Residential Property Sales in Metro Vancouver
Metro Vancouver housing market sees summer uptick in sales
VANCOUVER, BC – September 4, 2019 Homebuyer activity increased to more typical levels in Metro Vancouver* throughout the summer months.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,231 in August 2019, a 15.7 percent increase from the 1,929 sales recorded in August 2018, and a 12.7 percent decrease from the 2,557 homes sold in July 2019. The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $993,300. This represents an 8.3 percent decrease over August 2018 and a 0.2 percent decrease compared to July 2019.
Sales of detached homes in August 2019 reached 706, the benchmark price for detached properties is $1,406,700.
Attached home sales in August 2019 totalled 409, the benchmark price of an attached unit is $771,900.
Sales of apartment homes in August 2019 reached 1,116, the benchmark price of an apartment property is $654,000.
“Home sales returned to more historically normal levels in July and August compared to what we saw in the first six months of the year,” said REBGV President Ashley Smith, “With more demand from home buyers, the supply of homes listed for sale isn’t accumulating like earlier in the year. These changes are creating more balanced market conditions.”
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 13,396, a 13.3 percent increase compared to August 2018 (11,824) and a 5.9 percent decrease compared to July 2019 (14,240).
For all property types, the sales-to-active listings ratio for August 2019 is 16.7 percent. Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 percent for a sustained period, while home prices often experience upward pressure when it surpasses 20 percent over several months.
Fewer commercial real estate sales to start 2019
Commercial real estate sales in the Lower Mainland declined in the first quarter (Q1) of 2019 compared to the active market experienced across the region last year.
There were 318 commercial real estate sales in the Lower Mainland in Q1 2019, a 42.1 percent decrease over the 549 sales in Q1 2018, and the total dollar value of commercial real estate sales in the Lower Mainland was $1.531 billion in Q1 2019, a 57.3 percent decrease from the $3.587 billion in Q1 2018.
“Much like we’ve seen in the residential market, there’s been reduced demand in the commercial real estate market through the first quarter of the year,” Ashley Smith, REBGV president said. “With housing inventory at a five-year high and more supply on the way, the development community appears to be taking a more cautious approach with new acquisitions and projects at the moment."
First-Time Home Buyer Incentive Launches in September
In September, the federal government will launch the First-Time Home Buyer Incentive, an interest-free loan that doesn't require monthly payments. The incentive is intended to help reduce monthly mortgage payments without increasing the amount needed to save for a down payment.
How does it work?
Eligible homebuyers with the minimum down payment for an insured mortgage
can apply to finance a portion of their home through a shared equity mortgage with the federal government.
For an existing or manufactured home, the incentive will be five percent of the total borrowed amount. For a newly constructed home, the homebuyer can choose either a five or ten percent incentive. The homebuyer will need to repay the incentive based on the fair market value of their property, which occurs when the homeowner sells the property or after 25 years, whichever comes first
Eligible homebuyers can apply for the incentive as of September 2, 2019.
To qualify, a homebuyer needs:
- to be a first-time homebuyer or have gone through a breakdown of a marriage or common-law partnership or, in the last four years, not occupied a home owned by the homebuyer, current spouse or common law partner,
- to be a Canadian citizen, permanent resident or non-permanent resident who's legally authorized to work in Canada,
- at least the minimum down payment of five percent,
- a maximum down payment of 9.99 percent for the ten percent incentive or a maximum down payment or 14.99 percent for the five percent incentive,
- a maximum annual pre-tax household income of $120,000, and
- total borrowing (mortgage plus the amount of the incentive) that's limited to four times the maximum household income.
The Eligibility Calculator can determine if the home buyer meets the requirements as a first-time homebuyer.
Will you benefit?
The most expensive home that can be bought using the incentive is $565,000, meaning that with an average BC MLS® price of $684,497 in July, many homes in BC won't allow first-time homebuyers to meet the eligibility requirements. In the next Market Intelligence Report, BCREA's Economics Department will analyze the expected uptake of the incentive across BC.
BCREA 2019 Housing Forecast and Mortgage Rate Forecast
Multiple Listing Service® (MLS® ) residential sales in the province are forecast to decline 9 percent to 71,400 units this year, after recording 78,346 residential sales in 2018. MLS® residential sales are forecast to increase 14 percent to 81,700 units in 2020. The 10-year average for MLS® residential sales in the province is 84,300 units.
The inventory of homes for sale has climbed out of a cyclical low, leading to balanced market conditions in many areas and buyer’s market conditions in some communities and across some products types. Current market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit down 2 percent to $697,000. Modest improvement in consumer demand is expected to unfold though 2020, pushing the average residential price up 4 percent to $726,000.
Mortgage rate Forecast
The last year of mortgage rate increases has essentially been erased by an acute repricing of bond market expectations. A slowing Canadian economy and rising global trade tensions triggered a sudden change in bond market sentiment late last year, pushing further Bank of Canada rate increases off the table. The current low mortgage rates will be around for most of the summer before rising modestly into next year.
BCREA is forecasting that the Canadian economy will expand between 1 and 1.5 percent this year, a deceleration from 1.8 percent growth in 2018. That slowdown, along with an uptick in inflation, will likely keep the Bank of Canada sidelined, particularly given the uncertain state of the global economy and the ongoing impact of the B20 stress test on the housing sector. Markets are now expecting both the US and Canadian central banks will begin reversing course on monetary policy and lower rates within a year.