The BC Real Estate Discussion Thread

[sameer666]

5 minutes ago, Bizarre said:

 

Congrats Sameer, I remember chatting with you in a group chat when you were still in school. I'm guessing it was 2-3 years ago now.

 

Tons of solid advice in here like normal when you do decide to post.

 

 

 

Thanks Bizarre! I remember you! Which group chat was that again?

 

I think it was actually much longer ago, as I've been a licensed broker now for almost 4 years. 

 

=)

[Bizarre]

Just now, sameer666 said:

 

Thanks Bizarre! I remember you! Which group chat was that again?

 

I think it was actually much longer ago, as I've been a licensed broker now for almost 4 years. 

 

=)

 

I think it was a CDC BBM group chat. I really can't remember. I guess it was closer to 5 years ago then. If it was when I still had a blackberry it could have been 5-6 years ago.

 

#gettingold

[sameer666]

12 minutes ago, Bizarre said:

 

I think it was a CDC BBM group chat. I really can't remember. I guess it was closer to 5 years ago then. If it was when I still had a blackberry it could have been 5-6 years ago.

 

#gettingold

Oh man I remember that chat! Good times!

 

There's actually a discord chat now. I joined it, but there's no one super interesting on it, nor is it really active. You should hop on it and maybe we can get it going!

[Bizarre]

3 minutes ago, sameer666 said:

Oh man I remember that chat! Good times!

 

There's actually a discord chat now. I joined it, but there's no one super interesting on it, nor is it really active. You should hop on it and maybe we can get it going!

 

Will do, I use discord daily for business. I was in there a couple times but like you said it was quite quiet. Doesn't hurt to have another chat going.

[Harvey Spector]

New Home Sales in Metro Vancouver See Similar Dip to Resales: UDI Report

Despite some reports to the contrary, new home sales are just as strongly affected by recent market changes as resale transactions, says quarterly analysis

 

Joannah Connolly  REW.ca

November 17, 2016

 

“Metro Vancouver’s new home market was negatively impacted by the recent government initiatives to slow down sales activity in the region,” according to the latest quarter Urban Development Institute State of the Market Q3 2016report, compiled by real estate think tank Urban Analytics and released November 17.

 

Just over 3,000 new multi-family home sales were recorded in 2016’s third quarter, which is a decline of 34 per cent from the same quarter last year and a drop of 55 per cent from the six-year record set in 2016’s second quarter, said the report.

The figures run contrary to recent media reports suggesting that the new home market is bucking the downward trend seen in Metro Vancouver’s resale market. There have also been several press releases issued recently to media by developers citing recent presales successes.

“Some developments are doing really well, but there is an overall slowdown in the new home market,” Jon Bennest, principal at Urban Analytics and one of the report’s authors, confirmed to REW.ca. “There are a number of reasons for this, and the new foreign buyer tax is just one of them. In fact the market was already showing signs of cooling prior to the introduction of the foreign buyer’s tax.”

Broken down by property type, there were 1,763 new concrete condominium sales in Q3 2016, which is down 21 per cent compared with the same quarter last year. For new wood-framed condos, sales were down 44 per cent compared with the same quarter last year.

New townhomes told a similar story, with the 587 new townhome sales recorded in Metro Vancouver a drop of 28 per cent compared with Q3 2015.

 

Bennest said that one of the causes for some developments not doing so well was a “less sophisticated” developer failing to respond to changes in the market. He said that following the frantic second quarter where presale prices were breaking records at every new development, some developers in the third quarter were also attempting to set new record sale prices, and consequently overpricing their product – particularly in the Fraser Valley region, said Bennest.

As has been happening in the resale market, Bennest said, “Buyers have been stopping and taking a step back and saying, ‘Is this something I can afford, based on my income and down payment? What else is on the market?’”

The report added that “overall released and unsold inventory levels are still down 54 per cent compared to the same quarter last year.”

It said that currently, across Metro Vancouver, there are only 31 concrete condominium units, 19 new wood frame condos and 12 new townhome units that are completed and unsold.

