Westside Vancouver Months of Inventory* (MOI) remained at over 19 months on January for detached homes.  Attached homes climbed to over 10 months.  Apartments rose to over 8 months and officially into "buyer's market" territory.  The Vancouver real estate market is in real decline. 

Active listing volumes are presently at fairly typical levels.

Sales Volumes are a lows rivaled only at the time 2008 Credit Crisis.  This is the story.  

Average sale prices for houses suggest we have dropped back to 2015 pricing.  We might reach back to 2012 numbers before things are over.

Median price per square foot corroborates that we are back at 2015 pricing for houses.

The slightly "sunnier" Real Estate Board of Greater Vancouver HPI Price says we are at 2016 pricing.

With MOI at 19 months we should continue to anticipate a declining price environment for houses.  Many Westside house builders who built on speculation have been playing musical chairs and there are not enough buyers for everyone.  I expect the strongest downward price pressure to come from the sale of newly built and newly renovated homes that are vacant.  In most of these cases the seller has a significant mortgage and needs to sell at whatever the market will bear.  It is an exciting time to be a house Buyer.

It is also a great time to be trading up.  In spite of apartment and townhomes declining in price they have fallen far less relative to houses.  Aggressively pricing resulted in a recent listing of mine selling significantly over asking in a multiple offer with a large deposit and favourable completion dates.  This has put my clients in a strong position to go house shopping.

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").

Sam Wyatt - Vancouver Realtor.

Arguably the largest influence on the Vancouver real estate market in 2018 was the implementation of the new mortgage "stress test" rules that came into effect January 1st of 2018.   Months of inventory had been trending upwards since the fall of 2016 and prices were already softening when the new rules really put the brakes on detached home sales.  Months of inventory (MOI*) continues to trend upwards and I expect that prices will continue to fall across all product types in 2019.  It is a buyer's market for Vancouver real estate.   Westside houses were just shy of 20 months of inventory while attached and apartments were at over 10 and nearly 8 months respectively.

Active listings are within the typical range relative to the last decade.

Sales volumes are the lowest they have been since the 2008 Credit Crisis and those low volumes are the principal reason for the high MOI* figures.

The is no way to sugar coat it.  House prices are down dramatically.   Median sales prices per square foot for houses are down 25% from their 2016 high point.

Average Westside detached sale prices show the high point in October of 2017 at about $4,466,000 and December 2018 at nearly $3,041,000 a drop of over 30%!

It is a great time to be looking to buy a house in Vancouver.   There is little competition and falling prices.

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").

Sam Wyatt - Vancouver Realtor.

Months of Inventory (MOI*) dropped to 12.3 for detached Westside Vancouver homes in November.  It rose to 8.28 and 6.57 months for Attached homes and apartmens respectively.  Months of inventory has been in double digits for houses for 11 of the last 12 months.  I expect this high MOI to remain and for attached and apartment MOI to rise.

Active listing volumes are presently within typical ranges for all product types.  Apartments had very low active listing volumes for most of 2016 and 2017 (as low as 535) but as of November sat at (1359).

Lower sales volumes appear to be the reason for the hi MOI and decending prices.  In september only 38 houses sold on the Westside.  November saw a much healthier figure of 61 detached sales.

We experienced a typical Fall "bounce" in October with a small burst of sales activity.  Months of Inventory (MOI*) fell from highs not seen since the credit crises to 11.76 for detached homes, 5.61 for attached homes and 5.27 for apartments.  Detached homes remain well entrenched in a buyers' market. 

 
Sales volumes increased slightly in October compared with September.  We are likely to see them fall through November and December.


Active listings fell for houses and attached homes but rose for apartments.  This may not bode well for the apartment market which thus far has had more resilient sale prices than houses and attached homes.


Average sale prices continue to trend downwards since highs in 2017 and early 2018.

For better or worse, we are likely to see prices continue to head downwards until sometime in early 2019.  

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").

Sam Wyatt - Vancouver Realtor.

Months of Inventory (MOI*) reached more than 20 months for detached Westside homes in September.  This is the highest it has been since the credit crisis in 2008.  Moreover, MOI has been in double digits for 11 of the past 14 months.  Contrast this to the Credit Crisis where MOI was in double digits for only 7 months.  MOI rose also for attached homes and apartments to more than 8 and 6 months respectively.  


