Who does Vancouver's Empty Homes Tax apply to? How long does a home need to be occupied to be considered vacant or occupied? How do I deal with the Empty Homes Tax in a real estate transaction? If you're buying or selling Vancouver real estate you NEED to know how the tax applies and also how to protect yourself. In this video REALTORⓇ Mark Wiens will show who must occupy a home, for how long, and also what the definition of a property is. Mark looks at several examples where the tax may apply, and also debunks several assumptions that many have about the Empty Home Tax. For more information about Vancouver's Empty Home Tax, Vancouver's Vacancy Tax Bylaw, or the BC Provincial Speculation and Vacancy Tax, please feel free to contact Mark Wiens at any time at 778-840-7653. Mark Wiens is a Realtor licensed at Remax Crest Realty. This communication is not intended to induce a breach of an existing agency relationship. Mark Wiens is not an expert beyond the real estate industry and therefore any information about tax should not be solely relied upon. Mark urges you to consult independent legal and tax advice for any tax issues. All information, while deemed to be accurate, should be independently verified.
Is my BC assessment accurate? What is the purpose of the government's assessed value for homes in Vancouver? How can I I benefit or be hurt from a low or a high assessed value? In this video, Mark Wiens explains that the BC Assessment is an estimate of the value of your home on July 1 the year previous. That means that the very moment it is released, it is already six months outdated. If you are using this assessed value in December, the assessment is approximately a year and a half outdated, of about 548 days. Also, the vast majority of homes are never viewed by a human being and BC Assessment almost certainly does not have any idea about the state of the interior of your home or an accurate count of the number of bedrooms, bathrooms, and other finishing. BC Assessments are NOT a good way of determining objective, timely market valuations. You CAN use assessed value as a reference point when determining value, but only when looking at how comparable properties in the neighbourhood have been trending above or below the assessed value, not the assessed value itself. There are MANY factors that go into the value of your home. Location, layout, condition, redevelopment potential or development going on in your area. Also, many cultural groups or demographics have different tastes, and where your home is located WITHIN a city or neighbourhood could drastically change what a Buyer values. For all of these reasons and more, when you are looking to evaluate a property, make sure that you rely on the counsel of a trusted real estate professional. For all your real estate needs, please feel free to reach out to Mark Wiens at any time, at 778-840-7653. All information, while deemed to be accurate is not guaranteed and should be independently verified. Information in this video should not be taken as real estate advice, rather it may be referenced when speaking to a real estate professional. Watching this video or interacting with Mark Wiens in the comments sections does NOT mean that you are in an agency relationship with Mark Wiens therefore you CANNOT rely on this information. Mark Wiens does business as Mark Wiens Personal Real Estate Corporation. REALTORⓇ is a trademark of the Canadian Real Estate Association.
2021 is here and it's time for the most accurate 2021 Vancouver real estate market forecast. This year I am making 9 specific predictions. Keep in mind that these are speculative in nature and should not be taken as real estate advice or as being necessarily destined to come true! 1. The overall market will post somewhere around a 10% gain. Most likely the average price will be even higher than this at the end of the year. 2. The detached home market will stay strong. 3. Condos will go up significantly in value. 4. The Downtown market will recover and flourish. 5. Richmond will see significant increase in activity and price. 6. Growth in the suburbs will slow. 7. No new large policies to limit market growth. 8. Investors will come back to the market, particularly with presales and Downtown Vancouver condos. 9. The number of development land sales will increase significantly. Again, these are speculative in nature so please do not rely on these predictions when making real estate decisions. For any real estate advice or guidance please do not hesitate to contact Mark Wiens of Remax Crest Realty any time at 778-840-7653.
If Covid -19, the most severe pandemic and health crisis in modern history cannot kill the Vancouver real estate market, what can? That’s a rhetorical question! In today’s post I’m going to look at the performance of the Vancouver real estate market in the past year (2020)
If we’re going to understand what happened in 2020, we need to break the year down into four different sections since they were very different and each was a reaction to the other. The first period was from January to March. I’m going to title this period: the period of Continued Momentum.