Bennest suggested that the low standing inventory levels are another possible reason for the drop in sales in the third quarter – that a lack of available new home product has also caused buyers to put their plans on hold until more options are available.

“If you look at available inventory in the market, despite the slowdown in sales, it remains extremely low. As a buyer you may want to see what happens in the market.”

Bennest pointed out that, despite the overall slowdown, some developments have been selling extremely well, particularly in areas such as downtown Vancouver, Metrotown and Brentwood, where demand is still high.

[Harvey Spector]

For immediate release

BC Home Sales to Decline in 2017 from Record Pace  
BCREA 2016 Fourth Quarter Housing Forecast

Vancouver, BC – November 29, 2016. The British Columbia Real Estate Association (BCREA) released its 2016 Fourth Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to climb 11 per cent to a record 113,800 units this year, eclipsing the previous record of 106,310 units in 2005. Less robust economic conditions combined with government policy constraints are expected to slow housing demand by more than 15 per cent to 96,300 units in 2017. However, housing demand is expected to remain well above the ten-year average of 85,000 unit sales.

“"Housing demand across the province is expected to moderate next year as declining affordability related to rising prices and government policy interventions limit the number of eligible buyers," said Cameron Muir, BCREA Chief Economist. "However, while home sales are not expected to repeat this year's record performance, consumer demand is expected to remain well above the ten-year average."

The average MLS® residential price in the province is forecast to increase 9.8 per cent to $698,900 this year. The supply of homes for sale is expected to trend higher next year as moderating demand is met with added new home completions. A trend toward more balance in the market will unfold next year and exert less upward pressure on home prices. In addition, a larger contraction in the number high-end home sales will contribute to moving the aggregate average price statistic lower. As a result, the average MLS® residential price in the province is forecast to decline 6.4 per cent to $654,200 in 2017.

Edited November 29, 2016 by Harvey Spector

[Harvey Spector]

November 29, 2016

Demand for land and industrial properties lead a steady third quarter for commercial real estate in the Lower Mainland The commercial real estate market in the Lower Mainland remained active in the third quarter (Q3) of 2016, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).   There were 645 commercial real estate sales registered in the Lower Mainland in Q3 2016. This represents a 6.3 per cent increase from the 607 sales in Q3 2015.  The total dollar value of commercial real estate sales in the Lower Mainland in Q3 2016 was $2.399 billion, a 1.9 per cent decline from the $2.445 billion in Q3 2015. “While we saw some declines in office and retail sales this quarter, overall demand in the commercial market remains steady thanks to healthy economic growth in our province so far this year,” said Dan Morrison, REBGV president. “It was the busiest third quarter in the last five years for sales in our commercial market.”   Q3 2016 activity by category Land: There were 255 commercial land sales in Q3 2016, which is a 23.8 per cent increase from the 206 land sales in Q3 2015. The dollar value of land sales in Q3 2016 was $1.306 billion, a 46.4 per cent increase over $892 million in Q3 2015. Office and Retail: There were 203 office and retail sales in Q3 2016, which is an 8.1 per cent decrease from the 221 sales in Q3 2015. The dollar value of office and retail sales in Q3 2016 was $438 million, a 45.4 per cent decrease from $802 million in Q3 2015. Industrial: There were 153 industrial land sales in Q3 2016, which is up 15.9 per cent over the 132 sales in Q3 2015. The dollar value of industrial sales in Q3 2016 was $335 million, a 17.3 per cent increase over $286 million in Q3 2015. Multi-Family: There were 34 multi-family sales in Q3 2016, which is a 29.2 per cent decrease from the 48 sales in Q3 2015. The dollar value of multi-family sales in Q3 2016 was $321 million, a 31.2 per cent decrease from $466 million in Q3 2015.

[Harvey Spector]

REPORT ON BUSINESS

TD hikes mortgage rates for rental properties and lengthy loans

Toronto-Dominion is raising mortgage rates again -- and this time the lender is going much farther than its recent hikes.

 

Starting December 1, all fixed rate mortgages that take more than 25 years to pay back will cost borrowers an extra 10 basis points, or 0.1 per cent. TD is also implementing an extra cost for mortgages on rental properties, charging borrowers 25 basis points more.

