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Commercial real estate sales down from robust 2017 activity

Commercial Vancouver Real Estate 2018 Q1

Commercial real estate sales in the Lower Mainland declined in the first quarter (Q1) of 2018 compared to the active market experienced in the region last year.

There were 523 commercial real estate sales in the Lower Mainland in Q1 2018, a 10.8 per cent decrease over the 586 sales in Q1 2017, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

The total dollar value of commercial real estate sales in the Lower Mainland was $3.031 billion in Q1 2018, a 38.5 per cent decrease from the $4.927 billion in Q1 2017.

“Our commercial market returned to more historically normal levels in the first quarter of the year compared to the heightened activity we experienced in 2017,” Phil Moore, REBGV president said. “This shift to more typical activity is mirroring the overall economic trends we’re seeing in our province today.”

Q1 2018 activity by category

Land: There were 221 commercial land sales in Q1 2018, which is a 3.9 per cent decrease from the 230 land sales in Q1 2017. The dollar value of land sales was $1.594 billion in Q1 2018, a 20.5 per cent decrease from $2.005 billion in Q1 2017.

Office and Retail: There were 173 office and retail sales in the Lower Mainland in Q1 2018, which is down 15.6 per cent from the 205 sales in Q1 2017. The dollar value of office and retail sales was $1.076 billion in Q1 2018, a 51.8 per cent decrease from $2.232 billion in Q1 2017.

Industrial: There were 113 industrial land sales in the Lower Mainland in Q1 2018, which is down 7.4 per cent from the 122 sales in Q1 2017. The dollar value of industrial sales was $0.280 billion in Q1 2018, a 12.2 per cent increase over $0.250 billion in Q1 2017.

Multi-Family: There were 16 multi-family land sales in the Lower Mainland in Q1 2018, which is down 44.8 per cent over the 29 sales in Q1 2017. The dollar value of multi-family sales was $0.081 billion in Q1 2018, an 81.5 per cent decrease from $0.441 billion in Q1 2017.

Source – REBGV

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Mortgage Policy Changes Hit Affordability Hard

MLS Residential Sales

The British Columbia Real Estate Association (BCREA) reports that a total of 8,837 residential unit sales were recorded by the Multiple Listing Service®MLS Residential Sales (MLS®) across the province in May, a 28.7 per cent decrease from the same month last year. The average MLS® residential price in BC was $739,783, down 1.7 per cent from May 2017. Total sales dollar volume was $6.54 billion, a 30 per cent decline from May 2017.

“BC home sales continued to slow in May because of more stringent qualifications for conventional borrowers,” said Cameron Muir, BCREA Chief Economist. “The changes in mortgage policy are taking their toll on housing demand, not only in British Columbia, but across the country by reducing household purchasing power and housing affordability.”

While the decline in consumer demand has lifted the inventory of homes for sale, total active residential listings in the province are still relatively low by historical comparison.

Year-to-date, BC residential sales dollar volume was down 13.8 per cent to $26.4 billion, compared with the same period in 2017. Residential unit sales decreased 16.6 per cent to 35,976 units, while the average MLS® residential price was up 3.4 per cent to $733,616.

Source – BCREA

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New Rules to Profoundly Change How REALTORS® Work With Consumers

Real Estate Rule Changes in BC

On June 15, 2018, changes to Rules under the Real Estate Services Act that dictate how REALTORS® work with consumers will come into effect. The Rules, mandated by the Office of the Superintendent of Real Estate (OSRE) and finalized on April 27, 2018, have been amended to ensure consumers have a thorough understanding of their relationship with their REALTOR®, particularly when it comes to conflicts of interest and remuneration.

“Since the new Rules were finalized six weeks ago, BCREA has been hard at work to update our Applied Practice Courses for new licensees, continuing education courses and nearly two dozen standard legal forms that have been impacted by the changes,” said British Columbia Real Estate Association (BCREA) CEO Darlene Hyde. “The new rules governing real estate practices mark a significant shift in how REALTORS® in BC work with their clients. It’s important that consumers know what to expect when the changes come into effect.”

REALTORS®, consumers and conflicts of interest

One of the changes is a ban on limited dual agency. Limited dual agency occurs when a REALTOR® represents more than one party in a real estate transaction. That can be a buyer and a seller, two or more buyers, or a landlord and a tenant. The ban was recommended by the Real Estate Council of British Columbia’s (RECBC) Independent Advisory Group in 2016. Exemptions will be possible in limited circumstances.