This is because it was the continuation of a trend of market recovery which began in August of 2019. Sales were strong and each month was better than the last. By the time March arrived, we were experiencing conditions similar to the peak in 2016 with low inventory, multiple offers and strong price appreciation. When compared to the same month in 2019, we see that compared to the months year precious, when we look at sales per month
January: 42% increase
February: 44% increase
March: 46% increase
The sales to active ratio is the best indicator of the health of the market. The sales to active ratio is the number of sales in one month compared to the number of active listings in that month. When that ratio is ten percent or lower we tend to be in a Buyers market where prices tend to trend down while twenty percent or higher we are in a Seller’s market where prices tend to trend higher. Anything in the middle is a balanced market. From January to March, we went from a somewhat balanced market to a strong Seller’s market.
January: 18.2% S/A - Balanced market
February: 23.4% S/A - Sellers market
March: 26.3% S/A - Firm sellers market
I want to pause and talk about March for a moment, since the strong numbers really are staggering. Even including the last half of the month after the covid restrictions were in place, we still posted a 46% year over year increase and we were in strong sellers market. This shows that during the first half of the month the market had really taken off.
In short, precovid 2020 was a strong market that was getting only stronger. And then well….Covid came!
This brings us to the next phase of the year which really started in mid March and lasted until the end of May. I’ll call the next period of 2020 the Pandemic Period - Market Freeze. During this time we had the tightest restrictions ever placed on our society, perhaps ever. It is no surprise that sales plummeted, but other than a few isolated sales, prices really did not decline. In fact, if you compare the decreases in sales, they were actually matched by stark decrease in listings which meant that miraculously, even in the height of the pandemic, we NEVER reached into Buyer’s market territory. I want to repeat that again: we were NEVER in buyers market territory during the greatest crisis of our age. How did April and May do? Not bad all things considered.
April: 39% decrease - 60% decrease in new listings - 11.8 S/A
May: 43% decrease - 37% decrease in new listings - 15% S/A
Then we moved into June and July which I will call the rebirth period
June and July were the months when people realised that the sky was not falling, that massive price decreases were not going to happen, that actually now was a VERY good time to buy, and the momentum that we had seen building since September 2019 which was stalled by the height of the pandemic came back. In fact the recovery was so strong that for the first time this year, in July, we saw the number of sales in one month SURPASS the 10 year average, and by an impressive 10 percent. At this point it was clear that the market was still healthy and that we were in for a sharp increase and honestly, we have never looked back.
June - 18% increase in sales - 21% S/A
July - 22% increase in sales - 26% S/A
This brings us to the last part of the year from August until December which I will call the BONFIRE period. I’ve heard people call 2020 a dumpster fire but oh my goodness, this real estate market was so hot it was not contained to any kind of metal box that gets picked up weekly.. It was raging and expanding!
August - 37% increase - 24% S/A - 10% ABOVE 10 year average for sales
September - 56% increase - 28/% - S/A - 45% ABOVE 10 year average
October - 29% increase 30% - S/A - 35% ABOVE ten year average
November - 23% increase - 28% S/A - 25 ABOVE ten year average
As for December, well, we do not have the final numbers yet, but at the time of filming we are at 3,157 sales which is 67 percent above December 2019 numbers (which, funny enough was actually 88 percent higher than december 2018) which means that this should be the most active December ever recorded. EVER.
Some of the reasons why the market did so well in this period are:
With people spending way more time at home, they became more aware of their home. And at the same time, priorities changed. Space became important in a way it may not have been before. You now needed a home office space, you couldn't rely on eating at restaurants so maybe the kitchen needed to be larger, honestly maybe some people needed extra rooms to store all the toilet paper they bought! You get it since you’ve lived it!
At the same time as size became more important, location became less important. With less shops open and less events to go to, people started heading to areas that they would not have previously considered. These two reasons partially explain the growth in sales in the suburbs.
A change in requirements was coupled with a desire to upgrade and improve, the perfect combination to lead someone to want to move.
Number three, Mortgage rates dropped significantly, with the Bank of Canada slashing their rates from 1.75% at the beginning of March to .25% at the end. I’m actually going to talk a little later about why this did spur growth, but why the impact is actually much less important than you may think.
The biggest reason that sales took off? Honestly, there was, and still is still so much unsatiated demand from buyers. Remember this is the continuation of a market recovery which started in August of 2019 largely started because of buyers who had held off in 2019 and then realised that they had missed the bottom.