 

The changes follow Royal Bank of Canada's precedent-setting decision early in November to hike rates, and to also charge more for lengthy mortgages. The latter move marked the first time such a policy was implemented in Canada.

 

In response, TD increased its own fixed-mortgage rates a week later, but took a more measured approach. Royal Bank hiked its fixed five-year mortgage rate by 30 basis points, to 2.94 per cent; TD raised its equivalent rate by only 10 basis points to 2.69 per cent.

 

TD recently raised the same mortgage rate again, to 2.84 per cent, but still opted not to charge more for loans that take longer than 25 years to repay.

 

With its latest move, TD is following its main rival's lead, and then some. A higher rate for rental properties is something new.

 

"We regularly review our rates and adjust them based on a number of factors, including the cost that TD pays to fund mortgages, and the competitive landscape," the bank wrote in an e-mailed statement. "Increasing our rates is not a decision we take lightly. We consider the impact on our customers before proceeding with any rate change."

 

RBC and TD's rate decisions matter because they come from the country's two largest banks, whose mortgage portfolios are worth roughly $400-billion combined. It is common for them to move in lockstep when adjusting mortgage rates, and what they decide often serves as a benchmark for the rest of the market – but not always.

 

Lately, Canadian banks have had to re-think their mortgage rates because of moves in bond markets as well as policy changes in Ottawa.

 

Since November 1, the five-year Government of Canada bond has seen its yield jump 30 basis points. Banks earn a spread off of this five-year benchmark rate, and when their borrowing costs rise, they usually pass the increase along to customers.

 

Ottawa is also trying to crack down on easy lending standards that have been blamed for large increases in home prices in some markets, particularly Vancouver and Toronto. In October, Finance Minister Bill Morneau announced higher qualifying rates for mortgages with down payments of less than 20 per cent, as well as restrictions on the types of mortgages that can be covered by government-backed portfolio insurance.

 

The latter change is likely to have fostered the new rates for different amortization lengths because mortgages that take more than 25 years to pay back no longer qualify for bulk mortgage insurance. Even if these longer-dated loans aren't very risky, banks like to buy insurance for them because the regulator deems the mortgages risk-free this way.

 

RBC reported earnings Wednesday, and on a conference call Jennifer Tory, head of personal and commercial banking, said it is getting harder to make money off mortgages. "We've seen continuing pressure on our margins," she explained, adding this is one of the reasons the bank decided to significantly boost the rate on its five-year fixed mortgages.

 

**This story has been updated to reflect TD's two fixed-year mortgage rate increases in November, first to 2.69 per cent and then to 2.84 per cent.

Edited December 1, 2016 by Harvey Spector

[Harvey Spector]

Metro Vancouver home sales prices predicted to drop next year
Published on: November 30, 2016 

Following a year of double-digit increases, the B.C. Real Estate Association is predicting average home sales prices will drop by as much as 8.7 per cent next year in the Vancouver area and across B.C.

 

Following a year of double-digit increases, the B.C. Real Estate Association is predicting average home sales prices will drop by as much as 8.7 per cent next year in the Vancouver area and across B.C.

The prediction, included in the B.C. Real Estate Association’s newest quarterly Housing Forecast Update released Tuesday, marks the first time in five years the industry association for the province’s 20,000 realtors has predicted a year-over-year decrease in average Multiple Listing Service prices for Greater Vancouver and B.C.

The new forecast predicts the average MLS price of Greater Vancouver home sales will decrease by 8.7 per cent next year. That marks a 14.5-per-cent drop from the association’s previous forecast for 2017 — the most recent quarterly update, published in late August, predicted Greater Vancouver would see a 5.8-per-cent increase in average MLS price in 2017.

The provincewide average price prediction has dropped from a 5.2-per-cent increase for 2017 (as predicted in late August) to a 6.4-per-cent decrease for 2017 (in Tuesday’s forecast).

Cameron Muir, chief economist for the B.C. Real Estate Association (BCREA), said: “Home sales in Vancouver peaked in February this year and they’ve declined ever since, that’s been exacerbated by some of these policy measures, particularly the foreign buyer tax.”

