As we head into the spring market, navigating decisions around real estate can be tricky. With respect to real estate there are always 3 decisions to consider:
Buy: Investing in real estate in Vancouver remains a solid long-term decision, especially with the stock market at all-time highs and projected decreases in interest rates. Vancouver’s status as one of the world’s most desirable cities ensures continued demand and potential for appreciation. I would look at buying properties within Vancouver’s city proper near skytrain stations and future transit sites. For condos I would suggest buying in older buildings with low price per square foot that may be considered having strata wind ups and potential developer buyouts down the road.
Sell: In certain sub-areas, move-in ready detached houses priced under $3,000,000 are in high demand. For instance, we listed a home at $2,800,000 in Mackenzie Heights recently which garnered 19 offers and sold for over $3.2 million. However, it’s worth noting that Westside luxury detached houses have yet to reach peak market prices from July 2016, so we feel there is pent up demand and room for prices to increase further.
Hold: Vancouver’s limited inventory of detached houses, coupled with changes in density regulations favoring multiplexes, suggests that single-family homes will continue to appreciate relative to the market. Despite fluctuations, holding onto properties, particularly detached houses, presents long-term value opportunities in the Vancouver market.
Ready to explore how these market insights can guide your real estate decisions?
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Finding detached houses on the Westside is becoming increasingly rare. The scarcity of available properties is pushing prices up, driven in part by new multiplex zoning regulations. Builders and developers are now fiercely competing with buyers seeking homes for personal residence, reshaping this coveted market. We anticipate that Westside detached homes will continue to be one of the strongest market segments for 2024.
East Vancouver Market:
East Vancouver mirrors the Westside’s scarcity of detached houses, intensifying competition among buyers. Half-duplexes are highly sought after, reflecting a trend towards more compact living spaces and more affordability compared to single family detached homes. Despite this, the inventory of townhomes and condos remains relatively high, offering alternatives for those seeking housing solutions.
Downtown Market:
In Downtown Vancouver, the condo market remains sturdy, with prices holding steady overall. However, luxury condo prices are starting to decline, influenced by a shifting interest rate environment. Softening in the rental market and the prevalence of higher variable rate mortgages are prompting some property owners (specifically investors) to consider selling, adding fluidity to market dynamics.
Trends & New Regulations:
BC Government – Flipping Tax: The BC government’s introduction of a tax of up to 20% on profits from property sales within two years is set to impact both supply and demand dynamics in the real estate market. On the supply side, the tax may deter short-term speculative behavior as sellers face significant financial disincentives to quick flips, potentially reducing available properties in the short term. Conversely, on the demand side, prospective buyers, particularly investors seeking quick returns, may become more cautious, potentially dampening demand for short-term investment properties. All that said, recent statistics have shown that this new Flipping Tax will likely impact less than 4% of the transactions in BC, and when you factor in all the exemptions that would apply to many of those, the number drops further. So while the intent of the tax is to contribute to moderating price escalation and fostering more stable market conditions, we are not optimistic about the real world results. Time will tell.
Changes in BC’s Short Term Rental Market:
Sweeping changes are underway in BC’s short-term rental market, driven by new provincial regulations. Premier David Eby announced a multi-faceted approach to addressing the housing affordability and supply crisis. The proposed legislation aims to eliminate multi-property short-term rental businesses while allowing homeowners to lease spaces within their principal residence and secondary suites on platforms like Airbnb and Vrbo. Enhanced enforcement tools, including a provincial enforcement unit, increased fines, and a provincial registry tracking home usage for overnight accommodations, will be implemented. Additionally, Vancouver’s short-term rental license fee will rise from $109 to $1,000. These measures represent an enhancement of regulations province-wide, aligning with the goal of balancing the sharing economy with housing availability for residents.
Let’s Connect!
