Despite uncertainty on several fronts, quality homes priced realistically and in a relatively affordable price range for a given area / property type are in short supply and high demand throughout Greater Vancouver. This holds true whether single-family, condo, or townhouse. Relatively affordable homes have never been in high supply; now, with all the hunkering down and worries and distractions, the number of homes coming to market cannot keep up with the number of buyers looking to own such places. Classic supply-demand imbalance, leading to frequent multiple offers and increasing sales prices.
Some property types in some areas are seeing less demand however, and a resulting price weakening. For example, older 80s and 90s condos in central downtown Vancouver, particularly those in buildings with a relatively high percentage of rentals; off-shore / unengaged ownership; much deferred maintenance; and/or rapidly increasing insurance premiums, are not attracting many buyers these days, even at yester-year's prices. In years past the pool of potential buyers for these properties was much larger, with investors, speculators, Airbnb landlords, first timers and empty-nest downsizers all buying condos in such buildings. But not so much now: Airbnb is no longer allowed in most buildings, investors and speculators are gone for now, the tenant pool has shrunk with the loss of foreign students, some see a deterioration of the area in various ways, and there's a bit of a trend to live outside the central city core. These issues are likely not going away any time soon. If you own such a place, you might want to think about moving it along sooner rather than later.
Sales volumes and prices are also relatively high as a result of cheap financing. If you do the math, you'll easily see how much more you can borrow now vs in the past, while keeping your payments manageable. For example, the payments on a $750k mortgage a few years ago at, say, 3.5% would have been approx. $3800/m. Today, that $750k mortgage at 1.6% might cost you closer to $3000/m. Roughly speaking, if you originally qualified for $3800/m you could purchase a property $200k higher, with no impact on your monthly payment. This is of course assuming you're well qualified; lending criteria has tightened up in the past couple of years. And of course, you'd still owe $200k more! Despite various government efforts to cool the housing market – tighter mortgage qualifications in the way of stress tests, higher credit scores required, and stricter scrutiny of down payment sources, as well as foreign buyer taxes, etc. – it seems we are having some of the highest sales activity in several years. The decline in mortgage rates is a significant factor.
As stated in my last newsletter, each market, sub-market and property type will have its own trajectory. Predictions? I’d say there are just too many variables at play right now to comfortably predict the big picture in the short- to medium-term. Can anyone? It remains to be seen how the variables will play out and how the real estate world here is affected. As always, individual property stories can vary greatly from larger trends. For now, I expect a busy run to year-end and a quick start to 2021. If you're thinking of a move, with this active market, now may be time to act. New listings will likely drop off as we move through November; if you're selling, your home may be one of the few desirable choices for those many buyers on the hunt now. Ideally we could negotiate a long completion, giving you time to find your next home early in 2021, when perhaps the market you are buying into may be less competitive.
This just in
This past spring the traditional "Open House" was highly discouraged by the various BC real estate governing bodies due to Covid-19 concerns. Over the past couple of months these restrictions were relaxed. A few days ago however these restrictions were again put into place. Some home sellers may think the demise of Open Houses will hurt their sales process. Not at all! I as well as most of my Realtor colleagues have embraced the process of more controlled showings by appointment only; of truly qualifying buyers; having buyers qualify themselves prior to stepping foot in a home, and using 3-D home tours and other virtual showing methods. I've fully embraced this and feel that if done properly it's beneficial to all involved. The advantages can more than outweigh any perceived disadvantages.
