Real eState

Vancouver’s luxury real estate downturn

Published

1 year ago

October 12, 2023

As real estate analysts downgrade year-end forecasts due to nervousness over more interest rate increases and cost of living pressures, the B.C. real estate market seems to be softening across the board.

But as one insider explains, that softening isn’t just being seen in average home sales. Would-be purchasers of Greater Vancouver “luxury” homes are also reluctant to sign on the dotted line, and those who already have a portfolio are looking to offload.

Dane Eitel, founder and lead analyst at Eitel Insights, tells CityNews that for properties over $6 million, the region saw 346 listings at the end of January. Now, that number sits at 409.

“The inventory certainly is starting to come up to the higher levels. If we look back at where we were in the peak of 2022, [there] was 449 active listings in June of ’22. So, we’re very near the historical high for $6 million and above, active, detached properties.”

According to Zealty, as of Thursday, just the West Side of Vancouver alone — neighbourhoods west of Ontario Street — has 270 active listings.

Active listings of $5 million and over in Vancouver. (Zealty)

Eitel says that even during the peak of active listings last year, the region averaged 15 to 19 sales of over $6 million per month. This September, that number fell by almost 50 per cent to just eight sales with that price tag.

“[It’s] on the lower side, given our recent history here, especially since the turn of 2020, when we entered into the COVID market and the frenzy really started to boil up to frothy levels.

“We’re definitely starting to fall back on that,” he added. “On an average market basis, if we take all of the market into account, the average selling price in August was $2,345,000, [last month] we actually subtracted $164,000 month-over-month and come back down to $2,180,000.”

Eitel explains that the luxury market works a bit differently from the overall housing market, noting cases of forced sales when people fall behind on mortgage payments are not as common. However, with the dramatic rise in interest rates, he says the luxury market is seeing ramifications — including the need for sellers to reconsider and drop their prices.

A house in Vancouver's West Side has seen a price reduction of over 15 per cent after being on the market for more than 80 days (Zealty.com) — A house in Vancouver’s West Side has seen a price reduction of over 15 per cent after being on the market for more than 80 days (Zealty.com)

“And some builders that over-developed, and can’t necessarily get their profits that they were expecting at the onset of the project a couple of years ago,” he said.

Eitel expects this trend to continue.

“Lower sales environment, higher inventory, which has certainly been something that the market has been desperately searching for, is likely going to come to pass as we continue to move forward for the remainder of 2023. And even in the beginning of 2024.”

Luxury listings in Vancouver seeing price drops

A home in Vancouver’s exclusive West Point Grey neighbourhood has been on the market for over 12 months. The property along Drummond Drive, which sits on over an acre of land just south of Spanish Banks, was originally listed in 2022 for $21 million dollars. Now? It could be yours for $18.8 million.

Meanwhile, in Shaughnessy, after spending just under 80 days on the market, one detached home has seen a reduction of over 15 per cent. The house, on Balfour Avenue, underwent a $3 million renovation a decade ago, according to the Realtor. Now the home’s original price of $15,330,000 has been reduced by almost that exact amount — now listed for $12,980,000.

detached home has been on the market for over three months. The two-storey, six-bedroom home along West 26th Avenue was originally listed in July at over $8.2 million, and is now on the market for $7.9 million. (Realtor)

Another Shaughnessy detached home has been on the market for over three months. The two-storey, six-bedroom home along West 26th Avenue was originally listed in July at over $8.2 million, and is now on the market for $7.9 million.

Eitel, who is also a managing broker at Royal LePage West, says at his own brokerage, pressure is mounting on sellers — especially those who are on variable mortgages.

“They are getting pushed to points where they are potentially having to sell. If interest rates continue to creep higher, another 50 basis points would be obviously detrimental to their affordability.”

But Eitel explains the region won’t see the true impact of higher interest rates until around 2025, as five-year mortgages come up for renewal after the buying frenzy seen in the early stages of the pandemic.

“During 2020 and 2021, because of the rapid increase, just the torrid pace of sales that were occurring, we probably front-loaded a lot of that five-year average sales during those two years. … However, when we look at the five-year term of a mortgage, those will be up in 2025, 2026. So, the real potential fear for the market is a swath of inventory coming during those years,” he noted.

“If the economic factors don’t start to settle down, inflation doesn’t ease, and interest rates don’t have the ability to come down, that’s when you would see that swath of inventory come to the market that we haven’t seen in many, many years.”

Meanwhile, the BC Real Estate Association released its September numbers, suggesting hesitation is being felt right across the province.

“Home sales in B.C. have clearly been impacted by the Bank of Canada’s recent tightening of interest rates, along with the resulting surge in mortgage rates,” said BCREA Chief Economist Brendon Ogmundson. “Home sales are once again trending at below average levels as potential buyers struggle with a high cost of borrowing.”

In September, the Bank of Canada held its key overnight rate steady at 5.0 per cent after two hikes through the summer.

The next interest rate announcement from the central bank is scheduled for Oct. 25.

–With files from Mike Lloyd

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Real eState

Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

6 days ago

November 6, 2024

Anne Joseph

TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Homelessness: Tiny home village to open next week in Halifax suburb

Published

3 weeks ago

October 24, 2024

Anne Joseph

HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Real eState

Here are some facts about British Columbia’s housing market

Published

4 weeks ago

October 17, 2024

Anne Joseph

Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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