Navigating Vancouver’s real estate market can be complex, especially amid evolving trends. Whether you’re a buyer, seller, or investor, grasping these nuances is essential for informed decision-making. If you seek personalized insights or guidance on how these market trends may impact your property or real estate strategy, don’t hesitate to reach out to our team. We’re here to help you navigate Vancouver’s real estate landscape. Contact us for more information or to schedule a consultation. Our experienced team is dedicated to providing expert guidance every step of the way. Stay informed, stay empowered, and let’s unlock Vancouver’s real estate market potential together.
As we stride into the ever-evolving terrain of real estate, the Canadian Mortgage and Housing Corporation (CMHC) has cast a spotlight on the challenges and opportunities that lie ahead. In a recent report, the CMHC unveils a prediction of a 76%-89% increase in the cost of housing by 2030 in British Columbia, driven by a delicate interplay of population dynamics, interest rates, construction starts, and immigration policies. It should be noted that we’ve already seen around 20% increase in prices since 2019. CMHC tends to be fairly conservative in it’s predictions.
At-a-Glance: The Pulse of Canada’s Housing Future
The CMHC’s steadfast projection for 2022 remains unchanged — Canada is slated to require an additional 3.5 million housing units by 2030 to reinstate affordability to the market. However, as with any forecast, the devil is in the details, and this projection unfolds against the backdrop of a myriad of factors.
Regional Dynamics: Where the Heart of the Matter Lies
Housing demand, akin to a symphony, varies in its composition across the diverse provinces of our great nation. The report emphasizes that the lion’s share of housing supply gaps is concentrated in Ontario and our very own British Columbia. Yet, the story doesn’t end there; the provinces of Quebec and Alberta are also earmarked for increased demand, fueled by the flames of economic growth.
A Smaller Housing Stock on the Horizon: Decoding the Decline
Perhaps the most intriguing revelation from the report is the projection of a smaller overall housing stock in 2030 compared to last year’s estimates. The culprit behind this decline is none other than the current shortfall in housing construction.
Untangling the Threads: Population, Rates, Starts, and Policy Changes
The CMHC meticulously weaves together the threads that form the tapestry of our housing future. Population growth, dancing with interest rates, choreographed by construction starts, and influenced by immigration policies — a delicate ballet that shapes the affordability landscape. As we navigate this intricate dance, it becomes increasingly evident that each move, each policy decision, ripples through the fabric of our housing market.
In the vibrant and ever-changing real estate market of Vancouver, detached single-family homes have emerged as a solid long-term investment option. The allure of these spacious, standalone residences is driven by various factors, including their increasing rarity, the shifting focus of developers towards higher density housing options, and the seller’s market that persists even in the face of high-interest rates. For those fortunate enough to own a single-family home in Vancouver, it’s not just a place to call home but also a valuable asset with promising long-term returns.
The city’s limited geographical footprint, coupled with stringent zoning regulations, has made single-family homes a diminishing resource. Vancouver’s ever-growing population and urbanization have led developers to turn their attention towards building higher-density housing options. The pressure to accommodate more people in the same urban space has resulted in the emergence of duplexes and multiplex projects, often on lots that were once zoned for single-family homes.
As the city continues to evolve and densify, the coveted single-family homes become an even more elusive housing option. This shift towards higher density options does not just impact the availability of single-family homes; it also contributes to the appreciation of their value. As supply diminishes, demand continues to grow, and this scarcity drives prices higher.
Vancouver’s real estate market has, for years, favored sellers of single-family homes, even amidst fluctuating interest rates, and have proven themselves as excellent long-term investments. The potential for substantial appreciation in value over time is a significant draw for buyers who have the financial means to enter this market. As more single-family-zoned lots get converted to duplexes and multiplex projects, the value of existing single-family homes continues to rise. This upward trajectory is expected to persist, making these homes an enticing investment for those who can afford them. Even in periods of economic uncertainty and market fluctuations, these homes tend to hold their value and provide flexibility in terms of having a mortgage helped through suites and/or laneway houses. Despite the overall ‘soft’ market we are currently experiencing, it is still a seller’s market for detached homes in most pockets of our city.
If you own a single-family home and are curious of its current value, or are a buyer thinking about purchasing one, please reach out to us to further discuss your goals and situation.
