As many of you know, after 26 years of selling homes, just over one year ago Adam and I formed Pospischil Realty Group. We have just, this past month, had our one year anniversary for the birth of the new company. As our clients you already know how much we love real estate and working with all of you, your family, and friends and honestly Pospischil Realty Group since its inception has allowed us free reign on making the experience even more enjoyable. Our goal in this transformation into an independent brokerage was to allow our quickly growing company to:
1. Provide an even higher level of service to our clients by creating a cutting edge corporate office utilizing the latest in technology allowing us to implement innovative new marketing systems for your home and better systems for finding your new home.
2. Have complete control over all facets of our company from the design of our signs to what wine to serve you at offer presentations. :)
3. Allow our service area to expand by bringing onboard a very select few highly specialized professionals servicing areas outside of Vancouver.
4. Further enhance the overall buying and selling experience to a level of efficiency and comfort unmatched in our industry.
5. Ultimately allow Pospischil Realty Group to become a household name in real estate in Vancouver.
We are very excited to announce that our new permanent home is already under construction and will be ready for opening in early 2019. The new home / head office of Pospischil Realty Group will be at 1638 W 1st Ave in Kitsilano. We will keep you posted on our progress and hope to see you all at the Office Warming Opening Party next year.
We are partnering with our clients and friends at West Point Cycles to get some great
gear, and training support set up for the team etc. So it will be epic!
Would love to have you along for the ride, as we continue on our journey to
Conquer Cancer once and for all!
There is also a discount code to join the 2019 ride for a limited time for $25 Code: RIDEWITHME19
CANCER RESEARCH Recently Adam and I attended the BC Cancer Foundation Spring Research Luncheon as guests as a result of all the fundraising support clients like you have given us over the years. Your support in Pospischil Realty Group’s annual Ride To Conquer Cancer program has raised over $340,000 since its inception in 2009. Bear in mind that I am not a doctor nor am I a scientist, but I would like to share some of the interesting things we learned. The Research Luncheon had two parts:
Research & Treatment Options
The first part discussed the success the Foundation was having with Genetic Engineering in Immunotherapy. Dr. Holt (the head scientist) discussed Car-T Therapy which will provide treatments to Canadians outside of the private pharmaceutical industry via a publicly funded initiative supported by programs like ours in which you have played an integral role. The details of the program were fascinating and shows that all your support and our thousands of kilometers of cycling are paying off in saving lives.
The second part of the presentation spoke of the recent results of lab research using mice and how environment and diet effect cancer rates. Interestingly enough it was said that over 90% of cancers are environmental and diet related as opposed to hereditary. Of course, they found that the mice that followed the low carb and low sugar diets coupled with exercise had the lowest incidence of cancer. Some of the most interesting diet related facts in cancer prevention that I made note of were as follows:
• Sugar is the number one killer, avoid it at all costs
• Do not eat any white starches (Avoid: white bread, white rice, white potatoes)
• Do not eat grapes
• Do not eat ripe bananas but rather green bananas
• Eat fresh fruit
• Eat fish and take high quality fish oil supplements
• Olive oil and lemon is good for you in small quantities
• Eat Tofu
• Take a baby aspirin a day
• Take a Vitamin D supplement
• Go for a short walk after dinner
• Eat within a 12-hr window and stop eating 3 hours before bedtime
• Do not drink pop or packaged fruit juices (buy a Soda Stream if you like fizzy drink)
Each year the Ride to Conquer Cancer raises millions of dollars for Cancer Research and Treatment options right here in BC. Adam and I want to thank you and all our supporters over the years as we work towards more progress in the war against cancer.
To Donate to our Ride to Conquer Cancer Team or to join the team:
or simply follow the links on our website.
So, what is going on in our market? In a nutshell, detached houses continue to be pretty quiet across the board. Attached strata condo, townhomes, and half duplexes continue to be the hottest product available! While the majority of our attached strata condos and townhomes sell with multiple offers pushing the values ever higher, many houses can sit for weeks before there is an offer on the table. As you can see below for both Westside and Eastside product detached houses clearly fall into the buyer’s market category while the two attached strata product are well into strong seller’s markets.
