{"id":361,"date":"2019-04-26T01:39:31","date_gmt":"2019-04-26T05:39:31","guid":{"rendered":"https:\/\/www.waltersrealestategroup.ca\/blog\/?p=361"},"modified":"2019-04-26T01:39:34","modified_gmt":"2019-04-26T05:39:34","slug":"vancouver-real-estate-prices-up-down-or-flat","status":"publish","type":"post","link":"https:\/\/www.waltersrealestategroup.ca\/blog\/vancouver-real-estate-prices-up-down-or-flat\/","title":{"rendered":"Vancouver Real Estate prices – Up, Down or Flat?"},"content":{"rendered":"\n
Do you know the value of your home? <\/h2>\n\n\n\n
It’s been many years of a solid seller\u2019s market; prices increasing by double digit returns, homes selling before they were even listed and multiple-offer bidding wars becoming the norm. But this year, Vancouver has finally seen a change. Changes have been imminent for some time, but not everyone was ready for it. Many homeowners are now left wondering what their “forever increasing” Real Estate assets are currently worth. <\/p>\n\n\n\n
Is this reason to panic? Of course not. Vancouver is a beautiful city with both domestic and international demand. This is just another cycle and there will always be a market, and a buyer for your home. <\/p>\n\n\n\n
What are the main factors driving this market change? <\/h3>\n\n\n\n
Mortgage rules – <\/strong>As of January 1, 2018 the government has made it mandatory for all borrowers to pass a stress test when qualifying for a mortgage. What this means is you will have to qualify for your mortgage at a higher \u201cqualifying rate\u201d. This rate will be the higher of the Bank of Canada 5 year benchmark rate OR the rate you have been offered, plus 2%! Many buyers will now qualify for significantly less, which subsequently filters through reduced ability to purchase and lower demand in the marketplace. <\/li>
Decreased international demand<\/strong> – China is still a \u201cclosed\u201d economy and Chinese authorities have now enacted harsher punishments for anyone caught exchanging money outside of official channels. \u00a0Right now, Chinese citizens are only allowed to exchange equivalent of $50,000 through their own banks. The new restrictions stem from concerns over the Chinese economy and the recent weakening of the Yuan. <\/li>
Foreign Owner Tax \u00a0\/ Property transfer tax<\/strong> – \u00a0As of Feb 21st, 2018, If you are a foreign buyer in Metro Vancouver, then you will have to pay an additional 20% tax of the fair market value of the property. (increase of 5%)<\/li>
City of Vancouver Empty homes tax<\/strong> – each home deemed \u201cempty\u201d (not principal residence or rented for at least 6 months of the year) will be subject to a tax of 1% of the 2018 property tax assessment. \u00a0<\/li>
BC\u2019s Speculation and Vacancy tax<\/strong> – based on the Dec 31st registered owner, for 2019 and going forward all foreign owners will pay 2% of the assessed value and other Canadians who are not exempt will pay .5% of the assessed value. \u00a0<\/li>
Increasing interest rates<\/strong> – we at at the highest rates since January 2008, and higher rates mean higher mortgage payments, and decreased affordability. <\/li>
Consumer sentiment<\/strong> – Would you purchase something today if you think it will be a lower price in the future? \u00a0Probably not. Same goes for how consumers view the new Real Estate market conditions. More people are on the sidelines waiting, and this is contributing to the decreasing demand and prices. <\/li><\/ol>\n\n\n\n<\/figure>\n\n\n\n
How do these changes influence Real Estate prices?<\/h3>\n\n\n\n
All of these extra taxes, costs and regulations are contributing to decreased affordability and diminishing demand. It is estimated that the new mortgage stress test alone has decreased affordability on average by 20%. That means that consumers either have to look for a smaller home, a less desirable location, or save more money, before they make their purchase. <\/p>\n\n\n\n
This market is confusing to many because it changed so fast – buyers and sellers are getting mixed signals. \u00a0Some sellers are realistic about today’s value and pricing their home according to current market conditions and demand. \u00a0Some sellers are still back in 2017 and asking for the price they \u2018could have\u2019 received then. Many sellers start out in a 2017 price range and slowly drift towards something that a buyer will pay today. <\/p>\n\n\n\n
Most buyers on the other hand are happy to pay much less and are looking for value. \u00a0We\u2019ve worked with clients that have submitted bids WELL under the fair market value in hopes the seller might take it, given the lack of overall demand. <\/p>\n\n\n\n
What data can I use to determine the new value of my home?<\/h3>\n\n\n\n
Assessed value <\/h4>\n\n\n\n
Assessed value is a place to start and only provides an estimated valuation. This major limitation with this method of valuation is timing. You receive notification in January, based on data from July 1st of the previous year…and a lot can change in 6 months! Also, the assessor only looks at actual sales in your area, not your specific property. If you have completed significant renovations or have something special on your property, it likely won\u2019t be accounted for. Assessed value is a better benchmark for condos than it is for detached homes, as condos tend to have more similarities. <\/p>\n\n\n\n
Bank Appraisals <\/h4>\n\n\n\n
Have you ever asked for a mortgage, increase or refinance? \u00a0The first thing the bank does is send an appraiser out to your property to obtain a “lending” value. \u00a0\u00a0Usually this value disappoints the homeowner, as it is often much lower than the market value. \u00a0Remember, the bank is considering lending you money on this property for the long term. They want to make sure that even if the property value decreases, you will still have enough equity in your property to keep your debt in good standing. Canadian Banks are not in the business of buying and selling properties, so they have no interest in repossessing, unless absolutely necessary. Therefore, they will usually lend based on a more conservative, lower valuation. <\/p>\n\n\n\n
Comparables <\/h4>\n\n\n\n
Looking at similar, recently sold properties in your area is a great place to start. \u00a0We need to stress that \u201crecent\u201d and “similar” are key words here. A good comparable is a similar property that has sold in the same market conditions that you are in. \u00a0When the market is changing rapidly, as it is today, then we wouldn\u2019t recommend looking back more than a month or two. This method is also best for condos or townhouses that have very similar features. <\/p>\n\n\n\n
Talk to Tim or Shannon Walters, your local Realtors <\/h4>\n\n\n\n
If you are thinking of selling or are just curious what your home might be worth today, talk to us. (You may be interested for an equity take out, a later sale or just to update your personal balance sheet). We have the experience and expertise you can rely on. Tim has been selling homes in Vancouver for over 23 years. Shannon has valued homes for lending purposes with Canada’s largest chartered bank for over 22 years. Our team reviews new listings on the MLS every day, watching for trends, value and anomalies. \u00a0We read economic data on the markets; interest rates, growth rates, immigration, government policies and data forecasts, and determine how this will impact current market prices. <\/p>\n\n\n\n
We are experts in investment properties and can help put your capital to work for you. Our service includes advise on specific renovations (what adds value and what doesn’t) or finding you a distressed, undervalued property. Ask us anything about the rental market, cap rates or how to make the most out of your investment property. <\/p>\n\n\n\n
We can help you accurately value your detached home. Not only will we review what your lot and building are worth, we also advise you on the highest and best use. Sometimes this can mean subdividing your lot prior to sale, or looking for the \u2018perfect buyer\u2019 to take it over as it is. We also help you get the highest price for your home with proper staging and marketing. Every situation is so unique, but we ensure you understand this market and get the best price. We look forward to hearing from you! <\/p>\n","protected":false},"excerpt":{"rendered":"
![\"\"](\"https:\/\/www.waltersrealestategroup.ca\/blog\/wp-content\/uploads\/2019\/04\/IMG_3093-1.png\")
<\/figure>\n\n\n\n