07 Sep Vancouver Housing Market Forecast 2017 2018 – Richmond Burnaby Vancouver East West
Condos, Not Houses are the Story in Vancouver Real Estate
Will the rebound in the Vancouver housing market end with rising mortgage rates? Is the foreign buyer’s tax a non-factor now? Has the market solidly rebounded? Well it seems the August 2017 real estate sales report from REBGV is a study in paradox.
Demand for places to live and for investment properties is being funneled into the Vancouver condominium market and it’s driving up prices. And new construction? Starts have slowed, meaning the forecast is likely for rising condo prices. Will rising mortgage rates intervene and soften the market in 2018?
As of the first half of this year, HPO had received registrations for 1,788 new Vancouver condos, down from 2,488 units at the same time in 2016 — from a report in the Vancouver Sun.
Homes for sale scarcity combined with eager buyers, means demand is being focused on condos, townhouses and apartments. 3043 property sales were recorded in August 2017 which was 2.3% increase over July’s numbers. And it represented a 22% increase over August 2016 sales.
Condo Sales Driving Vancouver’s Market
While sales of detached homes dropped in August 2017 compared to July sales, and compared to August 2016 sales, Vancouver condos are in hot demand. More than 4200 condos and townhouses were listed for sale in August. The decreased availability and rising prices are putting big pressure on International students studying in Vancouver. UBC has 6000 students on their housing waitlist. Huge investment opportunity in foreign student housing.
Are you an investor? The August 2017 sales report shows townhouse/condo/apartment prices are rising fastest in Pitt Meadows, Squamish, Port Coquitlam, Burnaby East and Whistler. Mapleridge saw a big increase in apartment prices likely because the average price is only $252,000.
REGBV’s August 2017 report shows home and condo prices are rising. Any home for sale in Metro Vancouver between $350k and $750k are still subject to multiple offers. The big change is in the number of Vancouver area homes for sale which plummeted 19.2% since last month. Overall, the number of properties for sale dropped 4.2% since last month.
REBGV President Jill Oudil stated the the detached home market has achieved a balanced state and that buyers have more homes to choose from. That may contradict the reality that the volume of homes available for sale has plummeted. The truth might be that there are fewer buyers of homes above $750,000 which comprises most of the homes in Metro Vancouver.
The Federal Government has just raised the prime lending rate to 1% and hinted at further rate increases, and this will likely cool demand for higher end homes. The demand in Vancouver is still present, and the buyer target is condominiums.
Vancouver’s Housing Forecast Remains Positive
The last 8 years have been a real awakening for the city of Vancouver and for the rest of BC. BC is now is perhaps the hottest province economically in Canada. This has spurred tremendous construction, entrepreneurial, and employment opportunities. The demand for housing speakes for itself. Yet some suggest the goose that laid the golden egg should be shot, and the BC foreign buyers tax was the shot in the dark. With Christie Clark in the rear view mirror, we’re trying to forecast amidst the policies of the the new NDP goverment.
This new tax, good for the BC government, may squash employment growth as Asian buyers look to live and buy elsewhere. Although this is a downer for Vancouver, it’s brightening the forecast for Calgary and Toronto housing, where new investment is predicted to grow. Judging by the number of people visiting my site looking for info on Toronto, the demand is changing.
Post tax implementation: The average composite price for a Vancouver home was $938,000 in July which is still 33% higher than one year ago. The BC government has its worked cut out for it. The BC provincial government was already collecting $1.6 Billion dollars in taxes and the new tax will create a ridiculous opportunity for government spending in 2017. Do you cheer or jeer?
Here’s a look at the historical price trends in Vancouver contrasted with Toronto pirces. You can see the Toronto real estate forecast here.
The total numbers for July and August of 2017 haven’t been reported but we’d have to guess at $10 Billion for the two months.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Metro Vancouver totalled 2,489 in August 2016, a decline of 26 per cent compared to the 3,362 sales in August 2015; 10.2% fewer than the 2,771 sales in August 2014; and 1% less than the 2,514 sales in August 2013. August 2016 sales also represent a 22.8% decline compared to last month’s sales. – From the latest market report from REBGV on Sept 2, 2016.
The forecast is for fewer sales and perhaps lower prices, yet because of the foreign buyers tax, it might look more precipitous right now than it actually will be.
2017 Vancouver MarketUpdate!
The Real Estate Board of Greater Vancouver (REBGV) reported that residential property sales in greater Vancouver dropped to 18.9% in July from June to a new total of 3,226 (down 26.7% compared to June 2016 (4,400 homes sold). New listings increased in July. Vancouver properties currently listed for sale on the MLS® system in Metro Vancouver is 8,351, a 27.4% drop compared to July 2015 (11,505) and a rise of 6.9% compared to June 2016 (7,812).
How about the Vancouver Condo Market Outlook?
Regarding Vancouver condos, it looks like demand has slackened for cheaper accommodation and apartments and condos. REGBV said “Sales of apartment properties reached 1,602 in July 2016, a decrease of 7.3 per cent compared to the 1,729 sales in July 2015. The benchmark price of an apartment property increased 27.4 per cent from July 2015 to $510,600.”
BC Economic Outlook
Although employment growth and GDP will moderate, BC residents and homebuyers will have much more disposable income. These facts plus an expected 5.5% rise in retail sales will definitely perk the attention of businesses everywhere.
Running out of Land in Greater Vancouver
BC lower mainland real estate is doing well, in stark contrast with Northern BC which saw its sales volume drop 8% and total sales volume drop by 25% compared to January 2015. It will be much worse in August and September.
The Greater Vancouver area saw its sales volume rise 73% to $2,788,099,000. That was actually overshadowed by the 101% rise in sales volume in the Fraser Valley year over year in January. The valley had a growth of $427 Million. Chilliwack and Powell River saw significant gains too, as affordability issues are forcing more BC residents out into the burbs. The condo market in Vancouver showed a shocking increase of 50% year over year.
What it means for BC is a rare moment of sunshine where it is leading Canada in prosperity. Add that to BC’s more progressive and optimistic culture, and you’ve got an exciting mix. We can only hope it will last for a few more years before the Conservative wet blanket kills the party.
Vancouver Island enjoyed 50% growth in sales volume and the city of Victoria grew in sales to $260 Million in January. The south Okanagan region had a surprising growth of 44% in sales volume as well. It’s hard to argue that the Okanagan has not benefited from real estate and migration.
Yet, this market isn’t the hottest on record for BC, which was even more heated in 2005. Should this non-record high real estate market be snuffed out?
While politicians are jumping to suppress sales in BC, no one can argue that the deluge of real estate investment money is creating unheard of opportunity in Vancouver. The province is drawing migrants from Alberta and Saskatchewan who are looking for jobs at a time when Alberta is facing its biggest crisis ever. The worst hasn’t even hit Alberta yet, as oil sunk to touch $25 a barrel last week.
As far as the shadow flipping controversy is concerned, some believe the privacy issue in transactions will ensure the practice of flipping will continue unabated. Others suggest the inflow of Chinese funds into BC will be terminated by the Chinese government and price rises would then abate.
The Vancouver real estate forecast is glowing and is not headed upward, and Vancouver’s economic resilience has been tested by low commodity prices. Still, these good times never last so BC residents should revel in their wealth of opportunity. It’s a good time to be an entrepreneur in Vancouver.
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* BCREA is the professional association for over 19,000 REALTORS® in British Columbia Canada. BCREA focuses on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.