Are you thinking of investing in the Vancouver real estate market, but wary of all the doom and gloom prophesies around?
Take heart, there are many ways you can use the current situation to your advantage.
In February, experts suggested that the market would continue to fall. However, despite the British Columbia Real Estate Association‘s (BCREA) predicted 5% price plunge for residential homes in Vancouver, and a 14% decline in sales this year, Vancouver retains its top spot in the Canadian real estate market.
The Vancouver real estate market is very much alive and kicking, have a look at the property trends below to see what’s in it for you.
Rentals Remain in High demand
If you have the cash to spare for an investment property, now is the time to act. The demand for rental space in the Vancouver real estate market continues to outstrip supply.
Millennials are the main culprits behind this trend, forever searching for newer, better-quality units close to amenities such as schools and stores. The rental market has been tight for the last 5 years and doesn’t look like the demand will subside anytime soon.
The vacancy rate for purpose-built rental units is at 0.7% on average, with the Tri-cities area having the lowest occupancy at an astonishing 98.3%. The University Endowment Lands consistently report a zero availability rate for rentals.
Condos Are the Way to Go
Vancouver Realtors report a huge swing in demand for condominiums and townhouses. Prices for these residences have soared by 5% in the last three months. Up until April, condominiums and townhouses made up 68% of residential sales – an increase of 58% from last year.
Construction of these high demand residences is at an all-time high, but until these new buildings hit the Vancouver real estate market we are likely to see prices continue to head skyward. Until then, the city remains short on entry level homes.
According to the Real Estate Board of Greater Vancouver, condo listings are almost at a record low around the city. Sales-to-active listings were at 93.2 per cent for condominiums during June and Condo prices have increased by 17.6 % compared to last year. This is a 2.9 % increase on May’s figures.
A Shift Towards Mixed Use Properties
Vancouver is late to latch on to the mixed use property trend, which has been evident in other North American cities for decades.
Times are changing with a new breed of homeowner entering the market. These millennials crave a sense of community and a “live, work, play” environment.
The demand for these multi-functional housing developments is on the rise. We could see more of them entering the marketplace under the city’s Affordable Housing Choices Interim Rezoning Policy.
More Affordable Housing Options Are In The Future
The Greater Vancouver Board of Trade recognizes the need for more affordable housing in the city to ease the federal mortgage regulations restricting first-time homebuyers.
Plans are under discussion to address this problem of the ‘missing middle‘. This term refers to the absence of multi-unit housing schemes priced affordably for first-time buyers. Most of these developments are currently only available to renters.
Ownership of these types of dwellings is particularly attractive those in the 25 to 35 year old demographic. This group of young professionals currently make up most of the tenants in the city’s rental accommodation. The city hopes to attract property investment from this upwardly mobile sector by catering to their need for smaller, more affordable accommodation.
Part of this process is to encourage uniform development across the region when it comes to housing. In short, the authorities will be paying more careful attention to the density of housing types across the board. Pre-zoning areas for transit-oriented development is also being considered.
The city has committed to adding 72 000 of these affordable housing options over the next ten years. These will include row houses, town homes, and laneway houses.
It will be interesting to see how addressing the shortages in this area affect the Vancouver real estate market in the long run.
Prices and Sales Are Still On an Upward Trend
Despite the gloomy predictions, Vancouver remains a seller’s market. The Vancouver Real Estate market barely faltered under the new tax laws. Prices plummeted towards the end of 2016, but they have stabilized coming into 2017, particularly when it comes to condos, townhouses and detached homes.
The sales to active listings so far have shown only a 2% decline when compared to last year. This quick recovery is attributed to the limited supply vs high demand factor predominant in Vancouver Real Estate.
On the whole, Greater Vancouver and South Okanagan are expected to continue in a downward price trend for 2017, with the markets in other areas largely unaffected. In fact, slight increases of up to 4.5 % are likely to be seen everywhere else.
Metro Vancouver’s luxury home market has been the hardest hit by the new tax laws, aimed at foreign buyers and homes priced at over $2 million. While this has negatively affected the averages for Vancouver real estate on the whole, the figures for other suburbs remain promising so far.
Real estate agents report that even here, foreign buyers seem to have recovered from their initial hesitancy and are starting to show an interest again.
While sales from June 2016 showed an 11.5% decrease from sales in Vancouver last year this time, the figures remained more than 14% above the average for June over 10 years and were 10.8% better than last May.
The construction boom will see new houses emerging to help boost sales in the latter half of the year and may stabilize prices. An even greater increase in sales is certainly expected in high demand areas as new properties come to light.
The Future Looks Bright for Vancouver Real Estate
It is certainly encouraging to see that Vancouver real estate is not as reliant on foreign investment as we thought. It seems that we can look forward to a healthy market going forward.
We’re still going strong, get in touch with Vancouver’s leading realtor to make the most of the property trends in your area.