Sales volumes fell for all home types in the Vancouver Westside market.  Notably, Apartment monthly sales volumes fell to only 208 sales, the lowest since January 2013.


Active listings rose across all product types.  In the case of apartments, the Westside active listing volumes have not been this high since September 2015.



By all measures, Vancouver residential real estate prices are falling.   Average sale prices for houses are down 30% from their October 2017 high point - back to late 2015 prices!  Attached homes are down about 12% in September and Apartments almost 20%.


The Real Estate Board of Greater Vancouver's HPI price (sale price of a "typical" home) has house prices at mid 2016 levels - down about 10% from their high point.
   

Median price per square foot says house prices have fallen back to early 2016 numbers.

Based on current MOI levels, it is likely that we will continue to see sale prices fall for all home types.  The dramatic MOI level for houses means we will probably see even lower sales volumes in October.

It is presently difficult to see what might turn falling prices around.  In 2009 and 2012 (other recent market downturns), Vancouver's real estate market became the unintended beneficiary of US monetary policy.  Then, huge amounts of liquidity were pumped into the world economy by the US Federal Reserve who created new money supply by buying back treasury bills and other assets simply by creating credits on the member banks' accounts at the Reserve.  Tens of billions of dollars a month were added to the money supply.  The result was lots of money and low interest rates which helped fuel Vancouver's market.  No such policy will be coming this time.

I suspect that the principal factor in the present decline in prices is a result of the new mortgage qualifiaction rules that came into effect in January 2018.  These rules require that borrowers qualify for interest rates at 2% higher than their actual borrowing rate.  I estimate the effect of this change in the market should be about 20% of price.  IE: A home worth $1m should likely be worth $800k under the new rules.   Of course, nothing is ever so clear.  Markets generally over react and we might see prices fall by 40% or more from their 2017/2018 high points before rising back up to about 20% off.  


By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").

Months of Inventory (MOI*) was in double digits for Vancouver Westside detached homes for 10 of the last 13 months.  Not surprisingly Prices have been falling.  Unlike houses, attached homes and apartments have remained below 5 months for most of the past 13 months.  However, there too MOI is on an upward trajectory.


The Greater Vancouver Real Estate Board's HPI price for detached westside homes shows house prices retreating to where they were in early 2016.  Meanwhile the gains on attached homes and apartments appear to be leveling off.

The median price per square foot helps illustrate the change.  Apartments are presently more costly per square foot than houses and townhomes.


Sales volumes for detached homes have been near lows not seen since the credit crisis and this has been the principle factor in falling prices for houses.  With more stringent recent mortgage qualification rules and a host of new taxes on Vancouver homes, this trend is unlikely to change.
 
Unlike houses, very low active listing volumes for apartments and attached homes were the most significant factor in rising prices on those homes.  Note that since early 2018 both apartments and attached homes have seen increasing active listings.  Couple that with falling sale volumes and it feels very much like prices are softening across all home types.

By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").

For the months of March and April, the price per square foot for apartments was higher than for Westside detached Vancouver homes.  This is the first time since 2010 that this has been the case.  In May, the median price per square foot climbed for houses and fell for apartments, putting apartments lower again.  It looks like price per square foot sale values for the various home types are getting closer again after a protracted period where houses were significantly more costly per square foot.

Vancouver's Real Estate Board's  HPI price (price of a "typical" home) for detached homes has been trending down since August 2017 while apartments and attached homes have seen their HPI prices trend upwards over the same period.  In the near term, It looks like pricing will continue to stagnate or fall for detached homes and stabilize for apartments.



Months of Inventory (MOI*) for Westside houses was in double digits for 5 consecutive months from December 2017 to April 2018.  It fell to 9.34 months in May.


Stagnant sales were the reason for the high MOI for detached homes. The marginal reduction in MOI was due, in large part, to the lift in sales volumes from 68 in April to 91 in May.  Sales volumes remain on the low side of normal for houses.  Sales level off in May for apartments.