On September 15th, Vancouver’s city council gave their approval to a comprehensive zoning amendment with far-reaching implications. This amendment opens the door for the construction of up to 8 homes on single-family lots within all RS (Single Family) zoning areas. This novel zoning category, known as R1, presents a significant opportunity to address the housing needs of the “missing middle” generation, who seek relatively affordable housing options, both for ownership and rental, throughout our city.
Under this new zoning, the more modest 33×122 lots will accommodate up to 4 homes, whereas the larger lots will permit 6 strata (for sale) ownership units. Additionally, there’s an opportunity to construct up to 8 homes on the larger lots, provided they are designated as market rental units. This transformative change is poised to reshape our city, with some viewing it as a positive development while others express concerns, particularly among existing homeowners in quiet single-family neighborhoods.
These newly termed “multiplexes” will boast a 1.0 FSR (Floor Space Ratio), equivalent to 100% of the lot size in buildable square footage. For instance, a typical 33×122 lot would yield approximately four homes, each spanning around 1000 square feet. These homes are likely to include a mix of 2 and 3-bedroom townhouses. On the other hand, larger lots will accommodate up to 6 homes, predominantly designed as 3-bedroom townhouses to cater to families. There is also going to be additional density bonuses for Net Zero built houses with an emphasis on green construction and energy efficiency.
With that said, this new R1 zoning isn’t all about increases in density. The city has also implemented a 10% reduction in density for the allowable size of single-family homes, going from 70% FSR down to 60% FSR, likely to encourage the higher density developments.
Despite the general increases in density and relaxations through rentals and green construction, there remain numerous uncertainties surrounding these initiatives, including issues like parking provisions and the associated city fees for project development. Undoubtedly, this new zoning will bring about profound changes to our cityscape, marking a shift away from the traditional single-family home, which was once considered a luxury.
If you seek more information about how these changes will impact your property and neighborhood, please feel free to reach out.
Greetings, valued clients and friends of Roch & Weeks Real Estate. We trust this newsletter finds you in good health and high spirits. As we transition into the vibrant colours of fall, we wanted to provide you with an update on the state of the Vancouver real estate market and share our insights into what the coming months might hold.
Reflecting on 2023 So Far
The market has been impacted by several increases in interest rates, but so far we’ve been surprised to see how inventory has remained at historic lows. We anticipate that to change as the reality of ‘higher for longer’ interest rates impacts homeowners and investors. For many investors that have variable interest rate mortgages, they’ve likely gone from cash flow positive to cash flow negative, and have had to start feeding their investment monthly. This has caused many of these owners to consider selling and exiting the rental market. For homeowners that bought over the last 2-3 years with fixed rate mortgages, they are starting to worry about their upcoming renewal. We anticipate many of these homeowners will struggle to keep up with payments, or in some cases, have difficulty qualifying for a renewal on their homes.
Looking ahead to the Fall
As we enter the second selling season of real estate, we suspect that more homes come onto the market. We will also see price reductions on properties that were on the market throughout the spring and summer that did not sell. This will definitely create more buying opportunities this fall. As predicted the Bank of Canada held rates yesterday, which is positive news for many homeowners, but we are now just starting to see the lagged effects of the past 18 months of interest rate hikes. As the effects start to make their way through the economy, there will unfortunately be difficult times ahead for many renters, investors and homeowners alike.
Supply Dynamics and Future Trends
Specific market segments and pockets of the city are experiencing low inventory, so as a result well-priced new listings within these segments are encountering substantial demand. Move-in ready detached homes in desirable neighborhoods remain scarce commodities, and this scarcity is projected to persist throughout the remainder of the year. Affordability is going to remain the challenge for buyers in this higher interest rate environment, and we don’t see that changing until we see interest rates lowering.
During these times of dynamic and ever-changing metrics, we believe it is important to be extra prudent when it comes to your real estate situation. If you’re considering your next real estate move, whether it’s a purchase or sale, we encourage you to reach out to us. Our dedicated team of 5 professionals, with over 50 combined years of experience, is here to provide full-service support.
