as long as the loan amount is not altered. Borrowers can get insured rates from a new lender if they transfer their mortgage. This is important as you may be offered a higher rate by the existing lender than what you could get elsewhere if you TRANSFER your mortgage at maturity. The value of the home at the time of your last mortgage must be no greater than $1M.

• Basement suite rental income has changed from an offset of rental to using a maximum of 100% added to the borrowers’ income. Unless, they have 2 or more properties. Credit unions may still offer an offset on a case by case basis. Ask us if it will apply in your case.

City of Vancouver Empty Homes Tax Is Now A Reality

As you have probably heard, The City of Vancouver this past year implemented a tax on vacant properties. The tax is 1% of the properties assessed value. There are several exceptions and provisions within the new regulations, but generally speaking if a residential property is your principal residence where you live or has been rented for the past 6 months it will not be subject to this tax. We are coming up to our first declaration for this tax, and that being said all home owners must make a declaration by February 2nd, 2018 or it will likely be deemed to be vacant, and subject to the tax. This goes for those looking so sell/move as well, it is best to complete the declaration to avoid a potential problem or dispute.

City of Vancouver Empty Homes Tax is Now A Reality

 

The challenge we, and our Lawyer/Notary colleagues see for clients is that this tax (like property tax) runs with the property and the current registered owner (unlike income tax or sales tax specific to an individual or transaction). The problem is the City can potentially review up to two years following a taxation year, and collect the tax from the current owner if it is deemed payable. This is of specific concern for new owners property being finically responsible for a declaration a previous owner has made… a somewhat scary thought.

This all being said, there are ways we can work to reduce this exposure with research on your new prospective home, proper contract clauses, seller signed declarations, and a new title insurance product offering coverage for this exposure. The last of these may be the best way to reduce risk as of this time. We are eager to see how the City will resolve the difficult to overcome aspects within the implementation and execution of this tax.

2017 Client Movie Morning

A big thank you for joining us at the 2017 Client movie morning on Saturday for the premiere screening of STAR WARS: THE LAST JEDI. Braving the cold for some treats, prizes, and an excellent movie. Big thanks to the fans coming out in some great costumes, you looked great!

Clients also donated to the Ride to Conquer Cancer benefiting the BC Cancer Foundation raising a total of $500 at this event to bring our company total to $350,000 over the past number of years. Thanks for your support and generosity.

We hope you had as much fun as we did, and we look forward to seeing you in our next event!

Happy holidays…. and until next time…. May the force be with you!

Here are some photos below of the event

View more photos on our facebook: page: https://www.facebook.com/PospischilRealtyGroup/posts/1920267351320195 

2017 Pumpkin Patch, Thank You Vancouver For Your Support!

2017 Pumpkin Patch, Thank You Vancouver For Your Support!.

This past weekend at our annual Pumpkin Patch Fund Raiser Event, we raised $2500 towards cancer research and treatment options (BC Cancer Foundation) and for Trafalgar Elementary School.  You and your neighbours came out by the hundreds to get a fright, pick your favourite pumpkin(s), eat popcorn, cupcakes and play with dozen of halloween toys and monsters to support this great event. Over 300 pumpkins were chosen and a good time had by all!

See more photos and view our eye in the sky of the event below:

Aerial Video:

MARKET UPDATE | FALL 2017

MARKET UPDATE – We have seen many changes over the past 18 months in our Vancouver market. Beginning with the provincial governments introduction of the Foreign Home Buyers Tax 15 months ago to today there have been a number of fluctuations in the market place. While from October 2016 to April 2017 we witnessed a market stabilization, the provincial election results in May this year threw more uncertainty into our market and has resulted in a somewhat “Wait and See” approach to many who would have otherwise listed and sold and purchased a new home. This history is clearly reflected in the Median/Average Sales Price graphs below over the past 3 years.