Apartment active listings finally increased in earnest in May to over 1100 homes for sale.  Even at 1100 apartment listings, they are well below typical active listing volumes.  These low active listing volumes have been the prime driver of the low MOI for apartments and apartments' upward price trajectory to date.

By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market"). 

UPDATED June 4 2018:
The 2018 BC budget included a suite of measures aimed at slowing the real estate market and attempting to increase residential rental stock.  So many new measures added just after significant mortgage qualification rules came into effect January 1st 2018 make the chances of a declining Vancouver real estate market entirely probable.  Here is a quick summary and commentary on some of the most significant measures:

Speculation tax

• New tax aimed at homeowners who don’t pay income tax in BC and who leave homes vacant.
• The tax applies to the Metro Vancouver, Fraser Valley, Victoria (CRD), Nanaimo, Kelowna and West Kelowna.
• Tax rate of .5% of assessed value in 2018
• Starting in 2019, .5% of assessed value for citizens and permenant residents who are BC residents, 1% for citizens and permenant residents not residing in BC and 2% of assessed value for foreign owners and satelitte families.
  
• Homes that are long-term rentals for at least 3 months in 2018 are exempt.  Homes rented for 6 months will be exempt in 2019 and after.
• Citizens and permenant residents who are BC residents will receive a $2000 tax credit making a $400,000 secondary resisdence tax free.
• Exemptions also exist for owners or tenants in hospital or long-term care facility, absenses for work reasons and deceased resigistered owners while estate is being administered.

"Speculation tax" is a misnomer.  This should likely have been called a "Vacant Property Surtax". In general, I like the design of this tax.  I would like to have seen a full exemption for BC taxpayers for one additional property (aside from their principal residence) to ensure that vacation properties for BC residents would not be taxed at all.

Foreign buyer tax

• As of February 21, 2018, the foreign buyer tax will increase to 20 per cent from 15 per cent.  It will now also cover the Fraser Valley, Victoria (CRD) Nanaimo and Central Okanagan.
• Transitional rules apply if the property is located in the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, or Nanaimo Regional District, and the property sale is registered February 21, 2018 or after.

Truth be told, the foreign buyer tax has had little effect because so many foreign buyers turned to shell companies to buy Vancouver and other BC real estate.  The new beneficial ownership registry rules (below) should help address this.  That being the case, increasing the tax amount may be overkill.

Beneficial land ownership registry

Beneficial ownership information will now be required on the Property Transfer Tax form.
Through the Land Titles office, benefical ownership information will be publicly available and shared with federal and provincial tax and law enforcement.  In addition, BC corporations will be required to hold accurate and up to date information on beneficial ownership at their record offices.

This is a good start to curb not only money laundering and tax evasion in real estate but likely also in a myriad of other industries.   It probably does not go far enough.  In Europe, public shareholder registries are soon to become the norm.

Property Transfer Tax

Residential Property Transfer Tax for properties above $3 million will increase to 5% from 3% effective Feb. 21, 2018.  Property tax is now as follows:  tax on the first $200,000 of value is 1%, 2% up to $2m, 3% up to $3m and 5% on values above $3m.

Provincial School Tax

Starting in 2019, school tax will increase on most residential properties worth more than $3 million.  an additional levy of .2% on values between $3-4m and .4% on values above $4m.

This increase is likely a good way to raise tax without angering the majority of the province but with the average price of a detached home on the Westside between $3.5-4m, a lot of people will be affected there.  David Eby may have a harder time getting elected in 2021. 

Database on pre-sale condo assignments

Developers will now be required to collect and report information about the assignments of contracts for pre-sale condos. The province will share information with the Canada Revenue Agency (CRA). 

This is in line with a significant increase in CRA enforcement of taxing gains on assignments.  Most of these gains are considered income rather than capital gains so there is a lot of loot for both the provincial and federal governments here.

Online Accommodation PST and MRDT

The province struck a deal with AirBnb to collect and remit the Provincial Sales Tax (8%) and Municipal and Regional District Tax (Hotel Room Tax- 3%).  The rules are not yet clear but it appears that the previous exemption for 4 units or fewer will no longer apply.

