Market Update

–        ..barring a shock to incomes or employment, several factors should help prevent another sustained deterioration in housing markets in 2019. Chief among these factors include another year of strong population growth, healthy labour market conditions and a more patient Bank of Canada

–        The turn in the real estate market has led the Bank of Canada to abruptly change their characterization of the housing market, dubbing it “weaker-than-expected” earlier this month rather than its previous reference to “stabilizing”

–        Since August, the extent of weakness observed in B.C. has been eyebrow-raising

–        Relative to our December forecast, the backdrop appears softer for housing markets across the country heading into this year, suggesting that even holding on to last year’s average sales levels and prices in 2019 could be challenging. Still, assuming no major negative shock to incomes or employment, markets should be able to escape an even worse outcome

–        Policymakers are preaching patience: Although the Bank of Canada maintains a tightening bias, the next hike likely won’t come until later in 2019, instead of early 2019 as previously expected. Notably, bond yields have moved significantly lower since November, which should feed through into lower mortgage rates

–        Several other factors should abet these positive fundamental forces. For starters the “bank of mom and dad” remains open, providing a valuable source of funding for first-time buyers. Secondly, although mortgage rates have risen, some households can mitigate the impact of these increases by stretching their amortizations or reverting back to the original amortization schedule if they undertook more rapid principal repayments

–        In Toronto and Vancouver, strong condo price growth has caused relative price gaps between single-family homes and condos to narrow significantly. This provides a window for move-up buyers to trade into larger units, thereby helping resale activity

Vancouver metropolitan sales slacken, but prices remain elevated

Vancouver metropolitan sales slacken, but prices remain elevated

Metro Vancouver home sales over the first quarter of this year were the lowest in five years, but statistics from the Real Estate Board of Greater Vancouver show prices remain high.

The board stated that home sales across the region in March tumbled 29.7% year-over-year, and are 23% below the 10-year March sales average.

Just over 2,500 homes changed hands last month, a drop of more than 1,000 compared to a year ago, although the board noted that March 2018 sales climbed 14% compared to February.

Listings of detached, attached, and apartment properties also declined by 6.6% last month compared to March 2017, marking the region’s lowest total of first-quarter new listings since 2013.

Real estate board data showed the number of sales compared to the number of active listings soared to 61.6% for condominiums in March, while the rate was 39.9% for townhomes, well above the 20% rate that has been estimated to tend to push prices upward.

The composite benchmark price for all residential properties in Metro Vancouver stood at $1,084,000, a 16.1% increase over March 2017 and a 1.1% increase since February 2018.

REBGV president Phil Moore said that even with lower sales, prices will remain high as long as the selection of properties is slim.

“Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms,” Moore stated in a news release, as quoted by The Canadian Press.

“High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today,” Moore added.

The benchmark price for detached properties was $1,608,500 last month, up 7.4% from March 2017 and up less than 0.5% over February 2018, as sales-to-active listings nudged the mark where the board said downward pressure on prices could occur.

With sales outstripping supply for condos and townhomes, the benchmark price for a condo was $693,500 in March, a 26.2% leap from March 2017 and a 1.6% bump compared to February 2018.

Benchmark prices for townhomes across Metro Vancouver reached $835,300 last month, a 2% increase over February and a hike of 17.7% from March 2017.

Article by Ephraim Vecina: