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Metro Vancouver real estate sales, prices to climb in 2021

A new report from Central 1 Credit Union suggests Metro Vancouver’s housing market could be bouncing back faster than anticipated.

“Home sales have returned to more normal levels following over a year of policy-induced declines but B.C.’s sales recovery has lagged the rest of Canada,” according to Central 1 deputy chief economist Bryan Yu.

Yu said a decline in prices, particularly in the Lower Mainland, has also helped attract buyers back to the market.

“A growing number of buyers in the region have idled on the sidelines waiting for improvements in affordability following mortgage stress tests,” according to the report.

“Significant price declines over the past year and lower borrowing costs have buyers returning to the market among all housing types, particularly in the lower priced condominium sector.”

Province-wide, Yu said he anticipates 2019 to finish with a seven per cent drop in residential resale transactions, but forecasts a 13 per cent increase in 2020, followed by another four per cent hike in 2021.

Along with an increase in sales activity, Central 1 is forecasting a return to climbing prices.

The institution said prices could increase by 3.8 per cent next year and a further four per cent in 2021.

“Metro Vancouver will lead this increase which will undoubtedly bring affordability challenges back into the spotlight,” said Yu.

The report also predicted ongoing tightness in the rental market.

The Central 1 report reflects a growing consensus that the province’s housing market is rebounding after a slump that hit the Lower Mainland particularly hard.

Last month, the Canada Mortgage and Housing Corporation (CMHC) released a report predicting sales and prices in B.C. would begin to stabilize in 2020 and accelerate in 2021.

The CMHC forecast suggested B.C.’s real estate market would out-perform the rest of Canada.

“British Columbia will see modest recovery in price growth in 2020 from a decline in 2019, but rise to the second-highest rate of price growth after Ontario in 2021,” stated the report.

The benchmark price for a detached home across the Lower Mainland was $1,410,500, down 7.5 per cent from October 2018, but up 0.3 per cent from September, according the board.

The benchmark price of an apartment across the region was $652,500, down 5.9 per cent from October 2018, but up 0.2 per cent from September.

Source: Global News – Simon Little

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Bank of Canada maintains overnight rate target at 1 ¾ per cent

The Bank of Canada today maintained its target for the overnight rate at 1 ¾ per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 ½ per cent.

The global economic expansion is moderating largely as expected, but signs are emerging that trade conflicts are weighing more heavily on global demand. Recent encouraging developments at the G20 meetings are a reminder that there are upside as well as downside risks around trade policy. Growth in major advanced economies has slowed, although activity in the United States remains above potential.

Oil prices have fallen sharply since the October Monetary Policy Report (MPR), reflecting a combination of geopolitical developments, uncertainty about global growth prospects, and expansion of U.S. shale oil production. Benchmarks for western Canadian oil – both heavy and, more recently, light – have been pulled down even further by transportation constraints and a buildup of inventories. In light of these developments and associated cutbacks in production, activity in Canada’s energy sector will likely be materially weaker than expected.

The Canadian economy as a whole grew in line with the Bank’s projection in the third quarter, although data suggest less momentum going into the fourth quarter. Business investment fell in the third quarter, in large part due to heightened trade uncertainty during the summer. Business investment outside the energy sector is expected to strengthen with the signing of the USMCA, new federal government tax measures, and ongoing capacity constraints. Along with strong foreign demand, this increase in productive capacity should support continued growth in exports.

Household credit and regional housing markets appear to be stabilizing following a significant slowdown in recent quarters. The Bank continues to monitor the impact on both builders and buyers of tighter mortgage rules, regional housing policy changes, and higher interest rates.

Inflation has been evolving as expected and the Bank’s core measures are all tracking 2 per cent, consistent with an economy that has been operating close to its capacity. CPI inflation, at 2.4 per cent in October, is just above target but is expected to ease in coming months by more than the Bank had previously forecast, due to lower gasoline prices. Downward historical revisions by Statistics Canada to GDP, together with recent macroeconomic developments, indicate there may be additional room for non-inflationary growth. The Bank will reassess all of these factors in its new projection for the January MPR.

Weighing all of these developments, Governing Council continues to judge that the policy interest rate will need to rise into a neutral range to achieve the inflation target. The appropriate pace of rate increases will depend on a number of factors. These include the effect of higher interest rates on consumption and housing, and global trade policy developments. The persistence of the oil price shock, the evolution of business investment, and the Bank’s assessment of the economy’s capacity will also factor importantly into our decisions about the future stance of monetary policy.

Information note
The next scheduled date for announcing the overnight rate target is January 9, 2019. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.

Source: Bank Of Canada Website

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Vancouver Market High lights

Monday, October 2, 2017
Apartment and townhome activity is outpacing the detached home market across Metro Vancouver*. This activity helped push total residential sales above the historical average in September.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,821 in September 2017, a 25.2 per cent increase from the 2,253 sales recorded in September 2016, and a 7.3 per cent decrease compared to August 2017 when 3,043 homes sold.

Last month’s sales were 13.1 per cent above the 10-year September sales average.

“Our detached homes market is balanced today, while apartment and townhome sales remain in sellers’ market territory,” Jill Oudil, REBGV president said. “If you’re looking to enter the market, as either a buyer or seller, it’s important to understand these trends and use this information to set realistic expectations.”

