Opinion

Canada’s Housing Market To SKYROCKET End Of 2024? Experts Predict A Price Surge!

Oleg First time buyers, For Buyers, Market update, News, Opinion, Statistics, Videos 0 Comment

Royal LePage’s latest market forecast paints a vivid picture of Canada’s real estate landscape, predicting a significant 9% year-over-year increase in home prices by the fourth quarter of 2024. This upward revision stems from a robust first quarter, with strong price appreciation expected through the second and third quarters before tapering off towards year-end, aligning with seasonal trends.

The forecast highlights notable upgrades in major markets, particularly the Greater Toronto Area (GTA), where prices are anticipated to surge by 10%, surpassing the national average. Montreal follows closely behind with an 8.5% projected increase, while Calgary, Quebec City, and Greater Vancouver are forecasted to experience respective jumps of 8%, 8%, and 5.5%.

Royal LePage President Phil Soper attributes the current modest price rises to consumers, particularly first-time buyers, adapting to higher borrowing costs. However, he anticipates a steeper appreciation curve once the central bank enacts anticipated rate cuts, drawing in rate-focused buyers.

While easing rates will influence price upticks, the fundamental driver remains the severe housing shortage across the country. Soper warns of an intensifying seller’s market, foretelling a busy spring and fall for Canadian buyers and sellers alike.

Looking ahead, Royal LePage’s forecast suggests that by the end of 2026, the majority of mortgages will have transitioned into an elevated borrowing rate environment. Yet, this is not expected to significantly dampen the housing market’s resilience. Soper points to Canadians meeting their mortgage obligations amid record-low default rates and income growth offsetting increased mortgage costs. However, he anticipates a pullback in discretionary spending as individuals prioritize maintaining homeownership.

In summary, Royal LePage’s forecast outlines a dynamic Canadian housing market characterized by soaring prices, driven by a combination of factors including adapting consumer behavior, impending rate cuts, and the persistent housing shortage. Despite looming challenges, the market remains robust, with buyers and sellers navigating towards a seller-centric environment amidst projections of continued price appreciation.

3 strategies smart investors use to win in a slower real estate market in Vancouver

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The Greater Vancouver real estate market has been experiencing a slowdown in recent times. However, experienced investors understand that a slower market presents unique opportunities that can be harnessed for greater returns. Here are three ways smart real estate investors take advantage of a slower real estate market in Greater Vancouver:

  1. Upsizing:

One way smart real estate investors take advantage of a slower market is by upsizing their real estate portfolio. In a slow market, the more expensive properties tend to drop in price more, which presents a perfect opportunity for investors to acquire larger and more valuable properties. For instance, an investor who wants to move from a condo to a single-family home can leverage the slowdown to acquire a bigger and more luxurious property at a lower price than would be possible in a hot market.

The key is to identify properties that are likely to retain their value in the long term. This means focusing on properties with excellent location, good amenities, and good resale potential. An experienced real estate agent can help investors identify such properties and guide them through the upsizing process.

  1. Buying pre-sale properties from developers:

Another way smart real estate investors take advantage of a slower market is by buying pre-sale properties from developers. During a slow market, developers are often eager to move their inventory and may offer attractive incentives to buyers. In addition, interest rates are expected to go down in the future, which makes buying pre-sale properties an even more attractive option.

Investors can leverage this opportunity by identifying pre-sale properties with excellent potential for capital appreciation. This means focusing on properties in areas with good growth potential, excellent amenities, and strong demand. Additionally, investors should work with reputable developers with a track record of delivering quality properties on time.

  1. Buying long-term investment properties:

A slower real estate market presents a perfect opportunity for investors to acquire long-term investment properties. The rental market in Greater Vancouver is still very strong, which means that investors can acquire properties and generate steady rental income over the long term.

Smart investors focus on properties that have good rental potential, such as those in areas with high demand, excellent amenities, and good transportation links. Additionally, investors should focus on properties with good long-term growth potential, such as those in areas with strong job growth and population growth.

