Eerily Quiet Compared To The Buying Frenzy
The Calgary Herald reports from Canada. “Buyers who turned to the city’s resale market for a single-family home last month saw more than $17,000 in savings, says the Calgary Real Estate Board. The benchmark price on single-family homes in July was $502,300. That’s a 3.5 per cent dip from the same month in 2015 when it was $520,000, says CREB. The setback in prices was joined by a nine per cent cool down in sales, easing to 1,108 deals last month from 1,220 a year ago.”
“‘To buyers and sellers that have been paying attention to the housing market in Calgary and surrounding areas, it should come as no surprise that we continue to see a slowdown in sales activity,’ said CREB’s president Cliff Stevenson. ‘Buyers are expecting further declines in sold prices, and sellers are adjusting to softer demand with price decreases. When these expectations intersect, we’re seeing sales activity in the market, but not at the level realized over the last several years.’”
The Calgary Sun. “Canada’s biggest residential landlord said Friday vacancies at its apartments in Alberta are on the rise as it lowers rents and offers incentives to attract tenants — and it doesn’t expect conditions will improve much for the rest of the year. Calgary-based Boardwalk Real Estate Investment Trust, which owns 33,000 rental units in four provinces, said there are signs of weakness in Alberta’s rental market.”
“In July, the landlord saw a spike in the number of tenants who gave late notice to move out, which suggests some instability in the lives of renters who may be suffering from job losses, said Rob Geremia, the company’s president. ‘That really got us thinking, and we felt our original assumption of beginning to see strength in (the second half of the year) has to be pushed out farther because we are not seeing the financial numbers to back that up,’ Geremia said.”
From CKNW AM 980. “Still more indication we’re in the grips of a slow down in the economy. On the heels of provincial numbers that developers are scaling back projects, specific numbers on what’s happening in metro Edmonton show in April May and June of this year, the number and value of building permits are off almost by fifty percent.”
“The reason for the drop, City of Edmonton economist John Rose said the break neck pace couldn’t possibly keep going over what we saw in the last two years. ‘We saw a real run up in apartments and condo buildings in the Edmonton region, in 2014-2015 so yes the numbers did have to come down,’ he said. ‘However I would point out the building permits numbers are down substantially and that means the slow down in the construction sector, particularly on the residential side will continue into 2017.’”
“The good news out of that, if there is good news, Rose said once things start to pick up, there won’t be an over supply of product, and a resulting price crash. ‘There’s a lot concerns, particularly around Toronto and Vancouver, around where their housing market is going and are they in a bubble? Is there an over-build in condos particularly in Toronto. We’re not in that situation at all.’”
The Langley Advance. “July saw home price increases stall in Langley, though they remain shockingly high compared to last year. Sales in Langley dropped sharply across all categories of housing. While Langley saw largely flat prices between June and July, the Fraser Valley as a whole actually saw a decline in the price of detached houses. Parts of Surrey saw steeper declines in both sales and prices than Langley.”
“Wiebe said that the slowdown in sales will be good for the market. ‘Additional inventory will help drive us towards a more balanced environment for consumers and remove some of the upward pressure on prices we’ve been seeing,’ Wiebe said. The provincial government recently imposed a 15 per cent tax on purchases of homes by foreign nationals, which caused a scramble at the start of August to finalize sales. The change was announced less than a week before the end of July.”
The North Shore News. “Local real estate agents say they know of several multi-million-dollar real estate deals collapsing and predict the hot North Shore housing market will cool slightly in the wake of a new 15-per cent provincial tax on property purchased by foreign buyers. ‘It’s one of the most shocking events that’s ever arrived in our industry,’ said Brent Eilers, a longtime West Vancouver Realtor with Re/Max. ‘Nobody really knows how it will unfold.’”
“Eilers said the new foreign buyers’ tax is bound to have an impact, particularly in markets like West Vancouver and North Vancouver, which have been ‘incredibly dependent on offshore money or new money’ that’s come from sales to foreign buyers in other areas of the Lower Mainland. Eilers said he knows of several ’sizable purchases’ where the real estate deals may fall apart. ‘There was a $13-million house in West Van that just got nailed with it,’ he said. ‘It’s hard to see in some of these transactions there’s a clear path to the finish line.’”
“Realtor Steve Taylor of MacDonald Realty in West Vancouver recently sold a house for a retired couple in Ambleside to buyers from mainland China for about $2.5 million. But the deal is now subject to the new tax, adding a significant cost, which the buyers say they don’t have the money for. Meanwhile, the West Van couple has already bought another home on the North Shore. Until the closing date, said Taylor, ‘They have to sit and hope for the best.’”
“Since the new tax went into place, the housing market on the North Shore – particularly for detached homes – has been eerily quiet compared to the buying frenzy and bidding wars seen in the spring. The number of sales for detached homes in July were down 45 per cent over last year and down 15 per cent in North Vancouver for the same time period, said Eilers. The 44 West Vancouver sales in July 2016 contrast with the 74 sales in 2015 and the 153 sales there in February 2016.”
“August has shown an even more pronounced dropping off. The average number of August sales in West Van is about 60. Last year there were 80 sales for the month. So far this month, there have been two.”
From The Tyee. “And any claim that the BC Liberals’ surprise move to impose a 15 per cent tax on foreign nationals buying residential property will make homes affordable for average buyers is a cruel joke. That horse has truly left the barn. Median detached housing prices would have to be cut in half from their current $1.58 million to even begin to be affordable, using the term almost jokingly – for some upper-middle to higher income families. Everyone else is out of luck.”
“And if the market did collapse and prices fell 50 per cent, we would be in a economic crisis and no one would be buying houses anyway – they would be hoarding canned goods and water.”
“How bad is Vancouver’s housing affordability crisis? Incredibly, unbelievably awful, with the price of detached homes up 38 per cent in one year. One example: Only 10 years ago, just 11 per cent of Vancouver detached homes were valued at $1 million or more – when the city was already Canada’s most expensive. Today more than 90 per cent of Vancouver detached houses are worth more than $1 million.”
“Royal LePage CEO Phil Soper argues that Vancouver’s extreme housing price hikes are unsustainable. ‘You have severe affordability issues in Vancouver. It has become a serious public-policy issue, so it’s not healthy,’ he said in an interview. ‘Prices are moving upward at an irrational rate.’ True. And for some personal perspective, let me tell you about one modest home on West 15th Avenue in Kitsilano that I’m very familiar with – because we used to live there.”
“Friends bought it in 1986 for $180,000 and sold in 1992 for $380,000, when we rented it. The new owner eventually moved in, did some renovations and sold it for about $500,000 a few years later. Its BC Assessment value in July 2015 was $1.96 million – and a nearby very similar house sold recently for $2.5 million! That means the value of our old Vancouver home is 10 times greater than it was 30 years ago, with most of the increase in the last decade.”
“And so, as the price of that house and the homes across the region show, the horse has not just left the barn – it has left the country.”