Happy New Year!
A new year begins, and as always, Vancouver remains one of the most desirable places on earth to call home.
Where are housing prices headed in the next year?
If you happen to have access to this crystal ball, please feel free to reach out to me. In the meantime,
3 key areas to watch are:
Supply constrained by geography
Stricter mortgage regulations (Beginning Jan 1, 2018)
Political pressure on housing
If we are to gauge house pricing trends for 2018 based on the laws of supply and demand, logic dictates that a slow and steady climb is on the inevitable horizon. Above all, keep in mind the reality surrounding Vancouver’s housing market, our supply is constrained by our geography, leading to a finite supply. Expected population growth in the next 5-10-15 years is certainly something to look into as well…
Trends in interest rates and mortgage rules are another economic indicator that can greatly influence Real Estate markets. In October 2017, Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI) announced that the guidelines for residential mortgage underwriting (‘rules and regulations’ by which mortgage applications are reviewed and analyzed) would be revised. These ‘B-20 Guidelines’ as they have come to be known, cover 3 main areas: a financial ‘stress test’, a ‘loan-to-value’ review, and a revision to ‘bundled mortgage’ policies (explanation of these 3 items are below). The purpose of this drastic revision of policies, according to the OSFI, is to ensure the resilience of the Canadian banking system in a rising interest rate environment. The logic being that if you can qualify at a higher rate, then you can continue to afford mortgage payments should interest rates rise (as they are expected to do).
Lastly, provincial political pressure to take proactive steps on housing affordability has been very interesting. Be mindful that there may be more political changes on the horizon that may affect sales such as additional intervening of foreign buyers, potential implementation of new pre sale guidelines, and more Real Estate taxes! While there are stark differences between the Metro Vancouver Real Estate markets, and that at the national level, the real estate enclaves of Metro Vancouver move to very different beats (see surge in condo prices in North Vancouver in the last year vs. Shaughnessy/West Vancouver area homes for example). As someone who specializes in the North Shore Real Estate market, working day to day directly with first time home buyers, investors and larger scale developers, I can attest that the buying public has a tremendous amount of faith investing in the North Shore housing market.
Looking back at the North Vancouver Market for 2017….
Market activity really differed between each property type, detached home sales were somewhat slow and steady yet we saw a surge in condo and townhome activity. Overall a great year in Real Estate!
Detached Home Prices Dec 31, 2016 to December 31, 2017
Dec 2016 Detached Home Sales Average $1,590,000
Dec 2017 Detached Home Sales Average $1,672,000
3 Year Change: 59% 5 Year Change 81% 10 Year Change: 92%
CONDO Home Prices December 2016 to 2017
Dec 2016 Condo Home Sales Average $552,000 609 Per Foot
Dec 2017 Condo Home Sales Average $672,000 732 Per Foot
3 Year Change: 53% 5 Year Change 62% 10 Year Change: 60%
TOWNHOUSE Home Prices December 2016 to 2017
Dec 2016 Townhouse Sales Average $847,000
Dec 2017 Townhouse Sales Average $982,000
3 Year Change: 58% 5 Year Change 70% 10 Year Change: 78%
If you would like me to elaborate on any of the following avenues I have touched up on, please feel free to reach out to me.