As I write this update I realize that 2017 is only 58 days away signaling a close to what has been a turbulent year for the Vancouver Real Estate Market. As I wrote in my earlier market updates, the Vancouver real estate market began to slow in June of this year. Then we had the 15% foreign buyers tax come into effect in August, followed by the new mortgage rules in October. The market had been moving at an upward trajectory that was not sustainable, the market needed to slow and stabilize.
- Did the foreign property tax put downward pressure across the entire real estate market?
- Did the new mortgage regulations drastically impact the entry level real estate market?
These have been two hot topics of debate in the media and in Vancouver’s cafes, microbreweries and restaurants.
Has the 15% foreign buyer’s tax put downward pressure on the entire market?
The location and property type that has seen the most reduced activity due to the newly implemented foreign buyers tax is the West Vancouver detached houses, Vancouver West Side houses in the 5 million plus price range and the 3 million plus range in the Downtown / West Side luxury condominium market. The East Vancouver detached housing market has seen little effect from the foreign buyer’s tax but has had a slight decline in the average price. This minimal decline can be attributed to an already slowing market that initiated in June of this year and a wait and see attitude from today’s buyers who are uncertain as to what direction the market is headed. Overall, we still need more time to determine the impact that the foreign tax will have on the overall market. I will have monthly updates and if you would like more detailed data and information please call or email me.
What impact has the new mortgage rules had on the Vancouver real estate market?
I talked about the new mortgage rules in my September Market Update.
As far as the new mortgage rules go, they have not had much of an impact on the market. The new rules are specific to buyers with less than 20% down and properties priced under $1,000,000. I have spoken to three senior lenders at TD and HSBC and they say that approximately one of 25 applications for a mortgage preapproval is not approved due to the new rules. They continued to say that the applicants that are affected by the new rules would barely qualify under the previous method and would be at risk if mortgage rates started to rise. Independent mortgage brokers are saying the same and believe the change is a positive change to the lending rules as it will remove the risk of mortgage defaults should we get an increase in mortgage rates over the coming years.
How is the Vancouver real estate market today?
The market has definitely slowed from its previous unstainable pace back in the spring of this year. There have been moderate price corrections across the market with larger price corrections in the luxury detached houses and there is a wait and see attitude with many buyers who remain on the sidelines. The following is a brief synopsis:
Vancouver East Side Detached Houses
Single detached houses on the East Side for the month of October had an absorption rate* of 10% which indicates a buyer’s market. Prices dropped by only 1 percent from last month with the average days on market remaining unchanged at 15. The market has become more relaxed where buyers can now write subject offers. The neighbourhoods with the most activity were Hasting East, Grandview and Renfrew with an average absorption rate of 18 percent. Buyers can now take more time to view listings and not have to worry about rushed multiple offer bids on the first weekend of showings.
Vancouver East Side Condo and Townhouse
The condo and townhouse market on the Vancouver East Side is very active up to the 1 million dollar price point. The overall absorption rate for the month of October was 44% which indicates a seller’s market. Low interest rates and high rents continue to drive this market. The attached market is moving at a slower pace since June / July but the demand remains strong. The number of days a listings takes to sell has increased slightly to 24 and an overpriced listing will sit on the market. The new mortgage rules have not really put a dent in this market, but the next few months will tell the complete story.
Vancouver West Side detached Houses
Single detached houses on the West Side of Vancouver for the month of October had an absorption* rate of 14%, a buyer’s market right on the edge of balanced market of 15%. The most active price range was from 2 million to 2.75 million. The high end luxury market has slowed substantially with 275 listings and only 15 sales for the month of October. If you take out the 4.5 million dollar plus category the data shows that the West Side detached market is a seller’s market with an average absorption rate of approximately 52%. Prices are relatively unchanged from last month with the average days on market at 23. The neighbourhoods with the highest sales to active listings were University and Mackenzie Heights with an approximate absorption rate of 50% making these neighbourhoods a strong seller’s market.
Vancouver West Side Condo and Townhouse
The condo and townhouse market on the Vancouver West Side remains very active up to 1.5 million. The absorption rate* was 35% for the month of October which indicates a seller’s market. The 1.7 million dollar and up price range was very quiet which is maybe a result of the new foreign buyers tax. The neighbourhoods with the highest absorption rates were False Creek, Marpole, Fairview, Kitsilano and Mount Pleasant. There is a considerable amount of new development in the neighbourhood of Mount Pleasant / Olympic Village which is resulting in a high number of sales. This neighbourhood of Vancouver has grown considerably over the past few years and is now highly sought after by today’s buyers.
Downtown Condo and Townhouse
The condo and townhouse markets in Downtown Vancouver remain active up to the $925,000 price point and from 2.25 million to 3 million. The absorption rate* for Downtown is 31% which indicates a seller’s market. The neighbourhoods of West End, Downtown, Coal Harbour and Yaletown which all fall under the umbrella of Downtown Condos and Townhouse statistical analysis data are all in a seller’s market in the aforementioned price ranges.
North Vancouver Detached Houses
Single detached houses in North Vancouver for the month of October had an absorption rate of 20% which is at the high end of a balanced market (21% is a seller’s market). The average price remains relatively unchanged from last month with the average days on market at 24. The majority of the sales were in the 1 million to 1.75 million price range. There were very few sales above 2.25 million with 101 listings and only 6 sales.
North Vancouver Condo and Townhouse
The condo and townhouse market in North Vancouver remains busy with an overall absorption rate of 53% which indicates a strong seller’s market. The busiest sector of the market is from $300,000 to $900,000. The market slows down considerably from $950,000 and up with a total 59 listings and only 7 sales for the month of October. Listings are selling on average within 18 days of being listed.
*Absorption rate is calculated by taking the number of homes that sold in a month and divide it by the total number of homes for sale at the end of the month.
- Buyer’s Market: 0-14%
- Balanced Market: 15%-20%
- Seller’s Market: 21%+
The real estate market is performing well in the condo and townhouse sector and there is good activity in the single family detached housing sector. Performance is specific to moderate price ranges and specific neighbourhoods. There are many buyers on the fence at the present time waiting to see how the new foreign buyer’s tax and new mortgage regulations will play out in the coming months. The next three to four months will be interesting as Vancouver real estate stabilizes from the early 2016 fury. To date, the luxury housing and condo market above the 2.75 million dollar mark in West Vancouver, Vancouver West Side and Downtown have been most affected by the foreign buyer’s tax.
If you would like further information on a specific type, location or price range please call or email me. I can easily help with any questions by phone or email.
2016 Monthly Absorption Rates
Detached Single Family Houses
| Area | May | June | July | August | Sept | October |
| Vancouver West | 36% | 27% | 18% | 11% | 10% | 14% |
| Vancouver East | 49% | 33% | 21% | 14% | 10% | 10% |
| North Vancouver | 65% | 82% | 11% | 8% | 17% | 20% |
| West Vancouver | 27% | 19% | 11% | 8% | 6% | 6% |
Condominium & Townhouse
| Area | May | June | July | August | Sept | October |
| Downtown | 86% | 95% | 53% | 42% | 37% | 31% |
| Vancouver West | 83% | 80% | 64% | 51% | 40% | 35% |
| Vancouver East | 92% | 100% | 100% | 89% | 65% | 44% |
| North Vancouver | 100% | 100% | 88% | 62% | 61% | 52% |
| West Vancouver | 89% | 49% | 36% | 41% | 29% | 24% |
Written by Don Urquhart Vancouver real estate agent since 1987