Residential Property Sales in Metro Vancouver
Number of homes for sale is lagging behind the pace of demand
The number of home sale from September to November are 3,643, 3,687 and 3,064 respectively, with all recorded a significant increase compared to the numbers in 2019. September sales were 44.8 per cent above the 10-year September sales average, while October was 34.7 per cent and November was 24.6 per cent above the average of its 10-year sales.
According to Colette Gerber, REBGV Chair, the increased activities can be attributed in part, to lower interest rates and changing housing needs during the COVID-19 pandemic. With more days and evenings spent at home this year, people are re-thinking their housing situation.
“Homebuyer demand has been at near-record levels in our region since the summer. This is putting upward pressure on home prices, particularly in our detached and townhome markets" Colette Gerber said.
There were 6,402 properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2020. In October 2020, the number was 5,571 and 4,068 in November. All three months had more than 30 per cent increase compared to the corresponding month in 2019.
Even the MLS® listings entering the market was increasing, the heightened demand from home buyers kept the overall supply levels down. Some additional supply may come online following the end of mortgage deferral programs and the increase of EHT, but the situation is unlikely to be disruptive due to hesitation on the part of sellers to list during the pandemic. The total number of homes for sale in Metro Vancouver is lagging behind the pace of demand right now. This trend favours home sellers in today's market.
The sales-to-active listings ratio for September is 27.8 per cent for all property types, 29.7 per cent in October and 27.6 per cent in November 2020.
Analysts say upward pressure on home prices occurs when it surpasses 20 per cent over several months, while a downward pressure occurs when the ratio dips below 12 per cent for a sustained period.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver was $1,041,300 in September, $1,045,100 in October and $1,044,000 in November. There is a 1.8 per cent increase since June ($1,025,300). The British Columbia Real Estate Association (BCREA) are forecasting the provincial MLS® average price to finish the year up 9.9 per cent and to increase a further 2.6 per cent in 2021.
Gerber mentioned that homes priced right for today’s market are receiving attention and getting multiple offers. The Chair of REBGV also suggested working with the local REALTOR® to assess the latest MLS® housing market information, in order to get a better understanding of the market conditions in your neighbourhood and property type of choice.
Commercial Sales in Metro Vancouver
Commercial Activity Rebounded in Q3
The BCREA Commercial Leading Indicator (CLI, a tool to forecast changes in broad commercial real estate activity) rebounded in the third quarter of 2020 from 122.3 to 136.9, representing the first increase after four consecutive quarterly declines. The third quarter of 2020 saw the resurgence of key economic industries in BC, particularly the hard-hit retail sector, as brick-and-mortar stores reopened and travel restrictions in the province were eased. Employment in key real estate sectors and manufacturing also rebounded in the third quarter.
The economy reopened in the third quarter of 2020 after it was halted in the previous quarter by COVID-19 containment measures. Manufacturing sales were boosted by strong demand for wood products and building materials, supplying robust activity in new home construction or home renovations.
The business confidence index (measured on the expectations and operating conditions of small businesses in BC) is also rebounded to the pre-COVID situation, which has been negatively impacted by physical distancing measures since Q1.
Even though, the CLI’s financial component was negative in the third quarter of 2020. The market concerns over the impact of the pandemic on future office and retail space requirements continued to drag down REITs, while short-term risk spreads continued to normalize following a significant jump in the first quarter.
With the pandemic hitting, Commercial real estate sales dropped a 26.5 per cent in the Lower Mainland in Q2 2020, compared to 2019 Q2, according to the Real Estate Board of Greater Vancouver (REBGV).
“The pandemic has caused employers to adapt to how they view and use commercial space. We’ll need more time and data throughout this year and beyond to fully understand how these changing perspectives are affecting our commercial real estate market.” Colette Gerber, REBGV Chair said.
There were 76 commercial land sales, 137 office and retail sales, 104 industrial land sales and seven multi-family land sales in the Lower Mainland in Q2 2020. There is an average of 30 per cent decrease compared to Q2 2019.
Empty Homes Tax (EHT) to be increased from 1.25% to 3%
The Vancouver city council confirmed the Empty Homes Tax (EHT) rate to be increased to 3% for the 2021 tax year. It aims to encourage owners of vacant properties to place them on the rental market, thousands of rental homes are expected to be back onto the market.
The EHT was first launched in 2017 for 1%, then increased to 1.25% in 2019. Over $60 millions have been allocated to support affordable housing initiatives in Vancouver, and the number of vacant properties has fallen by 25%.
Please be reminded to declare your property status for the 2020 tax reference year by February 2, 2021.
How much would you like to pay for driving to downtown?
The council approved on mobility pricing within the Metro Core, as one of the ‘game-changer’ actions of the Climate Emergency Action Plan, and is recommended it should be implemented within the next 5 years. Further studies will be conducted on when and how to start charging tolls.
Metro Core is defined as Burrard St to the west, 16th Ave to the south, Clark Dr to the east and Burrard Inlet to the north.
The ‘game-changer’ actions were identified to reduce the city’s largest sources of carbon pollution – buildings and transportation, which represent nearly all of the produced in Vancouver.
Other ‘game-changer’ actions include expanding residential on-street parking programs, with a carbon surcharge on new, higher-priced, gas and diesel vehicles; setting carbon pollution limits for existing buildings to transition older buildings off fossil fuels; and setting requirements for low carbon construction materials and practices in new buildings.
Disclosure of land ownership starting November 30, 2020
BC's new Land Owner Transparency Act (LOTA) came into force on November 30, 2020. Transferees of an interest in land (including corporations, trustees and partners that own land in B.C.) are now required to file with the registry. It aims to end hidden ownership and help government, tax authorities and law enforcement combat money laundering and tax evasion.
There are two key dates:
April 30, 2021 – Certain information will be searchable by the public and government authorities
November 30, 2021 – Deadline of Disclosure by Existing Landowners
The Expert Panel on Money Laundering in B.C. report says that disclosing beneficial ownership is the most important measure to combat money laundering, the report estimates have raised housing prices by 5% in B.C. alone.
Homebuyers should get legal advice about the requirements of LOTA and to plan ahead to allow legal professionals to complete the declaration, if necessary.
New practices about home showings during second-wave of COVID-19
Safety remains the top priority for Metro Vancouver REALTORS® during today’s pandemic. With following the strict safety protocols that WorkSafe BC, the Real Estate Council of BC and other agencies have established, Realtor can still conduct a home showing. However, Real estate’s governing bodies are also advising that Realtors not hold open houses given the increasing COVID-19 caseload in our province.
Source: BCREA, City of Vancouver, CTV News, gov.bc.ca, REBGV, Statistics Canada