VANCOUVER REAL ESTATE – February Market Update
January brought a flurry of activity into our marketplace. We have already sold 12 homes totaling $24,000,000. This was a huge uptick in activity compared to the last few months. It would seem to me that buyers are getting used to the new interest rate environment and that people are no longer able to wait on the sidelines watching the market. Despite rocky times in the market buyers continue to need to move for many of life’s reasons including having baby’s, getting married, divorced, and downsizing. Times like this make people realize that their homes aren’t just an investment, they are their haven’s and places to enjoy family and friends.
While the market continues to be sluggish overall there are still a few nice properties that come on the market here and there. When they do come up, they do not last long and are quickly snatched. We work in all of the segments of the market, and within various sub markets, we are seeing different stories emerge. Here are a few key observations of late in different market segments:
Entry level condos: If priced well these homes are selling and with multiple offers.
Mid level condos and townhomes: Affordability for buyers is an issue. Well priced 3 bedroom condos and townhomes are hard to find because there is low inventory.
½ Duplexes: This segment of the market remains hot. In East Van, prices are down from a peak of an average of $2,000,000, and are now closer to an average of $1,800,000 for nice and newer homes. The Westside has low inventory, which continues to put upward pressure on pricing, and sales in this segment are at all time highs.
Luxury Condos: There is a lot of inventory and sellers are holding prices hoping demand comes up to meet them. The opposite has taken effect, especially downtown, where inventory steadily rises, which will create more downward pressure in terms of pricing on this segment. We expect to see some forced sales in the coming months.
Entry level detached homes: Move in ready houses are still selling quickly with little inventory. “Land value,” type properties are slow to move with few interested buyers, unless they are well priced. Developers are sitting on their money, waiting for prices to come down while building costs and labour are elevated.
Luxury detached houses: Prices are down substantially, however, inventory is low and buyers are only purchasing if the downturn over the past 6 months has been factored into the price. Large land value type properties are sitting and getting very little action.
If you are interested in having an up to date market evaluation of your home don’t hesitate to reach out or stop by our office at 6158 East Boulevard and we look forward to chatting with you.
After a quiet December in real estate we are looking forward to what is ahead in our real estate market. What happens over the next 6-12 months will largely depend on interest rates (we will have a good idea of what Q1 will look like once the BoC makes the rate announcement on January 25th). The market has been quite frozen over the past 6 months (generally speaking sellers have not wanted to list, and buyers have not wanted to buy), and that means there is a lot of pent up activity waiting to happen. An interest hold on January 25th could be the catalyst for that pent up activity to engage, or it could take a sideways market for several more months before buyers and sellers start getting active again. Unfortunately nobody has a crystal ball to know what exactly will unfold this year. One thing is for sure, the Bank of Canada is nearing the end of this rate-hike cycle, and may even be there already (we’ll see on the 25th). To further that, rate relief could be on its way later this year. Some economists believe the Bank could start cutting rates before the end of the year, which would be a major catalyst for our market. We’ve read several economists who feel that interest rates will be lower in 2024 than they are today, but perhaps we may see a 25bps increase later this month. Time will tell.
Our best guess is that our market picks up at some point this year, but when that happens will largely be determined by interest rates. A January 25th rate hold could do it, along with the typical strong ‘Spring Market’ which starts in February in Vancouver, or it may take until the second half of this before rates stabilize (with the potential for a rate drop late 2023 or early 2024) before our market wakes up again. We are already starting to see more activity this week than we’ve seen in the previous few months. Buyer’s seem to be coming back into the fold earlier this year than what we’ve typically seen for early January, which makes us cautiously optimistic (we’ve sold three homes so far this year which is a great start). Once ‘potential sellers’ start seeing activity happen, we feel they will be more motivated to get their homes on the market, which gives buyers more options to choose from. We will see what happens first (increased buyer activity, or increased inventory), but one (or both) of those should happen early this year and hopefully contribute to the other factors above to help ‘thaw’ our frozen market.
Where will buyers come from in this new market?
