Greater Vancouver’s home price gains during the pandemic have lagged behind most other Canadian jurisdictions as well as those in the United States, in stark contrast with the region’s unprecedented increases in the mid-2010s, when the provincial government intervened on foreign demand.
“It’s a different ballgame,” said Tom Davidoff, associate professor and director of the Centre for Urban Economics and Real Estate at the University of British Columbia.
“This is enhanced affordability for locals pushing up prices, as opposed to diminished affordability for locals, full stop, due to outside pressure.”
This time around, local residents – seen as the primary driver of the housing boom – have been able to access a greater pool of money with their relatively stagnant wages due to lower interest rates and more accessible bank credit. Adding to the housing froth has been heightened demand for suburban properties with more living space due to the COVID-19 pandemic, Davidoff says.
But these factors are being witnessed across North America.
Canada’s home prices have jumped 17.3%, whereas Greater Vancouver’s have risen just 6.8% between February 2020 and February 2021, according to the Canadian Real Estate Association. U.S. house prices rose 10.8% from December 2019 to December 2020, according to the Federal Housing Finance Agency (FHFA) House Price Index.
Despite the continental surge, some Vancouver-based media commentary has asked, “Where is the outrage?” now, in comparison with the significant political pressure applied on the B.C. government in 2017, when housing prices rose 48.5% over the prior three years, according to the Real Estate Board of Greater Vancouver (REBGV).
Then, foreign ownership – and money derived from foreign earnings – was perceived as a unique factor further disassociating local incomes (residents) from local housing prices in Vancouver.
Now, foreign purchases are down significantly in B.C. and immigration has vanished.
“The outrage was, you know, people who want to get into the market can’t, and renters are paying more. This time, it’s different, because the reason prices have escalated, in part, is because of enhanced affordability through the mortgage market,” said Davidoff.
“So instead of another group crowding out local demand, which was part of what was happening in 2016 – you know, how much of a part is controversial – but now, it’s pretty clear, it’s that people have more ability to pay,” he added.
People have more ability to pay because Bank of Canada (BOC) interest rates are at an all-time low of 0.25%. Furthermore, BOC is buying government bonds (debt) from financial institutions, allowing them to lend more freely and at historically low interest rates.
This process, called quantitative easing, “encourages households and businesses to borrow, spend and invest,” states BOC. “For example: We can buy five-year government bonds, which will lower their yield. This would be reflected in lower interest rates on five-year fixed-rate mortgages, making it cheaper to borrow to buy a house.”
The BOC has indicated low rates are here for the near term, at least until 2023.
Davidoff elaborated that suburban housing markets, such as in the Fraser Valley, have typically been cheaper as people factor in higher transportation costs. But buyers appear to be betting that working from home could become permanent.
“I think it’s true that the virus has made people want more space. Out in the suburbs, there’s more space, which is what you want. And the issue of transportation has been diminished,” said Davidoff.
Urban planner Andy Yan says outrage over housing still exists but “it’s a different type of outrage if you’re totally locked out of ownership, as opposed to moving on up.”
Yan, director of Simon Fraser University’s City Program, suggests people are leaving their condos and paying more for the suburbs.
Although Vancouver’s overall price change is 6.8%, detached homes are up 13.7%, townhouses are up 7.2% and apartments are up only 2.5%, according to the REBGV. However, the Fraser Valley Real Estate Board reports 25.3% price gains in all housing forms since February 2020.
“I think there is outrage. But it just depends on who you are,” said Yan, who has been criticized for his 2015 report suggesting overseas Chinese buyers fuelled the remarkable 2014-17 gains.
“My point wasn’t only just foreign money. But it was foreign money with cheap money, right? Now we have a scenario where cheap money completely takes over the environment,” said Yan.
Another difference between then and now, said Davidoff, is how rents have remained the same in Vancouver, due, in part, to government intervention (rent freezes through to December 2021). And so, a significant population is not faced with higher housing costs during the pandemic.
Yan said it is those renters who likely have had their incomes “vaporized” due to the pandemic.
“If you look at the core of unaffordability, it’s both very high housing prices with relatively low, very, very low paying jobs,” said Yan.
