Cheers to a New Year and another chance to get it right.
— Oprah Winfrey
Jay & Brenda News
Humans jump into an optimistic mind space at the beginning of each New Year with resolutions, with hope. After the surprises of 2016 we are still shell-shocked and battle-weary but back in the trenches with more realistic expectations.
The real estate market in Metro Vancouver has had to remake its expectations too after the gravy train of international buyers ground to a halt thanks to Premier Christy Clark and her band of merry men and women in the cabinet anticipating the May 9 2017 election. The detached house market has dropped like a stone in sales numbers, prices are still unaffordable for local buyers and foreign buyers have left the building.
There is a report on the 2016 real estate results and an explanation of the impact on real estate in Vancouver of the new China currency controls in my website article. Link below.
Efforts have been made to compensate for this unaffordability factor by offering a government loan to qualified buyers who need a little help to get to an acceptable down payment on a property. The maximum of $37,500 loan to first time buyers toward the 5% downpayment under the BC Home Partnership Program is limited at the top end to a $750,000 home purchase with the government anticipating that most home purchases will be in the entry level range of $300,000-$400,000. The 25 year loan will charge no interest or repayment for the first 5 years and an interest rate based on the RBC prime rate + 50 basis points, reset every 5 years for the following 20 years. The concern from those who think that housing needs to be affordable and in good supply (wishful thinking without a wholesale change in attitude by the municipalities and their NIMBY voters) was that this government loan would fuel the market and create multiple offers on every affordable property.
Probably true. Program is just getting underway now. Buyers are heavily concentrated in price ranges for which they can qualify for a mortgage. The new mortgage stress tests mandated by CMHC for buyers with less than a 20% downpayment has resulted in most buyers being approved for less mortgage than they would have been approved for in 2015 and early 2016. That combined with the buyers preference for high walkability scores and access to rapid transit has resulted in multiple offers on mid-sized, mid-priced condo units in downtown Vancouver and on newer townhomes in the suburbs.
The BC economy is divided regionally with rural areas suffering lower growth and fewer jobs partly caused by lack of resource development, slowdown in the oil industry and the softwood lumber dispute with the US with some potential job-creating projects being litigated by First Nations and the environmental movement. The growth in the tech sector which offers urban employment has created jobs in the Lower Mainland, Victoria and Kelowna. Recruitment and retention are challenging for all employers because the high cost to rent or buy makes it difficult for most younger employees to move to Vancouver even though they love the place. It’s a huge circle going round and round.
Interestingly the Urban Development Institute’s annual forecast lunch which attracts all the movers and shakers in the real estate and development sector focused on an entirely different part of the market at their January 2017 conference. After 14 years of Bob Rennie, marketer extraordinaire, giving the keynote address on the future of real estate in Metro Vancouver the UDI 2017 presentations were on master planned communities and transit oriented development.
Douglas Todd of the Vancouver Sun wrote on the long history of unaffordable housing and outcry against too much inflow of people to Vancouver with the various remedies tried at different times. All politicians including progressive leaders like Mayor Art Phillips, Alderman (later Mayor then Premier) Mike Harcourt and conservative Premier Bill Vander Zalm blamed the federal government for actively encouraging immigration and foreign investment. Nobody was concerned with political correctness and Phillips is quoted as writing in his mid-1970s book The Housing Crisis: "I maintain that the primary approach to solving the housing crisis in the Greater Vancouver area lies in the immediate reduction and future control of immigration". Harcourt wanted the federal government to lower the limit of 200,000 immigrants allowed into Canada annually and to create conditions that would discourage in-migration from other parts of Canada by making the present locations of the potential in-migrants more desirable. After Expo 86 the numbers moving to Vancouver exploded.
Vander Zalm created the Property Transfer Tax in 1987 as a way to charge investor buyers. He explained his reasoning this way: "Foreign investors, many speculatively, are driving up home prices beyond the reach of British Columbians. These people paid no tax and most have never paid a BC tax of any kind. These welcome newcomers should also contribute to the needs of the province, and this should be done through some sort of ‘property transfer tax’".
Plus ça change, plus c'est la même chose. The more things change, the more they stay the same!
Until Brian Mulroney became Prime Minister and ramped up the immigration rate the federal government under all leaders adjusted the immigration flow to suit the economy and the labour market. Harcourt pointed out that one of the outcomes of Paul Martin, Finance Minister in Chretien’s government, taking draconian action to lower the deficit in the 1990s was the jettisoning of federal funds for social housing programs in Canadian cities. This has contributed to the serious housing deficiency in Vancouver today.
Prime Minister Justin Trudeau has stated that increased immigration into Canada is necessary to replace our aging workforce and population. He also promised an affordable housing strategy for Canada which unfortunately will be running into the same headwinds as the 1990s when the debt got out of hand and many programs were cancelled. We shall see.
We are busy with clients, listings and sales in these early days of 2017. Activity is across the board for area and price range but there is a slowdown in the sale of older detached homes which in the past have been purchased for redevelopment. The Foreign Buyer Tax has had a major impact there. Building bylaw changes in desirable Vancouver neighbourhoods and the cancellation of Land Use Contracts permitting setbacks and heights that imposed on neighbouring properties in Richmond have altered what size and style of home can be built to replace the existing homes. This in turn has discouraged high end buyers who want large imposing new homes with 3 garages and gates.