As part of the Rule amendments, a REALTOR® will inform a consumer at the beginning of their working relationship that the REALTOR® may be required to stop representing the consumer mid-transaction if a potential conflict of interest arises. A conflict of interest can occur, for example, when a buyer who the REALTOR® has previously represented makes an offer on a property belonging to a seller the REALTOR® is currently representing. In such instances, the REALTOR® may be required to refer the seller to another REALTOR®.

REALTORS®, consumers and compensation

From June 15, consumers can expect that REALTORS® will make more disclosures on the commissions they receive on transactions. Consumers are most likely to notice the impact of this Rule change when it comes to multiple offer scenarios.

Once the amendment comes into effect, every time an offer or counter-offer is made to a seller, the seller’s REALTOR® will be required to present the seller with a completed disclosure form that explains exactly how much remuneration the REALTOR®’s brokerage will receive.

This form will also explain how the commission will be shared with other brokerages involved in the transaction (the buyer’s brokerage) and any other payments the REALTOR® expects to receive as a result of the transaction.

BCREA and the 11 member boards have been working with RECBC and OSRE to make these changes as seamless and as transparent as possible. We are actively working to educate REALTORS® on the implications of these changes so they can continue to serve consumers with integrity and professionalism when the Rule changes come into effect.

“These changes will profoundly alter for the foreseeable future the way consumers initially interact with their REALTOR®,” said Hyde. “BCREA has done its utmost to facilitate the transition to the new Rules and we stand behind a strong regulatory regime, informed and knowledgeable customers and professional REALTORS®.”

Source – BCREA

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Vancouver Real Estate Statistics – May 2018

May Vancouver Real Estate Statistics 2018

Reduced demand is allowing housing supply to accumulate

Home buyer demand continues to decline across the Metro Vancouver housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,833 in May 2018, a 35.1 per cent decrease from the 4,364 sales recorded in May 2017, and a 9.8 per cent increase compared to April 2018 when 2,579 homes sold.

Last month’s sales were 19.3 per cent below the 10-year May sales average.

“With fewer homes selling today compared to recent years, the number of homes available for sale is rising,” Phil Moore, REBGV president said. “The selection of homes for sale in Metro Vancouver has risen to the highest levels we’ve seen in the last two years, yet supply is still below our long-term historical averages.”

There were 6,375 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in May 2018. This represents a 5.5 per cent increase compared to the 6,044 homes listed in May 2017 and a 9.5 per cent increase compared to April 2018 when 5,820 homes were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 11,292, a 38.2 per cent increase compared to May 2017 (8,168) and a 15 per cent increase compared to April 2018 (9,822).

The total number of listings available today is 17.2 per cent below the 10-year May average.

For all property types, the sales-to-active listings ratio for May 2018 is 25.1 per cent. By property type, the ratio is 14.7 per cent for detached homes, 30.8 per cent for townhomes, and 41.7 per cent for condominiums.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“For home sellers to be successful in today’s market, it’s important to price your property competitively given the shifting dynamics we’re experiencing,” Moore said. “It’s also important to work with your local Realtor to better understand these changing conditions.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,094,000. This is an 11.5 per cent increase over May 2017 and a 0.2 per cent increase compared to April 2018.

Sales of detached properties in May 2018 reached 926, a 40.2 per cent decrease from the 1,548 detached sales recorded in May 2017. The benchmark price for detached properties is $1,608,000. This is a 2.4 per cent increase from May 2017 and a 0.1 per cent increase compared to April 2018.

Sales of apartment properties reached 1,431 in May 2018, a 29.3 per cent decrease from the 2,025 sales in May 2017. The benchmark price of an apartment property is $701,700. This is a 20.2 per cent increase from May 2017 and a 0.1 per cent increase compared to April 2018.

Attached property sales in May 2018 totalled 476, a 39.8 per cent decrease from the 791 sales in May 2017. The benchmark price of an attached unit is $859,500. This represents a 16 per cent increase from May 2017 and a 0.6 per cent increase compared to April 2018.

