Beautifully Updated Top Floor Unit!

You’re not going to want to miss this beautifully updated top floor unit! The gourmet kitchen was completely redone in 2017, filled with high-end appliances and upgrades. The open floor plan makes for a bright space, perfect for entertaining, and the large pantry and closet space offers lots of storage. The large master bedroom has an ensuite and with an added solarium space perfect for a home office. Conveniently located at Main St. and 41 Ave it’s a short walk to Oakridge shopping, Queen Elizabeth Park, and Transit right outside your door. Call today to book your appointment. Sneak Peak Open House Thursday Oct.5th 5-6pm and Saturday Oct.7th 12-2pm.

 

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Investors Alert! Perfect Downtown Rental Property

Convenient location steps to Yaletown, Gastown, Robson St, Seawall, & Skytrain station. This classy building has amazing features including: a gym, sauna, steam room, hot tub, party room, & theatre room. The open floor plan and convenient flex space give this unit versatile options as to how the space is used. This investment property is leased until the end of March 31 2018, so investor buyers only. Great tenant paying $1800. Turn key investment opportunity. 1 parking included, peek a boo view and amazing location make this a very easy rental. Pets allowed up to 25 pounds. Showings by appointment please allow notice.

 

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The Perfect Starter Home! 301-9132 Capella Dr.

This bright top floor unit has is the perfect starter home. Complete with generous sized rooms and balcony. The large laundry room offers lots of storage, and open living room and the kitchen is perfect for entertaining. Amenities include a clubhouse and outdoor swimming pool. Very well managed complex. Close to SFU, schools, Lougheed Mall and Skytrain! Pet-friendly strata with no size restrictions for dogs, and with a greenbelt across the street there are plenty of good walking trails. This is a very warm and friendly community that is welcoming to all. Sneak Peek open Thurs. Mar. 30th 5-6pm. Open Sunday 2-4pm. Call for an appointment today!

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Metro Vancouver home sales return to typical August levels

For the second straight month, home buyer demand in Metro Vancouver* moved off of the record-breaking pace seen earlier this year and returned to more typical levels.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential MarketUpdate_thumb.jpgproperty sales in Metro Vancouver:

Totalled 2,489 in August 2016,  ↓ 26%  compared to the 3,362 sales in August 2015

10.2%  ↓ than the 2,771 sales in August 2014

and 1% ↓  than the 2,514 sales in August 2013

August 2016 sales also represent a 22.8% ↓ compared to last month’s sales.

From a historical perspective, last month’s sales were 3.5 % below the 10-year sales average for the month.

“The record-breaking sales we saw earlier this year were replaced by more historically normal activity throughout July and August,” Dan Morrison, REBGV president said. “Sales have been trending downward in Metro Vancouver for a few months. The new foreign buyer tax appears to have added to this trend by reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers.

“It’ll take some months before we can really understand the impact of the new tax. We’ll be interested to see the government’s next round of foreign buyer data.”

New listings for detached, attached and apartment properties in Metro Vancouver:

Totalled 4,293 in August 2016.

an ↑ of 0.3% compared to the 4,281 units listed in August 2015

18.1 % ↓ compared to July 2016 when 5,241 properties were listed.

The total number of properties currently listed for sale on the MLS® in Metro Vancouver:

8,506,  21.9% ↓ compared to August 2015 (10,897) and  1.9% ↑ from July 2016 (8,351).

The sales-to-active-listings ratio for August 2016:

29.3%. This is indicative of a seller’s market.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12% mark, while home prices often experience upward pressure when it reaches the 20 to 22.5% range in a particular community for a sustained period.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver:

$933,100. This represents a 31.4% ↑ compared to August 2015 and a 4.9 %↑ over the last three months.

Sales of detached properties in August 2016:

715, ↓ 44.6% from the 1,290 detached sales recorded in August 2015.

The benchmark price for detached properties:

↑ 35.8 % from August 2015 to $1,577,300. This represents a 4.2% ↑ over the last three months.

Sales of apartment properties:

1,343 in August 2016, a ↓ of 10.1% compared to the 1,494 sales in August 2015.

The benchmark price of an apartment property:

↑ 26.9% from August 2015 to $514,300. This represents a 6.1% ↑ over the last three months.

Attached property sales in August 2016:

431, ↓ 25.4%compared to the 578 sales in August 2015.

