An RBC economist announced last month that we have probably seen the peak prices for real estate for the year. This correlates well with the fact that all benchmark prices have dropped in June. For detached home, the benchmark price dropped 0.5%. For apartment and attached homes, the benchmark prices have decrease 0.8% and 0.2% respectively. The inventory is rising despite the strong sales. In reaction we see a dramatic reduction in new condo launches and more Craigslist listings of owners trying to sell their presale condos before completion.

The big real estate news last month was the announcement from Canada Mortgage and Housing Corporation (CMHC) that they are putting in more restrictive guidelines for insured mortgages; that is, mortgages that have less than 20% down payment. They have made the credit requirement more stringent and the maximum amount of money you can borrow against your income less. But not to worry. Equally important is the fact that the two other mortgage insurers are not following the lead of CMHC. So, for lenders that work with all three insurers, not much has changed and buyers have nothing to be concerned about.

Another piece of important news is that the NDP pledged to introduce some legislation in response to the report on the recent dramatic increase in condo strata insurance. Details were not provided, but they have mentioned that they can not regulate insurance rates.

Finally, the BC government has decided to extend the temporary rent supplement to the end of August. So hopefully, as many people can get back to work as soon as possible before the end of August.

The post June 2020 Vancouver Real Estate Review first appeared on John Chan Mortgages.

The inventory is 32.4% lower than a year ago and that might explain part of the price stability. The sales-to-active listings ratio are still healthy. It is 13.5% for detached homes, 18.9% for townhomes and 14.8% for apartments. Ratios between 12% and 20% is considered balanced.

There have been many predictions or estimates of where real estate prices are headed in the next 12 months. The Canada Housing and Mortgage Corp (CMHC) made the biggest headline by predicting a 9 to 18% drop. Note it is a range based on their best and worse case scenarios. It is much better represented by the graph below. Other forecasts are also down but by a lesser degree. This include Scotiabank at 4%, CIBC 5 to 10%, RBC 7%, BMO 5% and Re/Max 5%.

I think the large drops will come later in the year. In the mean time, stay safe. And a Happy Father’s Day to all the fathers out there.

The post May 2020 Vancouver Real Estate Review first appeared on John Chan Mortgages.

BC Government COVID-19 Page:

https://www2.gov.bc.ca/gov/content/safety/emergency-preparedness-response-recovery/covid-19-provincial-support

Federal Government COVID-19 Page:

https://www.canada.ca/en/department-finance/economic-response-plan.html

In terms of the real estate market in April, sales are slow, inventory is holding steady and so are the prices.

There were 1,109 sales in Metro Vancouver last month. That is a 39.4% decrease from last year. But last year was a bad year. Last April’s sales were 29.1% below the year before. For comparison, at the market high in March 2016 there were 4,769 sales. The current sales volume is 62.7% below the 10-year April sales average. You will have to go back to 1982 to find a slower April.

Between March and April of this year the sales number dropped by 56.1% and newly listed properties dropped by 47.9%, but because of the existing pool of inventory, the total number of homes listed only dropped 2.3% which makes it surprising that the prices have held up so well.

Detached home and attached home prices actually increased by 0.8% and 0.6% respectively over last month. Apartment prices dropped 0.2% over the same time period. I expect the prices to adjust lower in the coming months. And the longer this drags on, the more devastating it will be for the market. As tenants stop paying rent, small mom and pop investors will reassess the viability of keeping the property as the mortgage payments accumulates, assuming they are deferring the payments. They will probably be the ones to sell first. Then comes everyone who has lost their jobs or closed their businesses. The latest statistics showed 1 million people lost their job in March and another 1.3 million Canadians who were employed worked zero hours. With air traffic ground to a halt and economies all over the world in contraction, foreign buyers will not have a chance to support the market. If there is anything that could derail Vancouver’s real estate market, this is it.

The post April 2020 Vancouver Real Estate Review first appeared on John Chan Mortgages.

As a result, the March sales were 19.9% below the 10-year average. The inventory was low:  24.8% below March 2019. The demand was high; thus, sales-to-active listings ratios were bullish: 21.1% for detached homes, 33% for townhomes and 28.9% for apartments. This moved prices up over the previous month. 1.2% increase for detached homes. 1.4% increase for apartments and 0.9% for attached homes. However, this is unlikely to continue next month. RBC predicts that home sales in Canada would drop by 30% this year!

Both the Federal Government and Provincial Government have put out many assistance programs. Updates are almost daily so it makes sense to visit their site directly eventhough there are a lot of prettier summary on the internet.