We have seen this quietness (predominantly in the detached category) before, causing a buildup in market activity that suddenly lets loose causing an overwhelming market surge. The surge usually includes activity and prices. Have you ever seen in those water parks where there is this gigantic bucket about the size of a garden shed that slowly fills with water and after some time of slowly filling it all of a sudden tips and pours all the water out. The market demand is similar. If the demand is not satisfied over a period of time, such as after this long ‘wait and see’ period, the market all of a sudden will explode and surge back. This usually occurs after some positive news/signs spurting some activity which grows quickly into an explosion. Consumers see the explosion of activity and all jump in at once. This is what will happen in due course for detached homes. Perhaps this fall, perhaps next spring but it will happen. This is of course barring any further government intervention in our marketplace. That of course would be like stretching that big bucket to twice its size before it tips. Longer gap / larger explosion.

residential average sale prices - jan 1977 to august 2017The interesting thing to note here is that contrary to the detached homes, the attached townhome and condo market is quite active with prices on the rise. This is mainly due to affordability and the fact that detached takes a much higher commitment level financially and time wise, particularly when a property is going to be extensively renovated or taken down for new construction. So for the first time in a long-time Vancouver is showing segregation between the detached and attached markets. The government intervention and consumer uncertainty has had much smaller impact on the attached market. This is evident when we break apart all three product types into individual data series as seen to the right.

If we look at the Sales-Active Listings Ratio we see even more clearly the differences. If the ratio is below 12% there is downward pressure on pricing, if it is between 12-20% the market is balanced, if the ratio is above 20% there is upward pressure on pricing.

As of the end of August, the Sales-Active Listings ratio is 16.3% for detached homes, 44.8% for townhouses, and 76.3% for condominiums.

Marty and Adam signatures

VIENGPING CHILDREN’S HOME – CHIANG MAI, THAILAND

This summer we had the wonderful opportunity of making another visit and donation to the Viengping Children’s Home in Chiang Mai, Thailand. This orphanage is a non-profit organization mainly run by volunteers to house children that do not have a home to grow up in or parents who love them. This is a home for orphans, abandoned children, HIV infected children. Ages range from newborn to 18 years of age. The school helps about 400 children at any given point in time with 140 of them living onsite, and another 260 receiving offsite support in foster (but non-adoptive) homes in the Chiang Mai area. Every year approximately 36 children get adopted all over the world from here. My family and I have met many of them over the years. They track the children and whenever possible have contacts in those countries to visit the children in their new homes to check up on them. They do great work and the team and I are proud to be sponsors of the Viengping Children’s Home.

THE 2017 RIDE TO CONQUER CANCER – $8.3 MILLION RAISED

On August 26th and 27th Adam and I once again had the pleasure of participating in the annual Ride To Conquer Cancer. Over two days we rode from Vancouver to Seattle covering 250km over varied terrain and some surprises. We had great weather this year with some good heat and thoroughly enjoyed the Red Truck beer at camp in Mt. Vernon after conquering the Chuckanut Highway out of Bellingham. Camp has some excellent, nutritious food and they managed to link up to the McGregor/Mayweather match for some great entertainment. We were in the blue tent! Day 2 is always the hardest with the endless number of hills that need to be climbed as we approached Seattle. They just keep coming and coming . . . but alas another free cold beer at the finish

Thanks to all of you that supported our fundraising efforts over the past 12 months. You donated at our client parties, movie mornings, silent auctions, and directly online. Along with 2000 other riders, we helped raise $8.3 million this year towards cancer research and treatment options at the BC Cancer Foundation. Over the past nine years the Ride To Conquer Cancer has helped raise $85.3 million for the BC Cancer Foundation. Team Pospischil Realty, through your generous support, has proudly contributed over $320,000 to this total over the past 8 years.

As a cancer survivor myself I know the challenges cancer patients and their families face in their journey through diagnoses, treatments, and the roller coaster of emotions towards the finish line. Our annual ride reminds me personally of my past challenges and enables me, and those that joined us through their support, to help push the boundaries of research and treatments to help those on the journey today, and in the future. And perhaps one day we can celebrate a victory in a cure to cancer.

We have signed up for the 2018 Ride To Conquer Cancer which is affectionately being called “The Ride for Hope” as next year’s ride will be from Vancouver to Hope! Should be fun. We have just setup our donations page and welcome any online donations through the new golden link on our home page at www.pospischilrealty.com

ride to conquer cancer button

Once on the Ride site under Team Roster, click either Marty or Adam to go to donations page