Jay does make time to walk the dog, cheer on the Toronto Maple Leafs and enjoy the wide range of films and concerts available on Netflix. His birthday is February 6 (also that of Ronald Reagan and baseball hero Babe Ruth) and we are very much enjoying the big screen HD/4G TV that he received last year. It was great for all the political action of 2016, the Trump Inauguration and the Women’s March on Washington. I have managed to wean myself off my addiction to television political news and just watch occasionally when Jay wants to see it.
Effi is doing well and enjoying her walks with the Woofer Walkers. Justin takes the gang in rain, snow, ice and sunshine. He said that on one snowy freezing day someone left a big pile of frozen fish parts on McDonald Beach near the airport where the dogs walk. They discovered it first and ran around with frozen fish pieces until Justin corralled them. He said that he attached their leashes and took them a long way away from the fish but that one Lab/Shepherd X ran back through the woods to find the fish again and he had to chase her to get the piece from her. I’m sure it was some kind hearted neighbour who thought they should feed the raptors, seagulls and geese not realizing that other animals would be injured by eating fishbones. Effi loved all the action around Christmas and the coming and going of family, friends and guests.
We had a wonderful time with Julie and Mary here for the holidays. They celebrated with a trip to Whistler and one to visit friends in Victoria. The 3 days at Whistler with fabulous snow conditions culminated in time spent with Jane and a day of skiing with Rory and his pals. She said it brought back memories of the year she lived at Whistler, skied through the week and sold expensive children’s ski clothes on the weekends. And was the top salesperson in the department!
The trip to Victoria was a thrill for Julie. The rough return ride wasn’t Mary’s favourite excursion. They went by Harbour Air Seaplane from the Fraser River Terminal to Victoria Inner Harbour where their friends met them. Instead of hours on the ferry and long lineups they were there door to door in 30 minutes. We marked their return with lunch at the Flying Beaver Grill adjoining the terminal.
Julie’s Uncle Russ organized a big cousins party at the Yaletown Pub which was catch-up time and a highlight of their visit. The main event was the wonderful Bellinger Family Christmas dinner at Jane and Rory’s home. We all got to admire Ronan, their 6 month old grandson.
Julie and Mary returned to Toronto to enjoy New Year’s at the cottage with hours of snowshoeing punctuated by hours without electricity. Fortunately they have a Honda generator for just such emergencies and managed to keep the fridge operating and the house warm with their airtight wood burning stoves.
We were sorry not to be spending Christmas with Alec, Lucia and Constantin. They celebrated the completion of their Kittsee renos and Christmas with Lucia’s family at their home in the Slovak mountains.
Kath and Stef hosted Christmas for friends and family members at Crooked Creek. They had a lovely time enjoying the days away from Toronto in the snowy Ontario woods. Lots of dogs to walk for exercise and fun.
That same group is going on holiday together to Palm Springs in early February. Julie and Mary are going separately to their own place but will be seeing the gang plus David and Pam Bellinger who will also be there at the same time.
FYI: We find that working with clients at every stage of life: buying first condo homes, moving up to family size townhomes or detached, then downsizing from the large family home to a condo again is very satisfying. We hope that Life is good for you too.
Real Estate News
The complete December 2016 Stats Package from the Real Estate Board of Greater Vancouver is also posted: 2016: The Third Highest Selling Year of Metro Vancouver Housing Market.
Dan Morrison, President of the Real Estate Board of Greater Vancouver states "It was an eventful year for real estate in Metro Vancouver. Escalating prices caused by low supply and home buyer demand brought more attention to the market than ever before. As prices rose in the first half of the year, public debate waged about what was fuelling demand and what should be done to stop it. This led to multiple government interventions into the market. The long-term effects of these actions won’t be fully understood for some time."
"The supply of homes for sale couldn’t keep up with home buyer demand for much of 2016. This allowed home sellers to raise their asking price. It wasn’t until the last half of the year that prices began to show modest declines." Morrison said.
According to the Real Estate Board of Greater Vancouver MLS residential property sales of detached, attached and apartments reached 1,714 in December 2016, a 39.4% decrease compared to 2,827 sales in December 2015.
December sales were 8.1% below the 10- year sales average for the month.
In December 2016 the number of residential properties listed for sale on the MLS in Greater Vancouver was 6,345. This is an increase of 5.3% from December 2015 (6,024).
The REBGV Home Price Index includes Benchmark Prices for consistent comparisons. Benchmarks represent a typical property within each market. The benchmark property descriptions have been updated to reflect current buying trends.
|Home Price Index / Benchmark Prices|
|Detached||December 2016||1 year change||5 year change|
|Townhouse||December 2016||1 year change||5 year change|
The following schedule shows the change in sales volume from December 2015 to 2016:
|Detached Home Sales|
|December 2016||December 2015|
|December 2016||December 2015|
Change has already begun with new mortgage rules. We’re still advising clients to take advantage of the continuing low interest rates available now whether you are moving up or down in the market. You will be glad that you did so at this time!
We thank you for your referrals and look forward to assisting you or any of your friends and family with future real estate needs.
"And now, let us believe in a long year that is given to us, new, untouched, full of things that have never been."
Rainer Maria Rilke
Sending warmest regards and all good wishes for a Happy New Year.
Jay Banks & Brenda Kinnear