Investors should also consider the potential for future development, such as adding additional rental units to the property or converting the property to other uses. This can help to increase the property’s value over time and generate even greater returns.

In conclusion, a slower real estate market in Greater Vancouver presents unique opportunities for smart real estate investors. By upsizing their portfolio, buying pre-sale properties from developers, and acquiring long-term investment properties, investors can take advantage of the slowdown to generate greater returns over the long term. However, it’s important to work with experienced real estate professionals who can help identify the best opportunities and guide investors through the process of acquiring and managing real estate assets.

More rent increases for Vancouver in the near future

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We have seen countless number of news stories about unaffordable rental rates in Metro Vancouver. It’s a hot subject in the media and with local politicians. The rent has been steadily increasing for a long time. But it seems that in the last coupe of years it has really “shot up”.

Local residents don’t know how to deal with such rent increases. There even is a tenants union that has been created back in April of 2017.

City of Vancouver is trying to deal with a problem by passing a foreign buyers tax, a vacant home tax and regulations for short-term rentals. Last week the city has released their 10 year housing strategy. The new strategy will encourage developers to build more rental suites within their “for sale” buildings. It will also promoted more co-ops and affordable living units. Many critics says the new strategy is not aggressive enough. But it’s a good start.

In my opinion, the rental rate increases we’ve seen in the last 4-5 years are not the end of it. CBC news wrote an article about the rent increases in the last 5 years. This article also includes census of rental increase by a neighbourhood in Metro Vancouver from 2011 to 2016. Most neighbourhoods went up in rent by 30-50%. That’s a big increase in only 5 years. Full article: here.

Condo prices in the last 12 months in most Metro Vancouver neighbourhoods have gone up by 30-45%. These price increases will have upward pressure on the rental market. I think we are going to see huge rental rate increase in the next 24-48 months and beyond. And the real estate condo market is not showing any signs of slowing down in the near future.

I would not be surprises to see 50-60% increase in rental rates in Metro Vancouver over the next 3 years. Especially since we are currently at close to zero vacancy rate.

All of the proposed and implemented changes and taxes are a good steps but they are too late. The city is reacting to the huge price increases that already took place. The bottom line is that huge rental rate increases are not over. Even if the real estate market prices don’t increase any more, we will still see an increase in the rental rates as a reaction to the condo market price increases that already took place.

Are the interest-free housing loans for first-time buyers a good idea? [OPINION]

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On December 15th 2016, Premier Christy Clark unveiled a new loan program for the first-time home buyers. This loan program will lend money to the first-time home buyers who cannot come up with the downpayment. The loan will be interest-free for up to 5 years.

There has been some criticism for this program. The primary criticism is that it will actually make housing more unaffordable. Which is the opposite of its purpose.

From my experience most first-time buyers are looking for 1 bedroom condos. For the most part the 1 bedroom condo market in Greater Vancouver is a ‘seller’s market’. (Read more about: Burnaby 1 bedroom condo market here.)  There is a lot of demand for these “starter” 1 bedroom units but not a lot of supply. By making it easier for the first-time home buyers to get into the real estate market the demand for these units is likely to go up. The increase in the demand will of course lead to the increases in price.

On the other hand, it’s very hard for young people to save up enough money for the downpayment. This program will potentially help many first-time buyers get into the real estate market sooner than they would with out. In most cases buying it’s better than renting. With the low interest rates mortgage payment are almost the same as rent.

In my opinion this program will cause the prices for “starter” condos and townhouses to go up in the long run. What Metro Vancouver but especially the City of Vancouver needs it to green-light more development projects. We need to change zoning bylaws for many of Vancouver areas and start building more strata condo buildings. There is a lot of demand and not a lot of supply. To make Vancouver real estate market more affordable we must increase the inventory.

