Real Estate News & Updates

The Vancouver real estate market has seen significant changes, including the implementation of a cooling off period and foreign buyer ban. Interest rate hikes have affected buying power and led to fewer transactions, with sales totals 13.4% below the 10 year average. December 2022 saw a 50% decrease in residential property sales compared to the same month a year earlier. The detached market has slowed more than the condo and townhome market, providing opportunities for move-up buyers. More inventory is still needed before we see substantial price declines.

Here’s your Vancouver real estate market update for December 2022 – under 60 seconds.

November is usually a slow month. November 2022 no surprise, was no different. Home sales and listing totals were well below the region’s long term averages. Metro Vancouver sales volume was 53% less than in November 2021, the same time of year earlier and 15% less than October 2022 a month earlier. This is to be expected in the current climate, there’s still incredibly low inventory and that’s keeping prices from free falling.

December 7, we just had another rate hike further hurting buyers borrowing capacities. There are good opportunities for buyers looking to move up into detached homes from condos and townhomes because that segment of the market hasn’t fallen quite as much as detached. Let’s see what happens in the new year. 

See you in 2023!

Here is a quick update on the Vancouver housing market for November 2022

There were 1900 residential sales in the Vancouver area in October 2022. This is down 45% from the same period a year earlier. However, this almost a 13% increase from the month earlier (September 2022). As you can see, there has been an uptick in activity.

Inflation and rising interest rates are some of the items that continue to dominate headlines. At the moment, there are many buyers and sellers that are on the sidelines. There is low housing inventory and sales to active listing ratio for October 2022 (blended average) for Metro Vancouver is almost 20%. Remember…anything higher than 20% is generally considered a seller’s market.

Moving forward we are probably going to see another interest rate hike or two. We can expect that further interest rate hikes will likely put downward pressure on demand.

Here is a quick Vancouver housing market update for October 2022

The last thirty days have been no surprise. Home sellers are a bit more active in Vancouver’s housing market while home buyer demand remained below the region’s long term averages.

Despite the decrease in sales in September of 2022, there was a 46.4% decrease in sales from September of 2021, and almost a 10% decrease in sales from August 2022, the month before. Inventory is quite low: there’s more inventory in the single family market than in the condo market, but low inventory is currently preventing a freefall in prices in Vancouver.

For the most part, sellers just aren’t panicked, and when they don’t get the price they want, they’re pulling their listings off the market. Rental prices are quite strong and that buoyancy is incentivizing many condo owners to rent out their condos rather than sell for a price that they’re not happy with. We are also seeing some condos being pulled off the market.

Higher interest rates, and as a result, higher borrowing costs, are certainly affecting buyer demand. And there’s every indication that we’ll see further rate hikes from the Bank of Canada in an effort to put downward pressure on inflation. It’ll be interesting to see what happens after the next couple of rate hikes, how that impacts inventory of housing in Vancouver.

When should investors jump into the Vancouver real estate market?

Part 1

Questions people are asking about Real Estate Investing in Vancouver?

I am a Vancouver Realtor with an expertise in investment properties and development sites. In my chats with investors, people are asking me: “is now a good time to buy a Vancouver investment property?” Wondering both about, rental properties that they can buy, rent out for cash flow, and hold or even development sites for land plays.

Answer: It Depends

And the answer is, it depends. It’s no secret that the market is considerably slower than it was at the start of the year. We hear it on the news all the time. This can benefit investors because investors are able to negotiate more favourable terms from sellers. For example, better a due diligence period, longer closing perhaps you can even negotiate a better selling price.

Where are Vancouver Cap Rates?

Vancouver Cap Rates Vancouver cap rates have gone up slightly, meaning that the yield on your investment has increased because rents are strong, or assuming you can have vacant possession and prices are down. Cap rate is not the only metric to look at though.

What challenges are Vancouver Real Estate Investors facing in October 2022?

Challenges for Investors – inflation and borrowing power The challenges that investors are facing aside from just general inflation are due to rising interest rates, which really hurt your borrowing power. And for a development site, it would be very hard to get a land loan with favourable terms or even palatable terms. So, is it a good time to buy an investment property? It can be, especially if you have considerable equity, it can be a great time, if you find the right deal, because of less competition.

Where to find Real Estate Deals in October 2022?

Of course, we source a lot of off-market deals, but investors may even start seeing a few MLS deals pop up. You have to keep in mind that rental properties in Vancouver, whether we’re talking about just condo units or even apartment buildings, generate a small yield and the more capital appreciation play the cap rate is going to be below what you can even get for a giant GIC. Now, in the case of apartment buildings, there’s financing structures that you can employ and certain tax write-offs that can help you make better sense of the deal.

There is big news to share in the Vancouver Real estate market. The Provincial Government has set the maximum allowable rent increase for 2023 to 2%.

How is the rental increase calculated?

The rental increase is usually calculated according to the Consumer Price Index (or CPI) which measures the price increase in a basket of goods (for example; food, clothing transportation and others). This is supposed to help calculate inflation – and this is used to help determine the allowable rental increase.

As we know, 2% is significantly less than inflation which is currently being calculated above 7%.

How does this effect Vancouver tenants?

It is designed to lessen the burden of the rising cost of goods and services (other than their housing of course).

How does this impact Vancouver landlords and Vancouver Real Estate Investors?

This could cause considerable harm to landlords. None of their costs are frozen in time – but their revenue is fixed to an amount considerably below inflation. Landlord expenses, such as property taxes, utilities, maintenance, insurance and strata fees have risen. There was a rent freeze at the start of the pandemic – and the 2023 rental cap further exacerbates the struggle of landlords.

For many landlords, this is not a sustainable business model.

The average landlord in canada owns 3 properties… Over 1 in 6 canadian homeowners own multiple properties.