BC Government COVID-19 Page:

https://www2.gov.bc.ca/gov/content/safety/emergency-preparedness-response-recovery/covid-19-provincial-support

Federal Government COVID-19 Page:

https://www.canada.ca/en/department-finance/economic-response-plan.html

Lenders are also helping out by providing the option for mortgage payment relief. Most of them have online applications as the phone lines have been jammed. Go to your lender’s home page and look for the COVID-19 link for the most up-to-date information. If you are having problems locating the right information, feel free to contact me.

Last month government officials and insurers held an online meeting but it doesn’t look like there is relieve anytime soon in regards to soaring strata insurance. Basically, the insurers are saying the way condos are built and managed in BC, it is just more expensive to insure. Being in an earthquake zone also doesn’t help. So, what came of the meeting were recommendations to the government and stratas on educating strata councils on ways to reduce damage to the building, improving building codes to reduce water damage and stop delaying depreciation reports and long-term maintenance activities. Things to consider when you are looking for a condo now.

The post March 2020 Metro Vancouver Real Estate Review first appeared on John Chan Mortgages.

A home equity loan requires the lender to put their name on your title. This means lawyers are involved. The borrower is responsible for all legal costs and a $2,000 budget is probably average. The lender and the mortgage broker will charge a fee. Sometimes the mortgage broker fee is inside of the lender fee as the lender often give half of their fee to the broker for compensation. Some lender charges admin fees, inspection fees and various fees for arranging this loan. The key is to ask for the total fees. What they call it is not as important.

Currently, if you are in a large city in BC the total fee should be around 2-3% of the loan for a first mortgage and 3 – 5% for a second mortgage. It really should not be higher unless your situation is extreme. For example, you quit your job to work on your new business for the last two years. You ran out of money and stopped paying your bills a year ago so your credit is terrible and you have no money.

In terms of rate, it is harder to pin down because so many factors go into deciding it. Credit worthiness, location, type of property, the amount of equity left after the loans and the condition of the property all play into it. However currently a good rate for a home equity loan would be 6.5% for a first and 8% for a second.

So, the minimal setup cost for a $100,000 home equity loan would be as follows:

Lender fee: $1,000
Broker fee: $1,000
Legal fee: $2,000
Appraisal: $400

TOTAL: $4,400

So, the initial cost is substantial and you wouldn’t go this route if you are borrowing a small amount of money.

Depending on your situation consider mortgage payment deferral for 6 months, home equity line of credit, refinance of your mortgage or a personal line of credit.

Also consider the various programs offered by the Provincial and Federal Government:

https://www2.gov.bc.ca/gov/content/safety/emergency-preparedness-response-recovery/covid-19-provincial-support

https://www.canada.ca/en/department-finance/economic-response-plan.html

If you need help deciding whether a home equity loan makes sense for you, feel free to give me a call. John at 604-831-4437.

The post Home Equity Loans in the World of Covid-19 first appeared on John Chan Mortgages.

The benchmark price for a detached home is up 0.2% for the last month but down 0.7% over the last 12 months at a price of $1,433,900. For apartments, the price is up 2.1% for the last month but only up 0.9% over the last 12 months at $677,200. And finally, for attached homes, the price is up 0.3% for the last month and up 0.6% for the last 12 months at $785,000.

The sales-to-active listing ratios show a general correlation with the price gains. A balanced ratio is between 12 and 20%. Higher means a greater demand and thus one would expect upward pricing pressure. The sales-to-active listing ratio for detached homes is 17.3%, for townhomes is 26.9% and for apartments it is 28.4%.

With the emergency rate cuts from the Bank of Canada due to the corona virus outbreak, the real estate market should continue to be strong going forward.

I would like to take this opportunity to give a shout-out to the staff of the BC Centre for Disease Control. It is a very important public health facility that people are not aware of but its existence contributes to the general health of everyone. They have some of the best microbiologists and virologists in the country working there. They serve as a reference lab for all the hospitals and doctors of BC. They work with the in-house epidemiologists and other public health officials to manage outbreaks such as SARS in 2003 and now the novel corona virus. Realize that they have tested more people in BC for COVID-19, then all of the US. They are doing a great job and I feel more people should know.

The post 2020 February Metro Vancouver Real Estate Review first appeared on John Chan Mortgages.

Lenders do NOT reassess your property at renewal as long as you don’t miss any payments. So, for people who bought their property with 5% down payment and the assessment is down 15%, you do not need to be concerned about being kicked out of your home at renewal.

And property taxes are not based on the absolute value of your home. The BC Assessment value is used to determine the proportion you owe of the total city tax budget. So, having your property value drop does not mean you pay less property tax this year versus last year. In fact, this year the city of Vancouver has decided to raise the budget, so most people will be paying more this year.

