Where is Affordable Real Estate in Greater Vancouver? 2016 was by far the hottest real estate market I have ever experienced in my 35 year career. It did, of course, benefit home sellers rather than home buyers but if you were selling your home and wishing to buy another it was a challenge to say the least, due to the demand far outstripping the supply.
The BC Government’s 15% foreign buyers tax introduced on August l, 2016 put the brakes on the market. In fact, property sales were already decreasing due to the affordability factor. Then City Hall passed the Empty Home Tax, which takes effect on January 1, 2017 and will present a challenge to people who live outside of the city and own a pied-a-terre in Vancouver for their own use. They will have to pay a 1% tax of assessed value if the property is left vacant for more than six months. In addition, Ottawa tightened mortgage qualifying rules – yet again, which presents a challenge for local buyers.
Vancouver is obviously trending up the unaffordable real estate ladder, whereby the younger buyers who aren’t lucky enough to tap into the Bank of Mum will be faced with renting or moving to the far away suburbs and commuting by public transportation or having to drive, which also increases your overhead, if they have a City job.
First I’ll look at houses -just because they are part of the real estate equation but only a small percentage of local people can afford a house in Vancouver – even on the East Side. Townhomes have become an alternative to houses and then of course there’s condos which remain the most affordable type of real estate to own, providing you’re not on the waterfront or the luxury Downtown hotel/condo complexes!
Townhomes reached a benchmark price of $661,000 at the end of December 2016, which is a 20% increase for the year. Over the last ten years the Lower Mainland has seen a 56% increase in townhome prices and a 39% increase over the last five years. Squamish townhomes won the race last year, boasting a 33% increase, closely followed by Whistler with a 32% increase and Maple Ridge with a 28% increase Currently the suburbs with the most affordable townhomes are Maple Ridge with a benchmark price of $391,000, followed by Pitt Meadows at $477,000 and Coquitlam at $504,000. Clearly townhomes are benefiting from the high cost of a house. In Squamish the benchmark price of a house is $813,000.
So that leaves condos as the only choice for young buyers. Alternatively, the Province could grow the economy in Surrey and create more jobs for people working out there. These properties saw a 52% increase over the last ten years in the Lower Mainland. East Van won this race with a 73% hike. Currently the least expensive condos in the Lower Mainland are in Maple Ridge with a benchmark price $208,000, then Port Coquitlam at $303,000, followed by Pitt Meadows at $310,000. Coquitlam is also affordable at $346,000. Consider a joint venture with a friend and buy a two bedroom condo with both of you paying the mortgage and sharing the profit when you sell. You can still find some two bedrooms in Richmond, Coquitlam or Burnaby that sell for less than $350,000. So getting some assistance from the Bank of Mum may be possible for first time buyers.
Consider Ladner which has a bus to the City and maybe in the long run the BC Gov’t will extend the Skytrain from Richmond to cross the new bridge which is due for completion in 2022.
Greater Vancouver 2016 Market Recap
In my entire career I have never seen anything close to 2016. Back in the good old days a hot market which favoured sellers would produce three or maybe four offers on the same property. Last March I was in an 18 offer presentation and every offer had at least another eight buyers competing for the property. I have also never seen properties sell for such a large amount over the list price. So it is healthy to see the market return to normal. If the Mainlanders return to buying real estate for the Chinese New Year which is at the end of January, that will stabilize prices. If they don’t we may well see a small decline, particularly in house prices. The sales to active ratio peaked at 61% and now sits at 27%. Listings peaked after the Wall Street crash in 2008 at 20,000 and now sits at 6,200. Prices generally decrease when the supply is high, but we have never had this degree of unaffordability.
2016 Vancouver West Side Real Estate Recap
The year saw the BC Government introduce the 15% foreign buyers tax on August 1, 2016 and City of Vancouver passing the Empty Home Tax effective January 1, 2017.
Sales actually peaked in March at 1,005 and declined to 325 in December, with a sales to active ratio falling from 66% to 28%.
Average days on market bottomed at 18 and is now up to 37.
There are only 1,049 properties listed for sale on the West Side. This is an all time low.
The average sale price of a house is now $3.7M, up 11% over the last year. Townhomes sit at k$1,287,000 up 16% over the last year and condos are $856,000 up 14% over the last year.
Ten years ago the average house price was $1.2M, townhomes $570,000 and condos $420,000. Houses have outperformed and perhaps that’ll be where the correction will be.
2016 East Vancouver Real Estate Recap
East Van average sale price is down to $1.452.000 for houses, which is equal to a year ago. It peaked at $1.726.000 in April. Townhomes are $814,000, up 21% from a year ago and condos are $543,000 up 22% from a year ago. Clearly East Van is benefiting from the very expensive West Side.
Ten years ago the average house price was $540,000, townhomes was $330,000 and condos $231,000. Cheap or what!!
Sales to active ratio is now 25%.
Currently 712 properties listed. The low was Dec’15 with 500.
Average days on market is 36.
Some economists are predicting that prices will correct by ten or even 20%, or only house prices will correct, and some are saying prices will sit flat for the time being. In truth, no-one knows and time shall tell! History shows that long term investors always do well.
Let my decades of hyper-local knowledge help you find the right home! Call Maggie at 604-328-0077