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Slower Growth Expected for Economy and Housing Market  

Vancouver Real Estate Sales Forecasts

BCREA 2018 Second Quarter Housing Forecast Update

Vancouver, BC – May 31, 2018. The British Columbia Real Estate Association (BCREA) released its 2018 Second Quarter Housing Forecast today.MLS Residential Sales Forecast

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 9 per cent to 94,200 units this year, after posting 103,700 unit sales in 2017. MLS® residential sales are forecast to remain relatively unchanged in 2019, albeit down 0.2 per cent to 94,000 units. Housing demand is expected to remain above the 10-year average of 84,800 units into 2020.

“The housing market continues to be supported by a strong economy,” said Cameron Muir, BCREA Chief Economist. “However, slower economic growth is expected over the next two years as the economy is nearing full employment and consumers have stepped back from their 2017 spending spree.”

“Demographics will play a key role in the housing market over the next few years,” added Muir, “as growth in the adult-aged population is bolstered by immigration and the massive millennial generation enters its household forming years.”

Muir notes there are, however, significant headwinds in the housing market. “Rising mortgage interest rates will further erode affordability and purchasing power, with the effect being exacerbated by an already high price level. The legacy of tougher mortgage qualifications for conventional mortgagors will be a reduction of their purchasing power by up to 20 per cent, and the provincial government’s expansion of the foreign buyer tax and several other policies aimed at taxing wealth is sending a negative signal to the market and likely diverting investment elsewhere.”

The combination of slowing housing demand and rising new home completions is expected to trend most BC markets toward balanced conditions this year, and lead to less upward pressure on home prices.

Source – BCREA

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BC Home Sales Show Little Change in April – BCREA

April 2018 in Vancouver BC

The British Columbia Real Estate Association (BCREA) reports that a total of 8,203 residential unit sales were MLS Sales Data - BCREA April 2018recorded by the Multiple Listing Service® (MLS®) across the province in April, a 16.8 per cent decrease from the same month last year. The average MLS® residential price in BC was $730,507, up 0.2 per cent from the previous year. Total sales dollar volume was $5.99 billion, a 16.7 per cent decline from April 2017.

“BC home sales were essentially unchanged in April compared to March, albeit up nearly 1 per cent on a seasonally adjusted basis,” said Cameron Muir, BCREA’s Chief Economist. “The impact of more burdensome mortgage qualifications for conventional borrowers is expected to soften over the next several months as potential buyers adjust both their finances and expectations.”

The supply of homes for sale in April increased 4 per cent from the previous month. However, total active listings on the market continue to remain low from a historical perspective. Most regions of the province have begun trending toward more balance between supply and demand, causing less upward pressure on home prices.

Year-to-date, BC residential sales dollar volume was down 6.7 per cent to $19.9 billion, compared with the same period in 2017. Residential unit sales decreased 11.8 per cent to 27,135 units, while the average MLS® residential price was up 5.7 per cent to $731,661.

Source – BCREA

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Canadian Building Permits – May 9, 2018

Construction Building Starts

The total value of Canadian building permits increased 3.1 cent on a monthly basis in March, led by higher construction intentions of multi-family units in Quebec and BC. Year-over-year, the value of permits was up 10.8 per cent.

The total value of permits issued in BC jumped 22 per cent on a monthly basis and was 74.2 per cent higher year-over-year at $1.77 billion. Non-residential permits were up 16.7 per cent on a monthly basis and 94 per cent year-over-year to nearly $1.3 billion. Residential permits increased 16.7 per cent monthly basis and were 67.2 per cent higher year-over-year.

Construction intentions in December were higher in only three of BC’s four census metropolitan areas (CMA):

Permits in the Abbotsford-Mission CMA declined 17 per cent on a monthly basis to $35.6million. Year-over-year, permit values were up 25.7 per cent.

In the Victoria CMA, total construction intentions declined 15.8 per cent to $93.7, a 1.1 per cent dip year-over-year.

In the Kelowna CMA, permits were up 54.1 per cent monthly basis, but down 21.5 per cent year-over-year to $83.3 million.

The Vancouver CMA recorded permit activity valued at $1.160 billion, an increase of 27.8 per cent over February and up 114.4 per cent year-over-year.

Source – BCREA

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Canadian Housing Starts – May 8, 2018

Construction in BC Vancouver Real Estate April 2018

Canadian housing starts fell 5 per cent on a monthly basis in April to 214,379 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts was steady at about 226,000 units SAAR.