Both Yan and Davidoff suggest housing prices are now at a level of risk not seen before, should interest rates rise and transportation demands return to the pre-pandemic era.
The total proportion of Metro Vancouver residential properties owned by non-residents in 2018 reached 4.9% while “some non-resident participation” in properties amounted to 7.6%, according to the Canadian Mortgage and Housing Corporation (CMHC). International students who file an income tax return are considered residents by CMHC. Last year, the CMHC reported these figures have remained the same.
B.C. introduced a foreign homebuyers tax in August 2016 and a so-called “speculation and vacancy tax” in 2018. Stricter mortgage requirements (“stress tests”) were also applied then by the CMHC, leading to house prices dropping in Vancouver in 2019.
Cracking down on potential crime and tax avoidance/evasion has also been an issue in Vancouver real estate. The B.C. government is conducting a public inquiry into money laundering that is to look at the regulatory regime in real estate. And between 2015 and 2020, a special Canada Revenue Agency audit program has issued $729.1 million of tax reassessments linked to Greater Vancouver real estate.
Hot real estate market sparks warnings to potential buyers as complaints to regulator double
As home sales in the province continue on a dizzying trajectory, the province’s real estate watchdog and regulator are warning buyers to be wary of what they may be getting into.
The Real Estate Council of B.C. (RECBC) and the Office of the Superintendent of Real Estate said that in the first three months of 2021, they have seen an increase in inquiries and complaints.
Calls to the regulator were up 42 per cent over the previous year, while complaints, such as how offers were made and accepted, were double the number received in the same period in 2020.
“Buying a home is one of life’s biggest financial decisions. There are potential risks at the best of times, but with the added pressure and stress of the current market conditions, those risks are amplified,” Micheal Noseworthy, superintendent of real estate, said in a statement.
Planning on buying or selling a home this spring? With increased market activiy, its important to understand the risks, and we are here to help. Here are some tips to help you find the most up-to-date information before you make a decision: <a href=”https://t.co/7D8d5Of5XZ”>https://t.co/7D8d5Of5XZ</a>
The Real Estate Board of Greater Vancouver says sales in the region have continued at a record-setting pace.
Residential home sales covered by the board totalled 5,708 in March 2021, up 126.1 per cent from March 2020, when the COVID-19 pandemic hit, and up 53.2 per cent from February of this year.
Rural and suburban areas have experienced the biggest spikes.
For the past two weeks, Jay Park has been in the middle of the buying frenzy.
He and his partner are trying to upgrade from their one-bedroom apartment to a two-bedroom condo or townhouse in Vancouver.
“I wish we had done this a month or two ago,” he said.
Park put an offer on a $1-million condo, $4,000 above asking price.
“To entice the [seller], we put in a subject-free offer, but it wasn’t successful,” he said. “They accepted $110,000 over asking price that was also subject-free.”
The hot market has led to bidding wars. Some would-be buyers have even lined up outside for days to try to get a jump on a property.
Erin Seeley, the CEO of the council, is warning buyers to do their research and be aware of risks before making an offer.
“It’s really important that buyers have engaged with their lender before they’re making offers so they know how to stay within a reasonable budget,” she said.
Seeley said some of the complaints the council has heard from buyers is that they weren’t aware the seller has a right to take an early offer.
“And the seller was really in the driver’s seat about setting the pricing,” she said.
Aaron Jasper, a Vancouver realtor, advises clients to avoid cash offers and to include finance clauses even if it may mean they lose a deal.
“There’s a lot of frustration among buyers, feeling pressure to take some risk,” he said.
“You’re better to be delayed perhaps a year getting into the market as opposed to being completely financially ruined.”
Jasper also says realtors are limited in the advice they can give to clients on legal matters, home inspections, potential deficiencies with homes, and financing.
‘Caught up in the craziness’
Other tips from the council include seeking professional advice before making a subject-free offer or proceeding without a home inspection, and speaking to a professional to determine how market conditions may be affecting prices.
Meantime, people like Jay Park say they are still keen to buy. Park has more viewings scheduled and is optimistic.
“It’s a very exciting time for us, but I also don’t want to get caught up in the craziness and make a purchase that’s above our means.”