With recent lack of success in the stock market many equity holders, primarily baby boomers are going to continue to help their adult children purchase homes. Given the state of higher interest rates our prediction is that the size of these family loans/gifts are going to continue to grow in size and frequency. Many economists are predicting that this transfer of wealth will only continue in the coming years.
In addition to that, immigrants will play a major role in our market. Canada added just over 437,000 new permanent residents in 2022, according to Immigration, Refugees and Citizenship Canada (IRCC). This topped the department’s target for the year, as well as the previous high of 405,000 reached in 2021. The bulk of these immigrants are coming from India, China and the Philippines. Looking forward, the government of Canada is predicting nearly 1,500,000 new permanent residents over the next three years. This flood of new permanent residents is expected to bring new homebuyers and renters to communities across the country with a large percentage of those coming to the Lower Mainland. That could increase activity in the residential real estate market, which has slowed since early last year, when borrowing costs jumped with a rise in interest rates.
If you are interested in having an up to date market consultation as it relates to your situation don’t hesitate to touch base with us or pop by our cozy office and we’ll make you a warm coffee or tea!
Sincerely,
Patrick, Devin & The Roch & Weeks Real Estate Group.
And just like that summer comes and goes. My family and I have had a great summer. We spent lots of quality time outdoors, taking in our beautiful city.
At the start of September, after working together for 7 years, Devin Roch and I have decided to formalize our partnership alongside our team. We are excited to now be known as the Roch & Weeks Real Estate Group.
On the real estate front, the past 3-4 months have been one of the slower markets we’ve worked in over the past 20 years. As interest rates rose multiple times, we saw buyers on the sidelines waiting for prices to drop. At the same time, sellers were hesitant to list their homes given the decreased demand from buyers. As a result, inventory levels remain low and there are fewer opportunities for buyers.
It will be interesting to see what happens as we enter the fall market, which is known as the second selling season in real estate. Fall often brings much needed new listings, as both buyers and sellers get back to their routines and life plans after the summer months. If we do see inventory increase this month, it will be interesting to see if buyers become more active, or if the waiting game continues.
In terms of prices, we have seen the greatest price decreases in the Fraser Valley and other suburban markets. Meanwhile, Vancouver has seen more modest price adjustments. Generally speaking, prices are down from February/March’s peak by 5-15% in Vancouver, whereas, we have seen as much as a 20% drop in the Fraser Valley. Given the level of income and down payment required to purchase a home in Vancouver, buyers that are active in the market here are less likely to be affected by interest rate hikes, especially in the luxury sectors of the market ($3 million plus). We are also noticing that “land value” properties are being hit the hardest in terms of price declines. This is a result of developers’ hesitation to buy into the market with the high cost of construction, rising rates, and softening prices of finished product. On the other end of the buyer spectrum, end users also seem to be focusing on “move-in ready” homes and have less desire to buy homes that require substantial renovations given the timelines from the city for permits and difficulty finding trades for reasonable prices.
Consequently, if you are thinking about selling and have a move-in ready home, you are still likely to sell for a relative premium, while fixer uppers and land value properties will need to be priced well if you want to sell in today’s market.
The Vancouver real estate market can move very quickly in either direction, and can often feel like a tap that is turned off or on overnight. There have been few “buyer’s markets” over the past 20 years, and they typically do not last very long. I think it’s fair to say that the current cycle we are experiencing could see prices continue to soften, however, I do not see this being a long term trend. There have been few opportunities to buy into Vancouver over the past 20 years without competing in multiple offer scenarios. If you look back in time, there have only been 3-4 years of buyers markets in the last 20, therefore, anytime there’s a downturn it’s proven historically to be a good time to buy. It’s human nature to hold out for the best possible time to buy and get the best deal possible, but the challenge has always been determining when exactly is the “perfect time”. Often by the time you’ve realized it, the market has already started to move in the other direction. We often take the approach that “time in the market” is more important for long term success than trying to perfectly “time the market”.