In BC, total housing starts declined 17 per cent on a monthly basis to 38,750 units SAAR and were down 11 per cent year-over-year. Multiple unit starts were down 10 per cent year-over year and 21 per cent month-over-month while single detached starts were down 11 per cent year-over-year and were flat compared to March.

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA were down 28 per cent monthly basis to 23,366 units SAAR. Year-over-year, Vancouver starts were down 21 per cent.

  • In the Victoria CMA, housing starts were down 8 per cent on a monthly basis. Although single detached starts were nearly double the previous month, a 26 per cent decline in multiple unit starts resulted in an overall decline in new home construction. Year-over-year, total starts were up 26 per cent.

  • In the Kelowna CMA, new home construction doubled on a monthly basis due to a surge in multiple unit starts.  However, total starts were down 5 per cent compared to April 2017.
  • Housing starts in the Abbotsford-Mission CMA  fell 66 per cent compared to March due to large declines in both single detached and multiple unit starts. Year-over-year, total housing starts were also down 66 per cent.

Source – BCREA

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April 2018 – Vancouver Real Estate Statistics

April 2018 Real Estate Statistics

The Metro Vancouver housing market saw fewer home buyers and more home sellers in April.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,579 in April 2018, a 27.4 per cent decrease from the 3,553 sales recorded in April 2017, and a 2.5 per cent increase compared to March 2018 when 2,517 homes sold.

Last month’s sales were 22.5 per cent below the 10-year April sales average.

“Market conditions are changing. Home sales declined in our region last month to a 17-year April low and home sellers have become more active than we’ve seen in the past three years,” Phil Moore, REBGV president said. “The mortgage requirements that the federal government implemented this year have, among other factors, diminished home buyers’ purchasing power and they’re being felt on the buyer side today.”

There were 5,820 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in April 2018. This represents an 18.6 per cent increase compared to the 4,907 homes listed in April 2017 and a 30.8 per cent increase compared to March 2018 when 4,450 homes were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 9,822, a 25.7 per cent increase compared to April 2017 (7,813) and a 17.2 per cent increase compared to March 2018 (8,380).

“Home buyers have more breathing room this spring. They have more selection to choose from and less demand to compete against,” Moore said.

For all property types, the sales-to-active listings ratio for April 2018 is 26.3 per cent. By property type, the ratio is 14.1 per cent for detached homes, 36.1 per cent for townhomes, and 46.7 per cent for condominiums.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,092,000. This represents a 14.3 per cent increase over April 2017 and a 0.7 per cent increase compared to March 2018.

Sales of detached properties in April 2018 reached 807, a 33.4 per cent decrease from the 1,211 detached sales recorded in April 2017. The benchmark price for detached properties is $1,605,800. This represents a 5.1 per cent increase from April 2017 and a 0.2 per cent decrease compared to March 2018.

Sales of apartment properties reached 1,308 in April 2018, a 24 per cent decrease from the 1,722 sales in April 2017. The benchmark price of an apartment property is $701,000. This represents a 23.7 per cent increase from April 2017 and a 1.1 per cent increase compared to March 2018.

Attached property sales in April 2018 totalled 464, a 25.2 per cent decrease compared to the 620 sales in April 2017. The benchmark price of an attached unit is $854,200. This represents a 17.7 per cent increase from April 2017 and a 2.3 per cent increase compared to March 2018.

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Canadian Inflation and Retail Sales

Canadian Retail Sales & Inflation

Canadian retail sales increased 0.4 per cent on monthly in basis in February and were 3.5 per cent higher year-over-year. Sales were higher in only 4 of 11 sub-sectors representing less than half of total retail trade. With today’s data, and all other data available thus far for the first quarter, we are tracking Canadian economic growth at about 1.6 per cent for the first quarter of 2018. In BC, retail sales were up 0.4 per cent on a monthly basis and 5.9 per cent year-over-year. Retail sales in the province continue to moderate back to historical trend after growing close to 10 per cent in 2017.

Canadian inflation, as measured by the Consumer Price Index (CPI), increased again in March as prices rose 2.3 per cent year-over-year, up from 2.2 per cent in February. The Bank of Canada’s three measures of trend inflation were relatively unchanged at around 2 per cent. In BC, provincial consumer price inflation was 2.6 per cent in the 12 months to March. Rising inflation and an economy operating at capacity signals further Bank of Canada tightening, potentially as soon as the next interest rate decision on May 30.