 

Housing demand will still be above average in 2017, Muir said, adding: “We expect the downside of the foreign buyer tax, particularly in Vancouver, has largely run its course, and we can see in the data today, the proportion of foreign sales are actually starting to increase again.”

Average sale prices, which incorporate different kinds of dwellings, are affected by the changing mix of “products” in the transactions, Muir said, as detached homes make up a smaller proportion of sales in Vancouver.

BCREA does not make previous forecast reports available online, but Muir said the last time the association predicted year-over-year declines in average prices was 2011, when quarterly reports forecast decreases between roughly one and 3.5 per cent for 2012.

BCREA spokesman Damian Stathonikos did not reply before deadline to a request to see the 2011 forecasts.

The 14.5 per cent price-forecast adjustment between the last two BCREA forecasts marks “a pretty significant development,” said Andrey Pavlov, a professor of finance at the Simon Fraser University’s Beedie School of Business.

“We have to consider the source,” Pavlov said. “This is basically an industry group, and they have incentives to paint the real estate market in the best terms possible. With this in mind, if they’re forecasting a decline, then in my view things are probably pretty bad.”

This week’s BCREA forecast predicts unit sales will decrease by 15.4 per cent next year, following two years of double-digit percentage increases.

Tom Davidoff, an associate professor at UBC’s Sauder School of Business, said: “We’ve lived through one heck of an upswing, it would be natural to see some slowdown a little bit from there.

“When you head into a downturn, typically you see sales volumes fall before prices,” he said. “There’s been a massive decline in volume and a moderate decline in prices so far, and it’s reasonable to infer that we’re going to see, given how bad the decline in transactions has been, that we’re going to start to see a more meaningful decline in prices.”

dfumano@postmedia.com

Edited December 1, 2016 by Harvey Spector

[Harvey Spector]

December 2, 2016 Home sales and listings just below 10-year average Home buyer and seller activity remains near historical averages in the Metro Vancouver housing market. Residential home sales in the region totalled 2,214 in November 2016, a decrease of 0.9 per cent from the 2,233 sales recorded in October 2016 and a decrease of 37.2 per cent compared to November 2015 when 3,524 homes sold. Last month’s sales were 7.6 per cent below the 10-year sales average for the month. “While 2016 has been anything but a normal year for the Metro Vancouver housing market, supply and demand totals have returned to more historically normal levels over the last few months,” said Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president.  New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,147 in November 2016. This represents a decrease of 20.9 per cent compared to the 3,981 units listed in October 2016 and a 7.2 per cent decrease compared to November 2015 when 3,392 properties were listed. Last month’s new listing count was 1.2 per cent below the region’s 10-year new listing average for the month. The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 8,385, an 8.3 per cent decrease compared to October 2016 (9,143) and a 3.6 per cent increase compared to November 2015 (8,096). The sales-to-active listings ratio for November 2016 is 26.4 per cent. This is up two per cent from last month (24.4 per cent).  Downward pressure on home prices can occur when the ratio dips below the 12 per cent mark for a sustained period, while home prices can experience upward pressure when it surpasses 20 per cent over several months. “Demand, relative to supply, for detached homes is lower right now than demand for townhomes and apartments,” Morrison said. “This is causing prices to remain stable, or flat, for townhomes and apartments, while detached homes are seeing modest month-over-moth declines.” The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $908,300. This represents a 1.2 per cent decrease compared to last month and a 20.5 per cent increase compared to November 2015. Sales of detached properties in November 2016 reached 638, a decrease of 2.1 per cent from the 652 detached sales recorded in October 2016 and a 52.2 per cent decline over November 2015. The benchmark price for detached properties is $1,511,100. This represents a 2.2 per cent decline compared to last month and a 23 per cent increase compared to November 2015. Sales of apartment properties reached 1,200 in November 2016, an increase of 1.9 per cent compared to the 1,178 sales in October 2016 and a 22.7 per cent decrease compared to November 2015.The benchmark price of an apartment property is $512,100. This is unchanged from last month and is an 18 per cent increase compared to November 2015. Attached property sales in November 2016 totalled 376, a decrease of 6.7 per cent compared to the 403 sales in October 2016 and a 40.9 per cent decline compared to November 2015. The benchmark price of an attached unit is $667,100. This represents a 0.3 per cent decrease compared to last month and a 23 per cent increase compared to November 2015.