The benchmark price of an attached home:

↑ 31.1% from August 2015 to $677,600. This represents a 7.1% ↑ over the last three months.

Will the Vancouver Real Estate Bubble Burst in 2016? Part 5, The Finale!

 

Part 5 of 5:  The ‘How Did We Get Here?’ Moment.

 

Conclusions about the bubble:

 

We have talked about the geography, economics, and history of Vancouver and their effects on real estate. The fact remains we have something people want, and they are moving here to get it.  As Vancouver city’s Civic Government moves to create density, detached homes are bulldozed for more condos…Thus, further shrinking the detached housing stock; thus further driving up the cost of a scarce resource. I commented to my wife, as we drove through the intersection of Cambie and King Edward, that we will one day be able to tell our kids about how there used to be houses along those streets. Much like how my Grandfather told me the same thing from way back when I was a little kid. Time changes the landscape. As we look over time, we see that prices have changed as well.

 

30 yera graph

 

 

 

 

 

 

 

Since the 80’s when interest rates were up at 20%, there have been only a few corrections in Vancouver and they were typically short lived.  The bottom line is the cost of a chocolate bar at one point was 25 cents. Today it is worth a $1.50, and there is no chocolate bar bubble.  We are in the middle of an “Oil Crisis” with the Province of Alberta taking a royal walloping at the moment, but the price of gas has not dropped back to 34 cents a litre like when I was learning to drive. There is no oil bubble about to burst.  The price of homes will never go up forever.  There have been and will be ups and downs, ebbs and flows, and the market will turn at some point. But sure as the sun will rise, so will the cost of housing in Vancouver.

Vancouver held Expo’86 which put Vancouver City on “the Map.” The Apex Summit was held in Vancouver boasting our structure as an international city. The 2010 Olympic Games showcased our city to the world in a spectacular fashion. Our Mayor Gregor Robertson wants to make Vancouver “the most livable city in the world.” While we are not yet in the league of London, New York or the Tokyo’s of the world, we are getting a taste of what they are like. We have been seen by the world and they are coming.  We are a hub of multiculturalism and tolerance, with strong social safety nets on the Pacific Rim. We have created a place that is the envy of others all around the globe, and because of that, we are now starting to pay the price.  It is being paid in the price of real estate.

Will the Vancouver Real Estate Bubble Burst in 2016? Part 4

Part 4 of 5:  The Matter of Interest

 

There are “two sides to every coin” as they say.  Currently, we have seen what happens when we have an over-heated market and prices sky rocket. Sellers cash in their “lottery tickets.”  This capital brings more money into the economy. (This was the intention of the Foreign Investor Program discussed in the previous blog.) For instance, Baby Boomers are now set-up for retirement, down-sizing, and cash in the bank; plus, maybe distributing some wealth to their grown-up kids. One of the consequences, however, is the buyers suffer from escalating affordability.

We have also seen, the opposing forces of a Buyers’ market in the United States when people couldn’t sell their homes which was a devastating buyers’ market in some places in 2008.  So it is clear that neither a Sellers’ Market nor a Buyers’ Market are healthy for the Vancouver market; although, both markets can make people a lot of money.

The purpose of this blog however, is to talk about the bursting of the bubble of course!  So how would this happen? The bubble won’t just burst on its own!  What if interest rates jumped?

Well, in an attempt to slow down the market in 2008, 2009, and 2010, the government changed amortization periods. This had the equivalent effect of raising rates.  Interestingly, as you can see in our chart below, at the point where amortizations were decreased to a maximum term from 30 years to 25 years, this essentially was the same as raising rates by 1%.

Consider, prior to 2008, with a 35-year or 40-year amortization, you had a longer time to pay off the mortgage and rates were higher. So when you lower the amortization term, and thus the time-line-to-pay, the mortgage payments will have to go up.  If you happen to reduce the amortization term but hold the payments constant, in the case below, you will see that magically the effective interest rate declines.

In the example below, using a one million dollar mortgage you can see the effect of changing the interest rate and length of amortization… by “pushing and pulling” the right levers you will find a similar payment amount.

 

Mortgage        Rate   Amortization   Payment

$1,000,000     4.49     40                    $4462

$1,000,000     4.14     35                    $4491

$1,000,000     3.49     30                    $4471

$1,000,000     2.49     25                    $4475

 

So, what happens when rates go up?  Well, the government can choose to roll back amortization again and soften the blow.  They now have a counter lever to help the bubble from bursting.  Interestingly, what this also illustrates is that people with 25 year amortization terms and buying at 2.49% have the same buying power as someone buying at the 4.49% rate in 2008.