If you are a first-time buyer thinking of getting into the real estate market in Metro Vancouver I suggest getting started as soon as possible. Don’t wait until the prices of the “starter” units go up thanks for the very program.

What effect will “empty home tax” have on Vancouver real estate market?

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Vancouver to implement vacancy tax on empty homes and condos

BC government has cleared the way for Vancouver to impose a vacancy tax on empty homes. Vancouver plans to impose the tax by early 2017. It will make it the first major city in Canada to implement such a penalty amid skyrocketing rents and growing concerns about foreign investment and speculation.

Mayor Robertson noted that a city study concluded there were about 10,800 empty residential units homes in the province, almost all condos, as of 2014.

Similar tax was introduced in London on ‘ghost homes’ back in 2013. As a result, one third of absentee owners began renting out their flats. However the majority of absentee owners left their flats vacant. The annual appreciation is way more than the ’empty home tax’.

So what effect will this new tax have on Vancouver’s real estate market?

In my opinion there will be no significant effect. Overseas millionaires and billionaires would not care about a couple of thousands of dollars per year in taxes. Vancouver has one of the lowest property taxes in the world. Even after additional vacancy tax it would still be quite affordable.

Empty home tax would be very hard to enforce. You could always have one of your family members “live” in the unit for a couple of weeks every year.

Other municipalities have not agreed to such tax yet. If Vancouver has an “empty home tax” a potential investor can alway buy in Burnaby, or North Vancouver, or Richmond, or… you get the idea.

In the best case scenario a small portion of the absentee owners will decide to rent out their units. Which should stimulate the rental vacancy rate. Currently the rental vacancy rate in Vancouver is 0.6 percent. Housing experts say a healthy vacancy rate is 3 per cent to 5 per cent.

In summery empty home tax will not have any significant effect on the real estate market in Vancouver. It might have a slight effect on the rental vacancy rates, but even that is questionable.

 

NOTE: This article represents my personal opinion. Do your own independent research before taking any actions. 

Feds are meeting to solve Vancouver’s housing ‘crisis’

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Can Federal Government solve Vancouver’s Housing ‘Crisis’?

Our Prime Minister Justin Trudeau is in Vancouver. The Prime Minister has just announced a massive funding injection to the public transportation in the region. On Friday June 17, he will be attending a roundtable on housing affordability, which brings tougher Liberal MPs, academics and housing experts.

He acknowledged that affordability issues in Vancouver are very complex puzzle. He also added that they would do everything possible to manage local real estate prices without it effecting the rest of Canada.

“We want to be drawing in money from overseas to continue to make this an extraordinary city, but we need to make sure we’re doing it in such a way people can afford their homes,” he said.

Federal Government has a few tools available to them that will potentially slow down Vancouver’s active real estate market. However, most of these tools will negatively effect real estate markets in other Canadian cities.

One of the tools at their disposal is raising interest rates. However, an increase in interest rates would have to be nationwide which will negatively effect the rest of Canada. Real estate markets in most Canadian cities are already not doing well.

Raising a minimum downpayment to 10% is another tool Federal Government might use. This strategy once again will have a negative effect on the rest of Canada.

Posing an “empty homes” tax could be another solution proposed. This solution might have a very minimal effect. Overseas millionaires who spend $4 million to buy a property will not be discouraged by an additional property tax.

It will be very interesting to see what solutions are proposed if any. It will also be interesting to see if Federal Government will actually get involved in regulating Provincial and Regional real estate.

Summer 2016 – Vancouver Real Estate Predictions

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What to expect from the Vancouver real estate market for the summer 2016 season.

Vancouver Coal Harbour Marina

 

 

Friends, we are entering uncharted waters. The demand is at the all time high. The inventory is the at the all time low. We are having one record-breaking month after another. What’s next? Will the market crash? Will the prices go down? Will the market remain just as strong?

Short answer – “I don’t know”. In fact nobody knows, and whoever claims that they know is probably a psychic. However, as an experienced Vancouver Realtor I can make some predictions.

Real Estate Prices

We can anticipate the prices to go up slightly over the next few months in most of the Vancouver neighbourhoods. The price increase will not be as extreme as what we’ve seen in the winter and spring of 2016.

Condo prices in some Vancouver neighbourhoods might even plateau. In my opinion we will not see any price drops during summer 2016.

Buyers’ Demand

Buyers’ demand in Vancouver remains strong. However, we can already see early signs of the buyers fatigue. Properties that were receiving 8-10 offers in March and April are now getting 3-4 offers. Still a lot of demand. Perhaps people looking for properties during summer months notice a drop in the competition levels.

The market is still a very strong sellers market and will most likely remain a strong sellers markets for the summer months.

Inventory Levels/Houses or Condos for Sale

Vancouver real estate market tends to go through the seasons. Spring is generally a busy season and summer is slower.

We have seen a fifty percent drop in inventory from the previous years.  We can anticipate even lower levels of inventory during this summer season. This could be a good opportunity for potential sellers to list their home as there are less competing properties.

In summery, the Vancouver real estate market will slow down a little for the summer months.  The lower buyer demand will be balanced out by the lower inventory levels. For the most part – business as usual.

 

NOTE: This article represents my personal opinion. Do your own independent research before taking any actions. 

Spring 2016 – Vancouver Real Estate Market Update

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What you should know about the Vancouver real estate market in the spring 2016.

vancouver skyline

Vancouver real estate market is a topic of conversation. It’s hard to turn on the news without hearing about a tear-down that’s been sold for three hundred thousand dollars over asking price or how the last few months were record breaking for local real estate.

Here are the trends I’ve noticed over the last couple of months:

The buyers demand seems to be cooling off as we head into the summer season.

Properties that used to receive 8-10 offers now receive 3-4 offers. Real Estate market activity usually goes though seasonal cycles. There are high activity seasons such as spring and fall, and lower activity seasons such as summer and winter.

A cool-off in real estate activity is natural as we enter summer season. But this could also be an early sign of over-all cool down of the hyper-active Vancouver real estate market. It is still too early to tell which one is it.

The prices are still remaining high and show no signs of going down.

Even though the buyers demand is cooling-off the real estate market still remains a very strong sellers’ market.

Real estate prices continue climbing up but perhaps not as fast as they did at the end of winter/early spring 2016. As we head into the summer season, we can anticipate real estate prices to slow down.  More on this in my article –  “Summer 2016 – Vancouver Real Estate Predictions”.

Inventory is still at the all time low.

We have seen a fifty percent drop in inventory from the previous years. This lack of available properties for sale is one of the most important components fuelling such strong seller market.

We can expect even less inventory being available for the upcoming summer season, which will balance out the lower buyer demand and continue current real estate climate.

In summery, Vancouver real estate market remains a very strong sellers market with roughly 3-4 buyers for every property for sale. Until we solve the demand issue in Vancouver or there is a major change effecting real estate market (ex. increase in the interests rates) we will continue seeing a version of the current market climate for the foreseeable future.

 

NOTE: This article represents my personal opinion. Do your own independent research before taking any actions. 

Why is AirBnB evil? According to Vancouver

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Lately, there has been a lot of debate about AirBnB. Is AirBnB legal? Should it be allowed? Does it effect real estate prices? Does it effect rental rates? Is it a good investment strategy for landlords? All are good questions. In this article I will attempt to answer some of them. Keep in mind I don’t have any preferences for or against AirBnB. I am simply trying to give you some facts and explanations as to why Vancouverites might be against AirBnB.

Is AirBnB legal in Vancouver?

No, according to the bylaws imposed by the City of Vancouver – AirBnB is not allowed. However, this city bylaw is virtually impossible to impose and there hasn’t been any cases (as far as I know) of the City penalizing anyone…yet

Does AirBnB cause rental rates to go up?