If we look at the year in total, In terms of price, the overall benchmark value of a home in Vancouver has gone up around 7 percent, with detached homes experiencing a 10 percent increase townhomes experiencing a 6% increase, and condos increasing by around 3%. Basically, if you decided to by a year ago and price was the motivation factor, you made the right choice! Congratulations!
Now condos and detached homes have faced very different challenges over the past year with detached homes seemingly being much more in demand.
Interestingly enough the hottest product type was townhomes, with sales to active ratios around 50%. This makes sense as many people are looking for more space, but do not have the budget to purchase a single family home. The strata insurance issue is also less of a concern for townhome projects compared to condominiums.
LUXURY REAL ESTATE
This year also marked the return of luxury real estate. 2020 was significantly more active than 2019 with 170 compared to 118 sales over $5,000,000 while in 2019 there were only 5 sales over 10 million dollars, with the highest sale being 15.5Million while this year there were 16 such sales with the highest being 27 million dollars.
At all price points, for all product types and for almost all areas, 2020 was significantly better than 2019.
Now I know what some of you may be thinking as you are listening to the year over year monthly numbers: 2019 was a terrible year. And that’s true, but I would say that there are three reasons why this really doesn’t matter:
By the time August came, the market was in recovery, and was already posting significant gains over the same months in 2018. In fact from September to December 2019 each month reported on average 56% more sales than the same month the year previous. When we are talking about big 2020 numbers, once we get to August and especially September, we are talking about massive month over month increases on months that were already good.
The number of sales from July onward surpassed the ten year average, and not by a slight number, by a substantial amount.
The growth from month to month and from year to year shows us where the trend and the momentum of the market is going. The single driving factor in the health and the direction of the real estate market in Vancouver is sentiment and emotion.
So that was the residential resale market as per the stats we have available from the MLS. Another way to look at the health of the market is looking at the market for new construction. In fact this can even be a better predictor of where the market is going as the people and companies building new homes are generally driven by profit. They will only move forward with projects if they believe that the market will be healthy in the short to mid term, or phrased the other way, if they believe that the market will deteriorate in the future, they will often hold off. An increase in the new home market shows confidence by the people who have the most to gain or lose.
In 2020 the new home market back strong. If we look at new single family homes, the number of brand new homes has increased significantly by 208%.
Sales of presale condominiums are also higher by 10% with a rising trend in the most recent months. The number of projects coming to market has actually not increased significantly, though what has increased is the number of projects at higher price points in more core urban areas. Think about higher dollar projects like Voyce, Gryphon House and Richmond Centre compared to those projects way out in the suburbs which tend to be more economical.
Everything shows that the number and sale price of presale condos will increase. The vast majority of buyers in 2020 were end users and NOT investors. Once the investors start buying again, watch out for a big bump.
In a moment, I’m going to address: 1. Why condos are doing really well despite what you may have heard and also 2. why low interest rates have had a much smaller impact on the Vancouver real estate market in 2020 than what many people have said.
But first, I want to examine why the real estate market did so well to weather Covid. Here are some of the reasons:
Covid disproportionately hurt those who are lower income and tend to be renters - think those in the hospitality sector, retail, tourism sector. Homeowners were less affected.
The CERB definitely helped prop people up. People knew they were going to be taken care of and therefore there were no panic selloffs.
Yes, lower interest rate and mortgage deferrals also helped and is a large reason why we did not see any meaningful rise in foreclosures.
The strong push in the real estate market prior to covid shows that the natural progression of the market is up. Every year there is talk about how the Vancouver real estate market is a bubble and is about to decrease, but time and time again it has roared back harder than ever. Many people believed that things would get back to normal after covid, and saw covid as a reason to get into the market or trade up in the market.
There are other reasons as well but those are some of the major ones. Let’s now talk about the performance of detached homes compared to condos.
We know that detached homes did really well, and given the realities of covid that makes sense. But what about condos? Much has been reported on the values of condos dropping in the city, and the problem with that is, well it’s just not true. Yes, condos downtown have trended down, particularly the one bedroom and studios that were previously most popular with investors. For more on that check out my video: Downtown Vancouver On Sale, which I filmed about a month ago and is basically true today.
Here are a few reasons condos haven’t been doing as well as detached homes or townhomes:
Vancouver, by its nature is an international city. Students, travellers, people on short term work permits, would often rent rather than buy, but the majority of those people did not come. This meant higher vacancies and lower rents causing investors to more or less stop purchasing condo units.