We continue to strive to provide the best service available to our clients and although we are in a tough market we have the tools and expertise to help you navigate and make sound real estate decisions. If you are interested in buying, selling, or acquiring investment properties don’t hesitate to reach out. You are also always welcome to stop by our office in Kerrisdale for a coffee.
Roch and Weeks Real Estate Group Introduction Video
Summer Newsletter – Current Market Conditions and the Cooling Offer Period Announcement
Summer is in full swing in Vancouver…finally!
It’s been an incredible run in real estate over the last 2 and ½ years, but it should come as no surprise that the market has begun to cool off. As history has taught us from previous real estate cycles, we knew the torrid pace of our market was going to eventually end, but we just didn’t know when. In Vancouver, the market began to slow down in late March/early April (a month earlier in the Fraser Valley), and we’ve seen a steady decline in sales and market activity ever since.
Along with record-setting real estate price increases over the past two years, inflation began to steadily rise. As a result, the Bank of Canada began increasing interest rates in the Spring and have continued to aggressively raise the overnight rate to try and combat inflation which is at a 40-year high. As painful as it is going to be for this period of time, we will all get through this just like we did the pandemic.
Life is complicated these days, with so many decisions to be made and the media coming at you with opinions from all angles. What we’ve all learned through this challenging time is that the most important things in life are family, friends and having a home to share this space with.
The reality is we just don’t know when the market is going to change again, and what the catalyst will be that changes the current trend. It could be anything from pent up demand from Buyers that have sat on the sidelines over the past several months, an increase in immigration, or simply the Bank of Canada holding rates flat for a few announcements.
In past market dips such as the 2008 financial crisis, we did not predict how quickly the market would rebound (prices started to increase in early 2009). I also don’t recall anyone predicting that the real estate market would take off shortly after the beginning of the pandemic, but it did. History shows that time and time again savvy investors have bought stocks and real estate when sentiment is low, and then turn around and sell when sentiment (and price) are high. This recipe has a proven track record and it makes us think of a famous Warren Buffet quote: “be fearful when others are greedy, and greedy when others are fearful.” In other words, buy when prices are low, and sell when prices are high.
That said, the reality for most of us is that we cannot time the market perfectly, whether we are talking about stocks or real estate. So often the best strategy is time in the market, and not trying to time the market. Short term and emotional based decisions can have harsh long term consequences. As your trusted real estate advisors we can help you navigate through these uncertain times and help you make sound decisions that will benefit you in the long run, through any real estate (or economic) cycle.
We also wanted to briefly touch on the long awaited (cringe) Cooling Off Period that was just formally announced this week. After much discussion over the past 6 months, the BC Government has introduced the Cooling Off Period which will come into play January 1st 2023. The key facts are as follows:
Will be in effect as of January 1, 2023;
Buyers will have three days to back out of a residential purchase after signing a contract;
Buyers who back out of a contract within this three-day period will have to pay a rescission (cancellation) fee of 0.25%. For example, if the purchaser exercises the right of rescission on a $1-million home, they’d be required to pay the seller $2,500.
As we have been expecting this announcement for quite some time, we have had many discussions with lawyers, other realtors and our clients about how this will impact our market, and more importantly, how it will affect our clients when they buy and sell real estate in BC. We already have many ideas and solutions that will help our clients be better prepared for this changing environment, and to ensure our clients continue being successful in achieving their real estate goals.
We are here for you anytime you would like to have a real estate check in. Give us a call anytime or stop by our office on the Arbutus Greenway at 6158 East Boulevard.
We hope you have a great summer and look forward to having you at our Vancouver Canadians private event September 6th at Nat Bailey Stadium. We will send you a formal invitation in the coming weeks.
Kind regards,
Patrick, Devin, Noah, Matt, Jenny, Georgia and Elana
Pre-sale Projects
We continue to work with several different developers selling their incredible projects. From 20 unit apartment buildings on the west side to ½ duplexes on the east side and plenty more, we have the perfect home for every lifestyle. If you aren’t seeing what you’re looking for on the market, give us a call anytime to discuss the perfect presale for you.
