Leslie McDonnell here, your Vancouver real estate expert with your 2016 year in review. Part 1 - The Numbers! 2016 proved to be a very exciting year - one that will surely go down in the record books as one to remember.
Let's get right to the numbers. For the numbers, I am using the Home Price Index, which as opposed to straight up averages of prices, takes into consideration lot size, age, number of rooms, etc. These features become the composite of the ‘typical house’ in a given area.
On the Vancouver Westside Detached market in December 2015 the HPI for a home was $2,886,000. In December 2016 that number rose 16% to $3,443,100 On the Vancouver Eastside Detached in December 2015 the HPI for a home was $1,222,800. That was another 16% increase in December 2016 to $1,456,700 For the Vancouver Westside Attached market, condos went up 11% in price, while townhouses rose 15% Looking at the Vancouver Eastside Attached market, we saw both condos and townhouses rise 11%So we know what the prices, which can be referred to as demand were, what about the supply, the number of homes sold. That number is down 28% and 30% respectively for detached homes on the westside and eastside of Vancouver. For the attached market, so condos and townhouses, on the westside of Vancouver, it is only down 5% for condos, but 29% for townhouses. If you look just at the numbers, almost 10 times more condos were sold versus townhouses. On the eastside of Vancouver, we are seeing similar numbers to those as the westside in reduction of supply percentage, but the overall numbers a quite a bit lower. After looking at the supply and demand of the last year, we can clearly see that demand increased, while supply decreased. In basic economic theory, that is why we see prices rise. In the spring market last year, we saw such high demand that listing price had been referred to quite often as the starting bid. Homes were selling sometimes 30% or more over the asking price. Not only that, offers were being made subject free, which can be a very risky way of purchasing a home, if you do not perform the necessary due diligence prior. To learn more about the reasons and reactions to the crazy market and my predictions for this year, please check out Part 2 of my annual review. Again, I am Leslie McDonnell with RE/MAX Select Properties and Property Sales Vancouver. Welcome back to Part 2 of my 2016 year in review - Reactions and Predictions. Again, I am Leslie McDonnell, you Vancouver Real Estate Market specialist The high demand was coming from a variety of factors. One in particular was the fact that Vancouver has entered a into a new category for real estate - it has become a Super Prime City - comparable to the likes of New York, Shanghai, Singapore, London, Paris, and San Francisco. Studies predict the Chinese middle class to be over 550 million people by 2022. The current population of Vancouver proper is just north of 600,000 people. If you look at the greater Vancouver area, so include the suburbs, that number rises to around 2.5 million. If only 1% of the Chinese middle class population decided to move to Vancouver, a Pacific Coastal city with abundant green spaces, world class architecture and clean air, that would be almost double our current population. The Provincial Government decided to step in and impose a 15% Foreign Buyer's tax, which came into effect on August 2, 2016. In fact, the government imposed a number of reforms over the past year and those include:
- ¨ Increased the Property Transfer Tax on homes worth more than $3,000,000
- ¨ Implementation of a 15% Foreign Buyers Tax
- ¨ Paved the way for the Vacancy Tax
- ¨ BC Home Owner Mortgage and Equity Partnership
When the foreign buyers tax was implemented, it did have the desired effect of cooling off what was a red hot market. Over the past 6 months, we have seen a reduction the prices for luxury homes - those over $5 million and a levelling off of most everything else. Prior to the tax implementation, we were seeing prices rise 2-3% per month. It was clear that something was needed to be done. That said, I do not foresee the long term effects of this tax having much effect on our market. Considering Vancouver is a Super Prime City, there will always be demand. What does this hold for the future? In the first few weeks of 2017 I have seen low inventory. Homes that are priced well are selling quickly. That said, I am also seeing homes come on the market that priced on the high side and sit on the market until a price reduction. The biggest question I am consistently asked is now a good time to buy or sell. My answer to that is it is a good time when it is right for you. What are the reasons you want or need to buy or sell. With the right due diligence, research and guidance, you can ensure that you purchase a great investment and it won't matter what is happening in the market. When you purchase a good investment, you will always see a return. I predict to see more of a balanced market this year, but there is still a higher demand than supply and that will keep the prices higher.Thanks for watching and stay tuned for more real estate videos - don’t forget to subscribe to my channel!!!!