[Moonshinefe]

I just clicked a thread that was declared a 'dupe' by the mods yet was the top thread on this subforum when I viewed it, because it was a duplicate to this topic. Why does this forum bother putting locked threads at the top, ever? Seems like a waste of time for everyone involved.

[taxi]

5 hours ago, Moonshinefe said:

I just clicked a thread that was declared a 'dupe' by the mods yet was the top thread on this subforum when I viewed it, because it was a duplicate to this topic. Why does this forum bother putting locked threads at the top, ever? Seems like a waste of time for everyone involved.

They don't put threads anywhere. They go in order of last post. 

[Harvey Spector]

REBGV sales for November 2016 compared to sales from November 2015:

 

Detached Homes:

 

Vancouver West - decrease 66%

West Vancouver - decrease 69%

Vancouver East - decrease 43%

Richmond - decrease 64%

North Van - decrease 36%

Burnaby - decrease 56%

Coquitlam - decrease 45%

Surrey - decrease 54%

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - decrease 36%

West Vancouver - decrease 24%

Vancouver East - increase 4%

Richmond - decrease 30%

North Van - decrease 37%

Burnaby - decrease 25%

Coquitlam - decrease 22%

Surrey - decrease 18%

 

Other than attached homes in Vancouver East which experienced a small increase, sales were down across the board last month.  Detached homes especially hit hard with most areas experiencing a greater than 50% decrease in sales as compared to last November. 

[Harvey Spector]

REBGV sales to active listing ratios for November 2016 (below 12% buyer's market, 12%-20% balanced market, above 20% seller's market):

 

Detached Homes:

 

Vancouver West - 12%

West Vancouver - 6%

Vancouver East - 11%

Richmond - 10%

North Van - 25%

Burnaby - 12%

Coquitlam - 17%

Surrey - 15%

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - 41%

West Vancouver - 39%

Vancouver East - 76%

Richmond - 36%

North Van - 69%

Burnaby - 50%

Coquitlam - 53%

Surrey - 35%

 

We are still in a seller's market with condos and townhouses.  With detached homes, we are in a seller's market in North Van, in a balanced market in Burnaby, Vancouver West, Coquitlam and Surrey and we are in a buyer's market in the Vancouver East, West Vancouver and Richmond areas.

[Harvey Spector]

REBGV median prices for November 2016 compared to median prices from October 2016:

 

Detached Homes:

 

Vancouver West - increase 2% to $3,255,000

West Vancouver - decrease 3% to $2,636,500

Vancouver East - increase 3% to $1,440,000

Richmond - decrease 8% to  $1,417,500

North Van - decrease 5% to $1,485,000

Burnaby - decrease 5%to $1,465,000

Coquitlam - decrease 12% to $1,009,950

Surrey - decrease 7% to $780,000

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - increase 2% to $676,000

West Vancouver - decrease 8% to $887,500

Vancouver East - decrease 3% to $471,000

Richmond - increase 2% to $495,500

North Van - decrease 7% to $540,000

Burnaby - decrease 1% to $459,900

Coquitlam - increase 7%to $436,000

Surrey - increase 1% to $399,500

 

For detached homes it looks like the last 4 months of 40-70% decreases in sales have finally affected prices. There were major price drops in many areas and only in Vancouver West and East did prices actually go up. 

 

For condos and townhouses, we finally see some price decreases. Prices dropped considerably in West Vancouver and North Van, and also dropped in Vancouver East and Burnaby. There was a considerable price increase in Coquitlam. Everywhere else was pretty flat.

 

Moving forward I see a change in the market in regards to prices. I think after 4 consecutive months of decreases in sales we are finally starting to see prices affected by the lower volume of sales with prices finally coming down in November in most areas and across all housing including detached homes, townhouses and condos. 

