Sales across almost all major real estate markets in the province showed significant decreases compared to April 2017. Sales of detached homes in Vancouver fell to the lowest level in 17 years for the month of April. Interestingly, new listings, as well as the total active listings, increased across almost all major markets in the province which means an increase in the supply and could signify a shift to a slightly more buyer friendly market. The Bank of Canada held the overnight rate at 1.25 on April 16, 2018 despite experts suggesting that the bank was poised for another hike. Many of the big banks did increase their 5-year fixed mortgage rates throughout the month; however, in a surprising move there is a significant spread of rates, with TD at 5.59%, RBC and Scotiabank at 5.34%, BMO at 5.19%, and CIBC at 5.14%.
IN THE NEWS
The B.C. Real Estate Association says that home sales in April were down 24.6% compared with April of 2017 while prices actually increased by 5.3% over the same period. The association says that the lack of properties for sale is to blame for the persistently high prices. Cameron Muir, chief economist of the association, is critical of the new mortgage qualification rules which he calls “burdensome”; Muir forecasts that prices will continue to climb as long as the lack of inventory continues.
A recent quarterly MNP consumer debt index survey indicates that 43% of Canadians are increasingly feeling the effects of higher interest rates, representing a 5 percentage point increase from three months ago. The poll also said that 51% of Canadians fear rising interest rates could impact their ability to repay their debts, with a third of all respondents saying that rising rates could push them to bankruptcy.
MNP president, Grant Bazian notes that half of all mortgages have interest renewals within a year, so mortgage payments for those people are going to be rising at a time when a large percentage of Canadians say they have no wiggle room at all.
Home starts in the City of Vancouver for the first quarter of 2018 were over twice that of the same period in 2017. The first quarter saw home starts increase by 30% for the Greater Vancouver area overall. Dramatic increases were also seen in North Vancouver where 1,422 homes broke ground in the first quarter of 2018, compared with 107 in 2017. However, the increase in housing starts may not have a significant impact on inventory, of the 7,000 new strata units or new houses completed this year only 1,004 remain unsold.
The recent announcement of Amazon.com Inc. that it will be increasing it’s Vancouver workforce to 5,000 employees by 2022 could strain the Vancouver real estate market even further. The announcement that Amazon would be redeveloping the former Canada Post building into a 416,000 square foot office is seen as a boon for the city as other companies will likely be attracted to having offices near the tech giant, as was the case in the city of Seattle. A senior economist at Zillow Group Inc., which calculates Seattle rental prices says that rental prices in the city increased by 50 per cent and home values doubled since Amazon’s start in the mid-1990s.
BC UNEMPLOYMENT RATES
||Rate from April to May 2018
||Rate from March to April 2018
Table source: http://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx
REAL ESTATE ACTIVITY BY REGION
- Units sold: 27.4% decrease from April, 2017
- Active listings: 25.7% increase from April, 2017
- New listings: 18.6% increase from April, 2017
- Benchmark price: $1,605,800 (0.2% decrease over last 6 months)*
- Units sold: 12.5% decrease from April, 2017
- Active listings: 13.4% increase from April, 2017
- Benchmark price: $866,700 (8.3% increase from April, 2017)*
- Units sold: 1.4% decrease from April, 2017
- Active listings: 14.6% decrease from April, 2017
- New listings: 14.4% increase from April, 2017
- Average residential price: $371,459 (3.0% increase from April, 2017)
- Units sold: 23.4% decrease from April, 2017
- Active listings: 15.3% increase from April, 2017
- New listings: 16.2% increase from April, 2017
- Benchmark price: $1,009,200 (13.5% increase from April, 2017)*
- Units sold: 15.7% decrease from April, 2017
- Active listings: 14.0% increase from April, 2017
- New listings: 16.7% increase from April, 2017
- Average residential price: $586,947 (12.1% increase from April, 2017)
*Benchmark based on the MLS HPI® benchmark for single family detached homes.