What Happened vs What to Expect: Greater Vancouver Real Estate Trend Analysis
2017 has been a year of hyperactivity in the real estate market of the Greater Vancouver Area. There was a hike in the mortgage prices due to the federal government’s new mortgage qualifications and massive shifts were noticed in the buying patterns. So, what does the real estate market outlook for 2018 looks like?
We are going to take you through all the major developments of 2017 in the real estate industry through this series. In this first edition, we will focus on the steep changes in the buying patterns, prices, and inventory of the detached homes and condos. By the end of this series, you will be able to make informed predictions about the real estate market in 2018 and invest smartly.
The Year That Was
With the buying power getting weaker, the mortgage rates were definitely going to rise this time. In the October of 2017, the Office of the Superintendent of Financial Institutions (OSFI), the top financial regulator in Canada, came up with a new set of guidelines for the mortgage industry. These guidelines include a mandatory “stress test” for the borrowers, even if they have uninsured loans.
Earlier, only insured borrowers had to pass the test. Now, the new requirement will ensure that these borrowers will be able to honour their debts even if the mortgage prices rise in the coming years. These guidelines came into effect on January 1, 2018. According to the Mortgage Professionals Canada, 18% of the total test takers are doomed to fail it. That is roughly 100,000 Canadians.
The cost of real estate in the region has increased 13% Y-O- Y on an average. With the mortgage prices going up, the real estate becoming more expensive, and the salaries in the region hardly keeping up, affordability has taken a serious blow. So, Greater Vancouver Area witnessed a decreased demand for the uber-expensive detached family homes.
All of these factors combined to make home buying a pricey decision. However, one good news was that the unemployment rate in the whole province of British Columbia, including Vancouver, went down. Buyers flocked the condo market, and this trend is here to stay. It has already resulted in a 20-25% lower inventory than the previous years, which promptly drove the condo prices up.
The Year That Will Be
Making smart investments is a science. There is simply no substitute for research and due diligence. You have to pore over a wealth of data in order to be able to recognize meaningful patterns and make investment decisions based on them. Then you’ll be able to answer two very important questions that you face when making an investment – Where? And How Much?
We have done all the heavy lifting and here is what you can expect from the real estate market in the Greater Vancouver Area. Read away.
We call the pre-sale units low-risk moneymakers. The increasing demand for them is a strong proof that it is the general sentiment. As more people invest in the pre-sale units, your investment not only gets more secure, its value goes up too. Another advantage is that these units do not require financing until the project is complete. That is a long timeline, during which the buyers can flip the property and make a sizeable profit.
For high profile buyers, investing in detached homes is an attractive option. Detached homes are out of the reach of an average buyer in the Greater Vancouver Area. This has piled up the inventory and stabilized the prices too. If you have the resources, you can take advantage of this price correction this year.
People with larger families may not be able to afford a detached home, but they still need one. This directly translates to a better rental market for the detached homes. So, if you are a detached homeowner, you have an asset that is low in supply and high in demand. Rent it out smartly.
This was a snapshot of the present real estate market in the Greater Vancouver Area and a quick overview of the upcoming trends. We will soon bring you more developments and analysis in the local area.