Yes, it does! Let’s say you have 1,000 unfurnished long term rental units. Suppose 20% of the landlords decide to rent out their units on short term rentals with AirBnB instead of keeping them as unfurnished long term rentals. All of the sudden the demand for the remaining 800 units increases and the rent rate goes up.

 Does AirBnB effect real estate prices?

There is no definitive answer to this question. AirBnB might effect real estate prices slightly. As the rental rates increase more investors are interested in buying real estate thus driving up the real estate prices.

Why are Stratas in Vancouver against AirBnB?

There are a few reasons why more and more Stratas are creating bylaws specifically against AirBnB and even going as far as monitoring the website for units within the building. Landlords caught advertising their units for rent on the website face penalties.

  1. Security. Many Stratas would argue that giving strangers access to the building is dangerous and makes some residents feel unsafe.
  2. Insurance. If you rent out your unit on AirBnB some insurance companies will not cover you. If your short term tenant off of AirBnB floods 3 floors below, you might be responsible to pay for the damages out of your own pocket. Some damages could cost hundreds of thousands of dollars. Stratas don’t like to take any chances.
  3. Noise. A lot of people that use AirBnB are in town on vacations and like to throw parties.
  4. Reduce quality of the building. Tenants in general don’t have a great reputation for taking care of the common properties such as hallways, party rooms, gyms and swimming pools. Stratas fear that short term tenants might be even more careless with the common property.
  5. Building bylaws. Every building has a set of rules and bylaws that everyone follows. Long term residents of the building know these rules and follow them (for the most part). Having new tenants in the building a few times a week makes it very hard to enforce any of these rules.

AirBnB is a new concept and like most new concepts causes a lot of controversy. It will be interesting to see what happens with AirBnB in Vancouver over the next few years and what effect it will have on local real estate as well as hotel industry. What are your thoughts on AirBnB in Vancouver?

Vancouver’s proposed affordable ownership program

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Vancouver skyline / new affordability program
JENNIFER GAUTHIER/METRO

Earlier this week City of Vancouver announced that it plans to create new affordability program for local residents. The purpose of the program is to address unaffordability issues in Vancouver BC. Specifically, Vancouver’s residents not being able to afford to purchase their first home due to rapid increase in the real estate prices.

If you feel skeptical about such program, you’re not alone. However, there are similar programs already in place in Calgary, Toronto and United Kingdom.

Don’t get too excited about the program just yet. To implement this program the city needs to secure permission from the province to change the Vancouver Charter. The Charter doesn’t necessarily prevent city from having a shared homeownership program. But the council is sticking with the motto – “better safe than sorry”.

How would the program work?

Details aren’t finalized, but the program would involve the city purchasing about 20 per cent of a units in a new development so the buyer – who would be subject to numerous restrictions – wouldn’t have as high of a down payment or mortgage payments. If the value of the property goes up upon sale of one of the unit in the “affordability program” City of Vancouver would receive it’s share of profits. If there are any remaining profits, these would be shared with the homeowner. It’s a win-win situation.

Who would qualify for the program?

  • Must be a resident of the city for a minimum of five years
  • Must be a permanent resident or citizen
  • Must never have owned property before (first time buyer)
  • Must be employed in Vancouver
  • Earn less than $67,540 per year for one-bedroom units (as a household)
  • Earn less than $96,170 per year for two and three bedroom units for people with children (as a household)
  • Must complete a home buyer education course

How many units will be available in the program?

The city aims to create 300 affordable units within the next 3 years. At least half the the available units will have two to three bedrooms. City officials said they might create a lottery system to see who gets to buy in. There are estimated 30,000 qualified households in Vancouver at the moment.

In my opinion it is fantastic the City of Vancouver is creating such programs. It is no secret that there are a lot of people that can’t afford to purchase their first condo in the city. With such programs we boost economy and help first time buyers. That’s why I love Canada, more specifically Vancouver! Where else will you find government care so much about people’s well being (outside of Toronto, Calgary and United Kingdom lol)?