Strata Insurance: In the last two years the cost of strata insurance has skyrocketed, with an average increase of 40%. It’s easy to see why this would discourage buyers from purchasing condos, but this is going to change. For more on that, watch my 2021 Market Forecast video
Condos, by nature are smaller than detached homes or townhomes, so what we started to see was buyers prioritizing size over location. That makes sense if you do not need to commute or the restaurants and bars that are in walking distance are closed.
Despite all of that, condos remained in either a Balanced or sellers market through all months of the year. In fact, listen to this. The sales to active ratio for condos was either substantially the same or far surpassed detached homes right up until September, but even then, the sales to active ratio for detached homes only surpassed condos by 5 percent, and this is while condos themselves were already at 25%. Basically condos were super hot and detached homes were blazing hot. What’s more, condos OUTPERFORMED detached homes in terms of the number of sales compared to listings over the year in total. Wow. So much for the death of condos. I mean if that is death then that is death with a very strong heartbeat!
How about interest rates? What affect have they had?
There’s been a lot of talk about how low interest rates have benefitted or even completely fuelled the current market, and they certainly has not hurt. The Bank of Canada started with an interest rate of 1.75 percent at the beginning of the year, and in March alone dropped it several times until it was at .25%. That’s a huge drop of approximately 85% which at first glance makes it seem like it would have a huge impact, and it would have, if not for the stress test.
The stress test is basically a mechanism which limits the size of the mortgage you can qualify for is based on a rate substantially higher than the rate that your bank will give you. Because of the stress test, even if you can get a 1.5% interest rate for your mortgage TODAY , you have to have the income to support a mortgage rate of 4.79% while pre-pandemic, a the beginning of the year when the market was already really strong, this was at 5.19 percent. That means that the drop in interest rates has actually only decreased the rate for the sake of qualification by 0.4 percent, which turns out to only be a 7 percent improvement. Put another way, the severe decrease in interest rates only marginally increased your borrowing power even though actual mortgage payments are quite a bit lower. I don’t think anyone would argue that a 50 percent increase in sales can occur solely because of a 7 percent improvement in budget.
So to recap, what we are seeing is one long run of momentum which started in August of 2019 and was briefly paused by Covid in Mid March through the end of May. Condos, townhomes, detached homes and presales are ALL doing very well, with detached homes posting the most price appreciation and townhomes being the most in demand. The suburbs have been the hottest markets, but even the highest priced markets like the West Side of Vancouver and West Vancouver are EXTREMELY active.
The biggest takeaway for the real estate market this past year is that we can definitively say that there is no imminent collapse, no bubble waiting to burst, and that real estate in Vancouver is not objectively overvalued. Since 2016 we have have had a multitude of forces impact the market negatively:
The foreign Buyer tax
Increased property transfer tax
The School Tax
The empty home tax
The speculation tax
2 NDP governments
Beneficial ownership registry
The most severe pandemic of our lifetimes which has caused GDP in Canada to CONTRACT by 5.5 percent this year
Despite these factors, the market is still very healthy. If you are waiting for a time to buy when the market goes down significantly, you may just perpetually stay on the sidelines!
But even with an upward trajectory, there will be cycles of up and down. How long will this boom last? When will it come back down? Will condos start to retake the momentum from detached homes? Which neighbourhoods are going to post huge gains in 2021 and which ones will flatten out? Well, there’s only one way to know, and that’s to watch my 2021 Market Forecast.
Thank you again for reading this post. Please check out my YouTube channel Mark Wiens Vancouver Real Estate and- most importantly watch my 2021 Market Forecast for Vancouver Real Estate. Please feel free to call me for information at any time at 778-840-7653.
Mark Wiens does business as Mark Wiens Personal Real Estate Corporation and as of January 1, 2021 is licensed at Remax Crest Realty. All information while deemed to be accurate is not guaranteed and should be independently verified. Information in this post should NOT be taken as professional advice since everyone’s real estate needs and real estate situations are different. I’ll say that again, do not take what I have said in this video as advice, but you may want to reference it in conversation with a professional. For real estate advice please contact me by phone, email or text. This communication is not intended to breach an existing agency relationship. Realtor is a trademark of the Canadian Real Estate Association.