An interesting side note is that in January 2016 mortgages in arrears in BC were only at 0.28%.  This would further indicate that people are managing in the current market place and in fact they are doing better than in 2010 when I first wrote about the bubble not bursting. (In January of 2010 the mortgage arrears rate in BC was 0.40 %.)

What else could burst the bubble? Closing the door to foreign buyers?  We have seen the government terminate the Foreign Investor Program.  Would-be participants have the resources to find another way into the country. The answer is likely yes. Now that foreign investors have experienced our West Coast lifestyle, their interests are likely insatiable.

There are of course always massive global events such as “Nine-eleven Twin Towers event” and the Credit Crisis in the USA that could cause corrections.  We can’t necessarily time when an event will happen.

Here’s the thing:  safety is boring, banks are boring, and they do not make for sexy headlines… like real estate bubbles. So it’s not heralded by the media. No one really wants to talk about the fact that banks are much more conservative. They now ask for more significant documentation that was not previously required, when qualifying for a loan. Banks have been much more careful with whom they do business and how they do the business.  Regulation has played a massive role in Canada protecting the consumer from themselves.

While there could certainly be a shake up, I don’t know if we will see the calamitous depths people are looking for. This is what is known as a black swan event and it could be argued it is really more of a separate issue than the bubble bursting. Of course no one really wishes for this type of event because the consequences will typically reach far beyond simply the affordability of Vancouver Real Estate.

What about affordability? Locals can’t afford to live here! What is the breaking point? Young people can’t afford to live in Vancouver. This is another discussion entirely. As much as some people hope that the bubble would burst so that people may get into the market, the shear will of the masses will not make this happen. I guess the question becomes, can people make it into the market place in Vancouver? Is affordability out of reach, or should we simply put our hands up and give up? Has the paradigm of home ownership shifted? Well these are all a question of perspective (and another issue to cover in another blog).

Look for Part 5 Coming out Saturday Morning!

Will the Vancouver Real Estate Bubble Burst in 2016? Part 3

Part 3 of 5:  Government intervention-Yes or No?  Let the Government Save us!

 

We have had a Geography lesson, and an Economics lesson so how about a History lesson?  For those of you that have bought real estate in BC or Vancouver, you may be familiar with the Property Purchase Tax (PPT). You may have had to pay the PPT or may have avoided it as a First Time Buyer.  If you are a buyer purchasing property over $500,000, or have owned property anywhere in the world (unless you are buying newly built property), then a tax is payable: 1% on the first $200,000 and 2% on the balance of the property purchase price.

This fun little tax was introduced by former Social Credit Premier Bill Vanderzalm as a luxury tax in 1987.  The whole idea of it was to tax speculation and wealth of foreign buyers. (Sound familiar?)  95% of the homes at that time were below the $200,000 threshold.  Nearly thirty years later, do you think this “Luxury tax” has had the desired effect? Are people still paying it and buying ridiculously expensive real estate? Does this help affordability?

In 25 years, from 1987-2012, this PPT raised a total of $11.9 billion dollars for the Provincial Government.  The government relies heavily on this source of funding. It is unlikely it will go away because the government is intoxicated with this source of revenue.   The only way to eliminate it, would be to replace it with another tax and we can see what happens when they tried to bring in the HST (Wait a second…What was Bill Vanderzalm doing?  Once again he had to be involved!)

How about another idea?  Since our economy is not running in a top gear, how about we bring in foreign investors to help spur on the economy. This was previously the idea of our Federal government with the Canadian Immigrant Investor Program.  It was created to promote the immigration of business people and their families.  Individuals had to have a minimum net worth of CAD$1,600,000 and make an investment of CAD$800,000.

Both of these programs were introduced to help Canada and BC.  Left unchecked, or once the government became addicted to the funds, these programs have both had the reverse effect of helping affordability.  So if we do sound the call to government to implement a plan, we better be very, very carful we are sure we know what we are getting into…and what the long term and potentially unexpected consequences could be.  As the past Provincial and Federal governments were initially well intended with their actions, their policies did very little to assist with affordability.

 

So what next, what if the scales are tipped? Well let’s look at that in the next Blog and we can discuss what could happen if the tables were to turn!

Look for Part 4 of our series coming out Wednesday Morning!