Source: – CBC.ca
Black Press Media introduces one of Western Canada's best real estate platforms helping home buyers Find. Love. Live. that new home – Aldergrove Star
Need an agent who knows the community?
Or, is it time to look for a new place to live, but you don’t know what’s on the market?
Whatever the real estate need is for residents in the communities of British Columbia, Yukon & Alberta, there’s a new way to do that one-stop shopping – by visiting Today’s Home.
The slogan for the site is “Find. Love. Live.”
“We want people to find their dream home, love it, and live in it,” said group publisher Lisa Farquharson.
Building on the success of Black Press Media’s niche digital platforms – Today’s Home brings the same wealth of knowledge and local expertise to the search for a home, be it buying, selling, or even just daydreaming about what changes you can make in the future.
Search hundreds of listings that local real estate agents have available.
The listings cover properties around the region, from a one-bedroom, one-bath condo for $339,900 to million-dollar acreages throughout the province of BC, Yukon, Central Alberta and beyond.
Click on a listing, and see not only the realtor handling the property sale, but links to his or her other listings and social media feeds. With the click of a mouse, take a virtual tour of the property, find the property’s walking score, and learn about nearby amenities.
There are links available to schedule a showing, or send the agent a comment or question.
Want to share a listing? When you click on the share button, you’ll actually send an attractive digital flyer of the prospective property, not just a link.
There’s even a button to help determine how much you have to spend, courtesy of the convenient mortgage calculator.
Plus, scroll down the page on Today’s Home and find a list of expert local real estate professionals who can answer questions or help with that home sale, Farquharson explained.
Today’s Home offers the advantage of the massive reach that Black Press Media has built throughout Western Canada with its network of community newspapers and online products. That allows the public to tailor real estate searches based on location, price, and other key factors while allowing real estate professionals to gain unprecedented audience reach with their listings.
Today’s Home will dovetail into the media company’s existing print real estate publications.
“Black Press Media has real estate solutions in print and now we can add in the digital component,” Farquharson said.
Watch for expansion of the Today’s Home platform in the near future, she added. That will come as Black Press Media adds a new component – the development community. Developers will be able to reach a huge audience when their projects are ready for presentation.
For information on Today’s Home, contact group publisher Lisa Farquharson at 604-994-1020 or via email.
Happy house hunting!
PGIM Real Estate, Revera Affiliate Target UK Market in Newly Formed JV
PGIM Real Estate has been active in recent months providing capital to facilitate blockbuster senior housing acquisitions. Now the firm is looking to capitalize on demand for senior housing in the United Kingdom.
The Madison, New Jersey-based real estate investor and lender announced this week it is entering into a joint venture with Signature Senior Lifestyle, an affiliate of Revera, to develop and operate senior housing communities around greater London
Mississauga, Ontario-based Revera serves 20,000 older adults in long-term care homes and retirement residences in Canada. It is also the majority shareholder of Sunrise Senior Living, one of the largest senior housing providers in the U.S. The company operates a portfolio of 12 communities in the U.K. under the Signature Senior Lifestyle brand, with one community in development that is slated to open in autumn 2021.
The JV has one development underway — a senior housing community, or “prime care” home, in southwest London. PGIM worked with Elevation Partners, a London-based investor and asset manager in U.K. health care real estate, in sourcing, structuring and executing the venture. Additionally, PGIM will retain the firm to leverage its expertise.
PGIM and Revera did not respond to requests for comment from Senior Housing News regarding details about its development pipeline.
London is emerging as a future hotbed of senior housing development, spurred by favorable demographic growth trends and a lack of available supply, and the PGIM-Revera venture will find competition.
Maplewood Senior Living CEO Gregory Smith told SHN last month that demand for U.K. senior housing is comparable to major U.S. markets such as New York and San Francisco, where supply has historically been constrained.
Maplewood and its investment partner, Omega Healthcare Investors (NYSE: OHI) are looking to expand its luxury Inspir brand to the U.K., and identified five suburban markets around London with high barriers to entry that are favorable for the brand’s growth.
Revera CEO Tom Wellner sees similar untapped upside potential for senior housing in the U.K.