This is a good idea and goes hand-in-hand with the City of Vancouver's new bylaw (effective April 2018) allowing residents to rent out their homes when away while still restricting the use of property exclusively for short term rental.  Longer term (31days+) stays using the AirBnB platform will not be taxed as well.  It would be great if the province could work with the CRA to clarify rules around short term rentals of a principal residence to ensure that owners don't get caught up in a mire of "deemed dispositions".  A simple CRA maximum of perhaps 90 days on short term rentals of principal residences where, if not exceeded, are clearly defined as "incidental" to the primary use as a residence would be a clean solution.

Agricultural Land Reserve (ALR)

The Agricultural Land Commission Amendment Act will make ALR land in the Lower Mainland, Fraser Valley, the Okanagan and Vancouver Island (zone 1) far more strictly protected.  Areas outside of these (zone 2) will allow for more flexible use of the land aside from only agricultural uses.

Farmers hoping to cash in will not likely be glad for this focus but with only 5% of BC's land mass being good agricultural land and global warming, this seems like a "no-brainer".

Months of Inventory (MOI*) rose again in March for Vancouver Westside detached homes.  It is presently at 14.57 months - the highest it has been in any March for over a decade!  Westside house prices are falling.  Apartments and attached MOI sit at 2.05 & 4.44 respectively.  Even as house prices fall, apartment pricing will likely continue to rise over the next several months.   

There are still more houses for sale than apartments in Vancouver West.  This fact is driving both increasing apartment pricing and falling house prices.

Sales volumes remain ultra-low for westside houses, low for attached homes and typical for apartments.

Detached home average sale prices plunged in March to just over $3.352m - pricing not seen since 2015.

As predicted, the price per square foot for apartments is now higher than for houses for the first time since 2010.  This may well be the new normal.

The new mortgage rules that took effect in January 2018, requiring borrowers to qualify at 2% higher than their actual lending rate, have likely made the biggest impact on the deteriorating Vancouver house market.  New taxation and other measures announced in the BC budget may also be contributing to lower sales volumes for houses.   In particular, the so-called "speculation tax", better titled "vacant property surtax" is probably having some effect.  With sustained double digit MOI, I expect westside detached homes to continue to see price decreases over the next several months.

By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing  ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").    

Months of inventory (MOI)* remained in double digits for detached homes for a third consecutive month in February.  February's MOI was the highest February and also the only time a February has been higher than January of the same year since 2006 .  Westside Detached house prices seem likely to see downward price pressure in the coming months.  In sharp contrast, Apartments remain deep in a seller's market with an MOI of only 1.97.  Attached homes also remain in a seller's market at 3.61 months of inventory.

Active listing volumes remain super low by the last decades standard's for both Apartments and Attached homes and this is the significant reason for their low MOIs.  Detached homes are at pretty fairly typical levels for the same time period.  Notice that there are actually more houses for sale than there are apartments!


While inventories remain in typical range for detached homes, their sales volumes are simultaneously near 10 year lows.  Only 52 Westside houses were sold in February 2018; compare that to the 226 homes sold in February 2016.  Low sales volumes for detached homes are driving the high MOI.  Apartments and Attached homes have sales volumes hovering near the median volumes of the last decade.

The average sale price of a detached Westside Vancouver home was over $4m in February.

The Real Estate Board of Greater Vancouver's HPI pegs the price of a "typical" Westside house at about $3.5m.
   


The median price per square foot of apartments continues to rise while attached and detached pricing per square foot are stalled and stagnating respectively.  If the current trend continues, apartments' price per square foot might exceed that of houses within 6 month's time.

What is driving both the slowing house market and hot apartment market is likely the tougher mortgage rules that where introduced in 2016 & 2017.  The new rules have made borrowing more difficult and have probably had the unintended effect of forcing less costly apartment prices up because it is easier to obtain the financing to buy them.

With the recently announced suite of new Provincial tax measures aimed at the housing market, the already cooling house market is poised to flag while it remains to be seen if apartments will be similarly affected over the coming year.

By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market ("Balanced Market") with respect to pricing and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").    