 

One thing I am not seeing is a spike in listings. Total listings in the Greater Vancouver area is around 8,400. That's quite a bit lower than the average over the past 5 years. Until we see listings over the 10,000 unit mark I dont anticipate major price drops. I think the next 2 months will be relatively flat as the winter market is considered the slowest time of the year. However come March if total listings do spike over the 10,000 unit mark then we could be headed for a really sharp price decline in 2017. The estimate right now is 7-8% price decrease for 2017. I think that is the conservative number. It could well be ALOT higher than that. 

[Harvey Spector]

Prices plunging: Houses selling well below asking, some under $1M

Kendra Mangione, Web Journalist / Digital Content Editor, CTV Vancouver

Published Monday, December 5, 2016 5:34PM PST 

 

Listing prices for detached homes appear to be falling as Vancouver's real estate market faces what an expert calls "significant headwinds."

 

Data released Friday showed that those looking to buy a single family detached home in the city last month forked over about $1.5 million in Metro Vancouver, but recent listings suggest that the benchmark is falling.

 

CTV News found a number of East Vancouver homes priced under then $1 million mark during a search of MLS listings on Monday, including one that sold for $560,000 below the initial asking price.

That home, located in Renfrew Heights, was initially listed at $1.36 million in August, but sold for $800,000 in mid-November. 

 

Sutton West Coast realtor David Hutchinson has been tracking plunging prices and found several detached homes listed below $1 million, some of which had been recently renovated.

"If you want to sell, you have to be priced sharply, and you see a lot of price drops," Hutchinson told CTV.

And even with price drops, he added, he's seen many sale prices lower than what sellers are asking for. He said he knew of one home in the west side of the city that was initially priced at $3.9 million, but when it didn't sell, the owners reduced the price. They kept reducing it in small increments, but eventually they couldn't wait any longer, and had to drop the price by nearly $1 million.

Another home on West 8th in Kitsilano was listed for $2.5 million, but could only fetch $1.6 million.

"There's not this crazy deluge of offers coming in like before, when you could price it below the market value and wait for all the offers to come in. That's not happening anymore," Hutchinson said.

"Buyers are being a little more picky now and you didn't see that before."

 

Tom Davidoff, associate professor at UBC's Sauder School of Business, said he's noticed a similar trend.

"Sales have been slow and we're starting to see prices tick down," he said.

"I think we can say the market is facing very significant headwinds. We have the foreign buyers tax hitting an important part of the market. We've got new qualification rules for mortgages coming down for lower-end buyers."

 

The changing market puts sellers in a tough position: holding on to their property in hopes of an upswing in prices in the spring, or selling it off so they don't risk prices dropping even further.

 

Hutchinson called the changing market a "window of opportunity" for those looking to buy.

"There's not a lot of selection, but there are some cracks in the market. There are some good deals right now," he said.

 

But Davidoff said Vancouver's market is hard to predict, and its future seems uncertain, especially with interest rates rising south of the border.

"Should mortgage rates in Canada follow suit, and some of them are – TD and RBC have raised interest rates – If those rates rise, that's another headwind against the housing market that could push prices down in the new year," he said.

 

While the most recent data from the Real Estate Board of Greater Vancouver shows benchmark prices were down from October, numbers are still higher than they were last November.

 

The latest report, issued Friday, said the benchmark price of single-family detached homes sold across the Lower Mainland was $1.2 million last month. In Metro Vancouver the benchmark was $1.5 million for detached homes, which represents a 2.2 per cent decline from last month, but a 23 per cent increase from November 2015.

 

The benchmark for all types of residential properties sold in Metro Vancouver was also down from October at $908,300. That number is 20.5 per cent higher than the benchmark in November 2015. The full report is available on the REBGV website.

 

"The long run for Vancouver is this is going to be an expensive place where rich people live," Davidoff said.

"Rents have been rising dramatically except at the very highest end over the last year. I don't think Vancouver is heading for super affordability. Probably people who buy today, 20 to 30 years down the road are going to be just fine."