There were 5,375 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2017. This represents a 12 per cent increase compared to the 4,799 homes listed in September 2016 and a 26.6 per cent increase compared to August 2017 when 4,245 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,466, a 1.2 per cent increase compared to September 2016 (9,354) and a 7.5 per cent increase compared to August 2017 (8,807).

“Detached homes made up 30 per cent of all sales in September and represented 62 per cent of all the homes listed for sale on the MLS®,” said Oudil. “This dynamic has slowed the pace of upward pressure that we’ve seen on detached home prices in our market over the last few years.”

For all property types, the sales-to-active listings ratio for September 2017 is 29.8 per cent. By property type, the ratio is 14.6 per cent for detached homes, 42.3 per cent for townhomes, and 60.4 per cent for apartments.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,037,300. This represents a 10.9 per cent increase over September 2016 and a 0.7 per cent increase compared to August 2017.

Sales of detached properties in September 2017 reached 852, a 27.9 per cent increase from the sales recorded in September 2016 (666), a decrease of 33 per cent from September 2015 (1,272), and a decrease of 32.9 per cent from September 2014 (1,270). The benchmark price for detached properties is $1,617,300. This represents a 2.9 per cent increase from September 2016 and a 0.1 per cent increase compared to August 2017.

Sales of apartment properties reached 1,451 in September 2017, a 19.1 per cent increase compared from the sales recorded in September 2016 (1,218), a 5.1 per cent decrease from September 2015 (1,529), and a 22.1 per cent increase from September 2014 (1,188). The benchmark price of an apartment property is $635,800. This represents a 21.7 per cent increase from September 2016 and a 1.4 per cent increase compared to August 2017.

Attached property sales in September 2017 totalled 518, a 40.4 per cent increase compared to the sales recorded in September 2016 (369), a 4.8 per cent decrease from September 2015 (544), and an 11.6 per cent increase from September 2014 (464). The benchmark price of an attached home is $786,600. This represents a 14.5 per cent increase from September 2016 and a 1.1 per cent increase compared to August 2017.

Source: Great Vancouver Real Estate Board website

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Vancouver Housing

There may be no place for the state in the bedrooms of the nation, but that’s not stopping sociologist Nathan Lauster.

The associate professor at the University of B.C. recently examined how Metro Vancouverites use their bedrooms in order to find solutions to the local housing crisis.

Using Statistics Canada data, Lauster counted 459,994 extra bedrooms in homes across Metro, estimating that about one-fifth of all bedrooms aren’t occupied. (For his study, he allotted one bedroom to each member of the household.)

Lauster also discovered that the region’s spare bedrooms are overwhelmingly found in what he calls “super-sized dwellings,” meaning those with five bedrooms or more. Metro has more five-bedroom-plus homes than both the Toronto and Montreal metropolitan areas.

“We’ve got way more mansions than any other metropolitan area in Canada,” Lauster said in an interview Friday. “The reason for that is a lot of our land is set aside for single-family houses.”About 80 per cent of Metro’s residential land is zoned single-family. That hampers the construction of two- to four-bedroom homes, such as low-rise apartments and townhouses, which are ideal for housing families.

“We should be filling up that missing middle between apartments and mansions,” said Lauster. “Why are we keeping townhouses out of any neighbourhood?”

The City of Vancouver is working to address the issue. In mid-September, city council referred several rezoning proposals to public hearing. A city-owned site on Main Street is slated for a nine-storey building with 145 social-housing units, while a proposal to rezone two single-family lots on Oak Street would create 50 new homes, including 27 two- and three-bedroom units, in an eight-storey building. More rezoned single-family lots on West 45th Avenue would add dozens of family sized units to the city’s housing stock.

In the meantime, people looking for housing in Metro have had to become creative.

While researching his book, The Death and Life of the Single-Family House, Lauster interviewed a single mother who rented a mansion in a wealthy Vancouver neighbourhood. To afford it, she shared the rent with another single mom and both took boarders.

“There seems to be a lot of unique living situations in Vancouver,” said the sociologist.

The census data shows that over 40 per cent of residents in five-bedroom homes are living in what Lauster calls “creative households,” meaning anything other than living alone, as a couple or as a couple with kids. In the rest of the country that number is 30 per cent.

For a time, UBC Prof. Julian Dierkes found a creative solution to his housing needs. About a decade ago he bought a house in Kitsilano with an acquaintance. The single-family home had been separated by a previous owner and the upstairs and downstairs had separate entrances. The co-owners, both with young families, shook hands on the deal and secured a mortgage together.

Dierkes said the agreement worked well, but after five years and more children, both agreed it was time to part ways. They sold, just as the market was beginning to heat up. Wanting to stay on the west side, Dierkes began renting.

“There aren’t a lot of options for a faculty member who wants to live close to campus,” he said. “One of the huge disadvantages of UBC’s location is that it’s in the most expensive part of town.”

Dierkes still wonders if things would have been different if UBC had approved a faculty co-housing proposal for the east side of campus, instead of pushing ahead with development.

“With one stroke of a pen, they could have settled 25 families,” he said. “But it was all about price maximization for them.”

Housing expert Tom Davidoff said the “market should have its way” in places where higher density makes sense.

“In North Vancouver, for example, I think people would build more than the zoning allows if they could,” he said.

But the director of the UBC Centre for Urban Economics and Real Estate said zoning is only one part of the affordability crisis.

“Adding supply will have an impact on prices, but we need to address demand as well,” he said, referencing foreign investment and property speculation.

Source: Vancouver Sun