Super low active listing volumes for apartments continues to be the news in Vancouver's real estate market statistics.  There have been more Westside houses for sale than apartments for the past four consecutive months.  The past 2 years' low active listing volumes for apartments and attached homes has put significant upward pressure on pricing.  Detached active listing volumes have been more typical.  The other significant news is the new federal regulations for "stress testing" mortgages whether they are insured loans or not.  More on that at the end of this stats report.

Sales volumes for apartments and attached homes have been about average while detached home sales have been slower.

We can best observe the change in pricing by looking at the median price per square foot of the three product types.  The gap is continuing to close between apartments and houses.

The Real Estate Board of Greater Vancouver's Westside HPI price (the price of a "typical" home) shows house prices starting to moderate.

  

The below average active listing volumes and typical sales volumes for apartments have months of inventory (MOI) at less than 2 for 10 consecutive months.  The average active listing volumes and less than typical sale volumes for detached homes has seen the MOI over 8 (buyer's market) in 5 of the last 11 months.  Only once since January (It was 3.13 in May) has MOI slipped below 5 into a seller's market for houses.

If the trend continues we should expect apartment prices to continue to rise and house prices to begin to slowly fall.  The wildcard will be what effect the Office of the Superintendent of Financial Institution's (OSFI) new mortgage regulations will have in the new year.  The new rules require that all mortgages be stressed tested against the Bank of Canada's rate or 2% higher than the actual lending rate (whichever is higher).  The effect of the rule will be to erode purchasing power - in some cases by as much as 20%.  The rules come into effect January 1 2018 and most federally regulated lenders have interpreted the rules to require that an active purchase and sale contract be in place before the year's end with the lender to qualify under the old rules.  Allegedly, TD Bank is interpreting things a little differently and is applying the old rules to any held rate until that rate hold's expiry.  Based on most lenders' cut-off rules we will probably have a busier than typical sales volumes month in December as buyer's try to purchase something before the rules take effect.  OSFI's rules do not apply to provincially regulated Credit Unions and the Financial Institutions Commission (FICOM) which regulates Credit Unions has thus far said that it will not be adopting similar rules.  I suspect that the result will be a very slow January and February but that the spring of 2018 market for apartments may remain robust.

By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market") for the ensuing six months, 5-8 months of inventory has indicated a flat market ("Balanced Market") with respect to pricing and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").     

Months of Inventory (MOI)* remains well entrenched in a seller's market for attached homes and apartments but detached homes have seen several spikes deep into buyer's market territory over the past year.  MOI in October 2017 for Vancouver's Westside was 7.39 for houses, 2.94 for Attached homes and 1.94 for apartments.

Active listing volumes have been well below the past decade's norm for apartments and it has translated into a super-heated market for them.  Astoundingly, there have been more Westside active listings for houses than for apartments since August.  It is these ultra-low active listing volumes for apartments that have played the largest role in their increasing sale prices.

Sales volumes have remained in typical range for apartments and attached homes but have been on the low side for detached homes for most of 2017.
  
Average sale prices for detached homes took a significant dip in January of 2017 but have since recovered to a new high point in October of $4,466,841.  If high listing volumes and lower sales volumes continue for houses, we should anticipate their prices to feel downward pressure soon.

The difference in median price per square foot between detached homes vs apartments and attached homes continues to narrow.  I expect this to continue as apartment prices rise and house prices stagnate or decline.

The biggest real estate news of late has been the Canadian Government's recent rule changes for nationally regulated mortgage lenders.  The most significant of these changes is that ALL mortgages will need to be stressed tested against the greater of the Bank of Canada Benchmark Rate or 2% higher than the contract rate of the borrower.  The rule comes into effect January 1 2018.  That means that any firm contract to purchase a home prior to that date will be able to qualify under the old rules, even if the closing date is after January 1 2018. The effect of this rule will be to lower many people's buying power.  I expect that the resulting effect will be to put even more upward pressure on lower cost apartment pricing.  I also expect to see a slightly busier than average November and December real estate market.  Note that these rules do not apply to Provincially regulated Credit Unions and small private lenders who will no doubt be too busy to meet the demand.  

By Sam Wyatt - Vancouver Realtor

*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market") for the ensuing six months, 5-8 months of inventory has indicated a flat market ("Balanced Market") with respect to pricing and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").