Edited December 6, 2016 by Harvey Spector

[Harvey Spector]

Myth of the Retreating Millennial:

 Millennials are now the most populous age group in the City of Vancouver.  The population of 20-34 year olds has grown significantly in both the City of Vancouver (+9.5%) and Metro Vancouver (+18%) over the past decade.  The population of millennials in Metro Vancouver has increased at a faster rate than in the City of Vancouver corresponding with more rapid overall population growth outside of the City of Vancouver.  The rate of home ownership for younger households was up significantly during the last two census periods.  Millennials were born between 1980 and 1995, and are the first generation to reach adulthood after the year 2000.
 Millennials are between the ages of 20 and 34 today and are the largest demographic cohort since the baby boomers.

 

The narrative that millennials are leaving Vancouver in droves because of high housing costs is becoming increasingly commonplace. Numerous mediai stories lament their exodus and the potential economic impact, particularly in the high-tech sector. Even a local credit union produced a report speculating that millennials are disengaging from the Vancouver economy, largely the result of high housing costs. This viewpoint is surprising, especially when you consider millennials are such an abundant demographic cohort in large vibrant cities across North America, and that so many of them seek out the kind of urban lifestyle that Vancouver has to offer.

An examination of population estimates for the region reveals that millennials are, in fact, not retreating from Vancouver, and that the population aged 20-34 years old has increased significantly. In addition, home ownership rates for the millennial age group were significantly higher during the most recent census than in the previous decades.

 

Analysis:
The millennial generation is the first generation to reach adult age after the year 2000. Millennials were born between 1980 and 1995, and comprise the largest generation since the baby boomers. In fact, millennials are the children of the baby boomer generation. In 2015, the typical millennial would be between the age of 20 and 34. Using population estimates from BC Stats for 1995, 2005 and 2015, the population aged 20-34 years has increased in the City of Vancouver and in the larger Metro Vancouver region.

Between 1995 and 2005, the number of 20-34 year olds in the City of Vancouver rose by over 5,500 individuals or nearly 3.5% to just under
160,000. Over the next decade, 2005 to 2015, the population of 20-34 year olds took off, climbing by more than 15,800, or over 9.5%, to approximately 181,000 individuals. Growth in this age group over the past ten years has been so strong that they are now the most populace
age cohort in the City by a wide margin. In the larger Metro Vancouver region, millennials have also swollen the ranks of the 20-34 year old population. Between 1995 and 2005, the population aged 20-34 increased by11,500 or nearly 2.5% to 471,000 individuals. During the ensuing ten years, 2005-2015, over 86,000 people aged 20-34 years were added to the Metro Vancouver population, an increase of nearly 18%. In 2015, there were an estimated 569,000 people aged 20-34 residing in Metro Vancouver. Growth in the 20-34 year old population over
the past decade was nearly twice as fast in Metro Vancouver as in the City of Vancouver, 18% versus 9.5%. However, this difference is largely the result of differing rates of overall population growth between the two jurisdictions. According to the 2011 Census, between 2006 and 2011 the total population of Metro Vancouver climbed 9.3%, while growing just 4.4% in the City of Vancouver. The proportion of the Metro Vancouver population residing in the City of Vancouver has steadily diminished from 31% in 1987 to 26.5% last year.

 

The narrative that there is an exodus of millennials from Vancouver is not based in fact, but rather supposition. Unaffordability, or the
inability to own housing, has been the key driver of the retreating millennial hypothesis. However, the home ownership rate for younger households was much higher during the 2006 and 2011 census periods than in previous decades. The millennial generation has bolstered the population of 20-34 year olds dramatically over the past ten years. Both the City of Vancouver and the larger Metro Vancouver region, have experienced a significant increase in this population. Millennials are being attracted to the City of Vancouver and the region, not retreating from it. 

 

myth-of-the-retreating-millennial.pdf

Edited December 8, 2016 by Harvey Spector

[Harvey Spector]

What Happens Next to Home Prices?

 Since 1981, prices have posted monthly year-over-year increases of 20% or more 46 times.
 An acceleration in prices is generally followed by a reversion of growth back to its long-run average within 12 months.
 In a number of periods, price growth has turned negative within 24 months, though generally following a significant external shock.