While our Provincial governments would like to take the credit for the slower detached market saying that “this is part of a grand plan to make housing affordable”, they can’t. Prices for houses that are selling have remained relatively stable with only minor drops in price, only the volume of sales have fallen significantly. So, while the Foreign Home Buyer tax increase, the new Speculators Tax, and the Federal Mortgage Stress Test have slowed the market, they have by no means made housing more affordable. In fact, since the bulk of activity has now shifted over to strata product, we have seen the price in this category sky rocket making entry level condos and upgrade townhomes/duplexes unaffordable for many local families. The Stress Test has further hindered families from purchasing their first or second homes.
Having two polarized and disjointed markets puts too much pressure on various price bands and product resulting in dramatic swings and hot spots. It makes purchasing and selling homes more unpredictable and more stressful for clients. But, holding true since the times of King Solomon, and as I have said many times before, “this too shall pass”. At some point our markets will reach a point where the trend stops, stabilizes, and then returns back to a more balanced market. And a balanced market in all product would be happily welcomed by sellers and buyers alike.
We are always here to help you and your friends, we are never too busy to help, and no transaction is too small.
We have just completed the first 4 months post stress test! The new stress test requires that mortgage applications qualify using income from the tax returns using a rate that is 2% above the actual interest rate.
During May we will see how this new stress test will impact the real estate market under these new rules, as any applications approved before Dec. 31, 2017 were approved using the old rules, and the rate holds were good up to April 30th 2018. The month of May will represent the first month with all applications undergoing the new rules.
Unfortunately the interest rates are on the rise! The Bank of Canada has a mandate to take Canadian interest rates back to “normal”, meaning a prime rate that is 4.5-5% over the next 2-3 years. Currently our prime rate is 3.45% so that means we are potentially going to see 1.55% increase in interest rates if the Bank of Canada follows through with the current mandate. We are expecting 2-3 Bank of Canada increases during 2018 depending on how the Canadian economy performs. February GDP showed an increase of growth of .4% which is higher than the expect.
The Economic Fallout of Housing Price Shocks
The desire of some well-meaning British Columbians for government to drive down the price of homes through demand-side policy may sound practical at first blush. However, when you consider the broad and deep economic toll that a negative shock to home prices would exact on both homeowners and renters, it quickly becomes apparent that such an approach is at best, a mug’s game. BCREA Economics analysis* shows that even a relatively modest negative price shock will produce significant consequences to the BC economy.
Nearly 70 per cent of British Columbian households own their home. A relatively minor 10 per cent negative shock to home prices would extinguish $90 billion of their wealth, or $70,000 of the average home owner’s equity. While some may see this as a paper loss, it will have a significant impact on the economy, as declining household wealth reins in consumer spending. Retail sales would suffer, with an estimated $1.8 billion in forgone revenue in the first year after the shock.
Home construction activity would fall dramatically. Home builders would cut back production 25 per cent; that’s 10,000 fewer housing starts in the first year alone. A negative price shock would markedly slow the expansion of the housing stock, creating even more critical housing supply problems down the road.
Across the economy, a negative home price shock will slow growth. Tens of thousands of jobs will be forfeited. The unemployment rate will shoot up. A 10 per cent negative price shock will slow real GDP growth to 1.5 per cent from a baseline of 2.7 per cent. That’s $3 billion in lost activity. If home prices fell 35 per cent, a level some activists are championing, the BC economy would collapse into recession. The average home owner would have lost $245,000 in equity, housing starts would fall by half, 64,000 jobs would be forfeited – sending the unemployment rate to 7.5 per cent with $4.4 billion in forgone retail sales and a colossal $8 billion loss to GDP in the first year.
This analysis does not account for the negative impact on provincial tax revenues, expanding deficits, ballooning debt and credit downgrade risks.
*Based on simulations using BCREA’s econometric model of the BC economy augmented by a housing Vector Autoregression model.
Article above taken from “Market Intelligence” of the British Columbia Real Estate Association April 4, 2018 publication
Working with Pospischil Realty Group is definitely having the A-Team on your side. Having partnered with them on five separate transactions, I can say with certainty that they maximized our outcomes and did them with such professionalism that we always felt comfortable and confident that our goals would be met. They do a great job of keeping us in the loop all year round on the state of the market and are just really wonderful people to work with. I highly recommend them for your next real estate transaction.
– Lisa and Brian M.
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.
As 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.
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.