Note BC assessments are estimates based on July of last year. An appraisal is the only way to determine current value for your home. However, the market has picked up since the fall, so the actual value should be higher. In fact, this trend continues. The sales in December were 9.5% above the 10-year December average.

The sales-to-active listings ratio for detached homes is 15.2%, for townhomes is 25.7% and for apartments is 32.5%. The sales-to-active listings ratio is a measure of supply and demand. When the ratio is between 12 and 20%, the market is considered balance

This supply and demand dynamics is reflected in the price increases. In December the prices of detached homes went up 0.6%, but over a 12-month period the price dropped 4%. The prices of townhomes went up 0.7% in December, but lost 2.4% over the last year. And finally, the price of apartments went up 0.8% in December but lost 2.75% over the last year.

Will this continue in 2020? CMHC, BC Real Estate Association, Royal LePage and Central 1 Credit Union all put out releases to say that they believe real estate sales will strengthen; however, they differ on what will happen to the prices. It ranges from “breaking new records” to “flat”. I don’t see any reasons for new records, so I am siding with the “flat” camp.

The post 2019 December Metro Vancouver Real Estate Review first appeared on John Chan Mortgages.

In terms of the real estate activities in January, the sales activities are close to normal while the inventory is below average. The prices continue to climb higher. The market looks relatively healthy for now. Here are the details.

The home sales number is 7.3% below the 10-year January average while the current total number of homes listed is 13.7% below the 10-year January average. The sales-to-active listings ratio for detached homes was 11.6%, for townhomes was 22.6% and for apartments was 23.9%. The range of 12% to 20% is considered to be a balanced market with neutral pricing pressures. However, all property types showed an increase in price from December. For detached homes, there was a 0.5% price increased compared to December 2019. The increase for apartments and attached homes were 1% and 0.5% respectively.

The post 2020 January Metro Vancouver Real Estate Review first appeared on John Chan Mortgages.

As the year closes out, the number of new listing falls as usual. It is 25.7% lower than October, but it is also 13.7% below last November. The total number listed is 12.5% below last November as well which is helping support the prices.

Prices are remaining fairly stable. The benchmark price for an apartment has gone down 0.2% in the last month while the prices of detached homes and attached homes has gone up 0.3% and 0.2% respectively.

The sales-to-active listings ratio which gives an indication of demand in the market is a healthy 23.2%. The higher the percentage the higher the demand.

By property type, the ratio is 17.2% for detached homes, 24.9% for townhomes and 29.3% for apartments. The range between 12 and 20% is considered balance. While this is true, these are averages of properties over the entire Metro Vancouver and the Vancouver real estate market is much more fragmented. If you are truly considering entering the market, then you should get a local expert who knows what is going on in the particular segment of the market you are interested in.

The post November 2019 Metro Vancouver Real Estate Review first appeared on John Chan Mortgages.

The inventory is lower. Compared to last October it was down 5.8% and compared to September 2019 it was a 9% decline. In part due to higher sales volume and in part due to a 16.3% reduction in new listings in October.

This in turn, resulted in higher prices across all property types. The benchmark price for a detached home is 0.3% higher than the month before; though, still down 7.5% year-over-year. For apartments, the benchmark price increased 0.2% from the previous month while it went up 0.5% for attached homes.

The sales-to-active listings ratio reflected the positive pricing pressure. The ratio is 17.3% for detached homes, 26.2 per cent for townhomes and 29% for apartments. Generally, between 12% and 20% is considered a balanced market. Anything over would indicate upward pricing pressure.

The Canada Mortgage and Housing Corporation put out a report in October on the outlook for the Vancouver market. It forecasted a range of prices over the next two years. On the high side, it will go up about 8% over the two-year period or be slightly down from today’s level. Goes to show how difficult it is to even tell the direction of the market.

The big real estate news last month was actually the election. With the Liberal continuing, we would expect an increase to the limit for the First Time Home Buyer Incentive. However, I still do not think it will have a big impact. Also, a one-per-cent vacant home tax is expected to pass. It will be applied to non-Canadians, not living in Canada. No details are available yet, so it is hard to estimate the impact.

What will impact Vancouver is the commitment to fund the Broadway corridor SkyTrain route. Remember what happened to real estate value when it happened for the Cambie corridor. Houses around the area tripled to quadrupled in prices in a short period of time due to bidding by developers. However, this time around the City of Vancouver will slap a hefty development fee to redirect some of that money into the city coffers. But it should still be a sweet deal for property owners in the area. Congratulations!

The post October 2019 Metro Vancouver Real Estate Review first appeared on John Chan Mortgages.