Home prices in the Real Estate Board of Greater Vancouver (REBGV) area accelerated over the past year, even exceeding 20 per cent year-over-year growth in each of the first three months of 2016. Given already high prices, in particular for single-detached homes, that rapid acceleration in prices prompts the obvious question of what happens next? In this issue of Market Intelligence, we look to past periods of accelerating prices in the REBGV area for answers. This analysis is not a forecast, but rather an examination of what trajectory home prices have typically followed after previous periods of rapid acceleration.

Analysis:
Periods of rapid price acceleration, defined as 20 per cent or higher year-over-year growth for the purposes of this report, are far from unusual in Vancouver. In fact, since 1981, there have been 46 months in which prices rose by more than 20 per cent on a year-over-year basis and 38 of those months occurred prior to 2010. To provide a benchmark for the aftermath of a period of rapid price acceleration, we estimated a statistical model1 that does a good job explaining this data. In particular, it demonstrates that price growth is mean-reverting. That is, after an acceleration of home prices, the percentage change in growth tends to trend back to its long-run average growth rate. These model findings are further corroborated by a simple historical average of price growth following historical periods of 20 per cent year-over-year price increases.

While these summary measures provide us with a general idea of how prices typically evolve following a period of acceleration, it is also informative to examine each period of price acceleration individually. Excluding the highly anomalous 1981 market, there were seven periods of price acceleration in the REBGV area over the past 35 years:

1988 and 1989: Growth in home prices breached 20 per cent or more on a year-over-year basis six times in 1988 and re-accelerated into 1989, peaking at 45 per cent year-over-year in February 1989. From 1989 to early 1990, price growth averaged 30 per cent before eventually turning negative in October 1990, following a sharp increase in interest rates and the onset of a severe Canadian recession.

1993: Home price growth tipped over 20 per cent for just one month in 1993 before trending to single digit growth within 12 months.

1995: After a steady rise throughout 1994, home prices rose 23 per cent in February of 1995 but sharply corrected within six months, turning negative through the late 1990s as the lingering effects of the leaky condo crisis and significant net losses of interprovincial migrants dampened housing demand.

2006: After a long period of relative calm in the Metro Vancouver housing market, prices accelerated through the early 2000s, eventually reaching growth of 20 per cent or higher in seven of 12 months of 2006. Strong price growth continued until the onset of the Global Financial Crisis in 2008 and ensuing recession which sent prices lower for several months in 2008 and early 2009.

2009: The recovery from the financial crisis and subsequent recession saw prices rise as interest rates fell to historical lows and home sales surged from pent-up demand and rising affordability. By the end of 2009, home prices were back to their pre-recession level.

2011: Strong growth in home prices was restricted to detached homes as a result of their relative scarcity. The federal government, through the Canada Mortgage and Housing Corporation, tightened mortgage insurance regulations. These tightening measures included requiring all insured borrowers to qualify at the five-year fixed rate and also a reduction of amortization periods on insured mortgages to 30 years in 2011, and eventually to 25 years in 2012. These changes had a strong impact on demand, and price growth turned negative in late 2011.

2016: The year started with home prices posting 30 per cent year-over-year increases, which moderated to 16.5 per cent by May.

Most periods of price acceleration were followed by a gradual moderation of price growth within 12 months. In two of the historical periods, price growth turned negative in the 12 months following a rapid acceleration. However, these periods coincided with an idiosyncratic or external shock, such as the leaky condo crisis of the mid to late 1990s, recessions or a tightening of monetary or macroprudential policy.

Using history as a guide to what comes next for the Vancouver housing market, one would expect that without a major economic shock or significant change in housing policy, that conventional market dynamics of supply and demand will take hold and growth in home prices will likely trend lower over the next 12 months.

 

what-happens-next-to-home-prices.pdf

Edited December 8, 2016 by Harvey Spector

[aGENT]

Y u no copy text and post @Harvey Spector?

[Harvey Spector]

1 minute ago, J.R. said:

Y u no copy text and post @Harvey Spector?

 

It's a PDF.  Can you open it?