We aren’t talking about institutional investors …these are mom and pop investors that are being pushed to the brink—especially if they have considerable leverage in their portfolio or if they rely on these properties for retirement income.

Many of these investment condos in Vancouver are negative cash flowing – or are barely cash flowing.

Interest rate hikes, inflation and the latest rental increase cap could push some of these landlords into a situation that is no longer financially palatable. I suspect that we will start seeing more investment condos come to market in the coming months as a result of this financial pressure on investors.

If you are interested in how this could affect you or if you are curious on the numbers of an investment property…please reach out to me and I will be happy to sit down with you.

To with connect with Vancouver’s Top Realtor, reach out to Jonathan Ames with questions about the Vancouver Real Estate market at https://jonathanames.ca/about/#connect Check out expert opinion on the Vancouver Real Estate Market from Vancouver’s Top Realtor https://jonathanames.ca/blog/

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As predicted, the Bank of Canada raised its key interest rate by 75 basis points today.

The BOC also signaled that this will not be its last increase in its continued fight against inflation. The rate hike brings the bank’s key rate target to 3.25%. This is the fifth interest rate hike this year.

This increase will feed into other lending rates, and it is going to be more expensive for Canadians and businesses to borrow money.

So, why do we have a problem with inflation?

Well, we know that the COVID 19 pandemic and the response of printing money, the global supply chain crisis and the war in Ukraine have all contributed to rising inflation.

How is it affecting the Vancouver housing market?

Right now, we’re seeing increased pressure on borrowers. So, the rising rates are pushing many Vancouver buyers to the sidelines, and it’s also reducing the purchasing budget of others. At the same time, we have yet to see a flood of inventory hit the market. This has helped prevent significant price corrections from occurring in Vancouver real estate.

I will follow up next week with further observations on the effects of these rate hikes on the Vancouver real estate market.

In the meantime, if you have any questions, you can reach out to me by visiting my website at jonathanames.ca

Since I am a Vancouver Real Estate Agent, I deal with many estate sales.

I received calls recently from a few people that sadly had deaths in their family. This is always a really hard time.

These people were wondering how to proceed with the sale of the property of the deceased, and we do quite a few estate sales. It’s certainly good to speak with the realtor early on because you’re going to want to know the market value of the property, and it may be necessary to get an evaluation for probate. But really, from the beginning, you should be speaking to a lawyer.

Ideally, your loved one will have had a will and potentially trusts in place that would make this a quicker process. Depending on the structure, you may need the court to grant probate before the properties can be sold. This process can take up to six months and often a lot longer, so the earlier you start on it, the better. If you have any more questions or you’d like a referral to a lawyer, please reach out.

SEPTEMBER 2022 VANCOUVER DETACHED MARKET IS A BUYER’S MARKET

It’s the start of September 2022 and summer is ending and everyone is wondering, “what’s happening in the Vancouver real estate market?”

We will be receiving the August stats from the Real Estate Board soon. Historically, August is one of the slowest times of year for real estate activity. The seasonal slowdown, coupled with overall market cooling from rising interest rates, has seen Vancouver’s West Side detached market transition into buyer’s market territory.

SEPTEMBER 2022 VANCOUVER CONDO MARKET HAS PROVEN TO BE MORE RESILIENT

There is a lot more activity in the condo market, especially on the entry level. For example, downtown one-bedroom condos are still quite busy. We are currently working with several end users and investors looking for condos in Kitsilano, Fairview, Downtown Vancouver and Coal Harbour. The one-bedroom condo market is still active.

In the last 30 days in Downtown Vancouver, we’ve seen sales to active listings at over 20%. Although sales activity has dropped considerably since the market peak earlier this year, this is still technically a seller’s market.

WHAT WILL HAPPEN WITH SEPTEMBER’S ANTICIPATED INTEREST RATE HIKE?

So what’s going to happen in September? Generally, buyers in the Vancouver real estate market return after Labor Day. The big news that we’re waiting for is the interest rate hike that’s expected September 7th. It is anticipated to be at least 75 basis points or three-quarters of a percent. And I’ll check back with you to see how that influences the September market and how things play out after the interest rate hike. Please reach out if you have any questions on how this might be impacting you with your Vancouver real estate goals.

How to get started with a presale assignment?

Recently, I’ve had several investors approach me about selling their presale contracts before the completion of the project. This used to be a more common practice in the Vancouver real estate market but has waned in popularity in the last few years. Regardless, this still occurs for a variety of reasons. And if you’re going to do this, there’s a few things to consider. The first step is you’re going to have to work with a realtor familiar with the process. An assignment of a presale is its own beast, and you’re going to have to make sure that everything is done in the appropriate manner.

Read that disclosure statement and contract!

The first thing that I’d recommend is reading the original developer’s disclosure statement and purchase and sale agreement. You’re going to have to confirm the assignment policy for the project and for your specific contract. You will almost certainly need to get the developer’s approval, and there can often be major restrictions on how you can market the assignment and when you can market that assignment. You’re also going to have to keep in mind that the assignor, the one who’s selling their assignment, will still be on the hook if the assignee, the person who’s buying the assignment, can’t complete for any reason.

What risks are associated with assigning your presale unit?

If you assign your presale and then you go and buy another property because you’re not going to get your money for another year, you could be in big trouble if the assignee backs out and the market is down. So presale assignments can be a great opportunity for the assignor. You have the opportunity to turn a profit and have a sizable return on your initial equity. It can also provide the assignee the chance to get a property in a difficult seller’s market. So if you’re getting into this, you just need to be careful and make sure you know what you’re doing.

If you’re interested in finding out more about the process or if you’d like to find out which presale assignments are available for purchase, please reach out and we’ll gladly have a chat with you.