We have heard reports for many years about the affordability, or rather the lack thereof, of real estate in Greater Vancouver. The latest report from RBC suggests that the typical home is now about 10 times the median family income. This means that if your family income is $60,000, then the typical home would be about $600,000 which is about the GVRD benchmark. Let’s have some fun when factoring mortgage rates and going back in history.
In 1981, the typical home was about $150,000 and the mortgage rate was around 20%. Assuming the $60,000 income the house would be 2.5 times that amount. Yet with 20% down on a 5 year term, you would only qualify for a $115,000 home.
In 1991, the home became $275,000 with mortgages at 11%. Using the same income, the home would be 4.6 times that amount; however that income now qualified for a $189,000 property.
In 2001, the same house became $360,000 with rates at 7%. The income was now 6 times the amount while the same income qualified for a $260,000 property.
In 2011, the rates dropped to 4%. The same $60,000 income now qualified for a $350,000 property while the typical home is about $700,000 which is about 11.5 times that.
You get the idea. Over the past 40 years, real estate has proven to be a sound long term investment. This is another reason to buy when you have the opportunity to do so instead of waiting and renting. Typical incomes will never catch up to hard assets. I have heard so many people waiting for prices to drop. Remember that you are buying a place to live in, not a short term investment. Cycles do come and go, but prices have always surpassed the previous high. You would think that increased mortgage rates should have the opposite effect on house prices. Yet Vancouver has become a destination city where others want to live from around the world. What do you think?
Every January homeowners receive their Property Assessment Notice. This is an estimate of property value established by the BC Assessment Authority for property tax purposes. Many get upset when values goes up because they expect property taxes would increase accordingly. This is not always the case. If the municipality in where you live decides to raise taxes to improve public services, or if TransLink or Greater Vancouver Regional District does the same, your property taxes would increase even if your assessment value dropped. Many also believe that this truly is what their property is worth.
So how accurate is this property assessment value if you wanted this to be used when you sell your home? Imagine two million properties in BC being reviewed every year by a group of appraisers from the BC Assessment Authority. That’s quite a few for each staff member. Have you ever had someone enter your property from BC Assessment Authority to establish value? Furthermore, the current assessed value is estimated as at July 1 of the previous year. If you have been a property owner in BC, in particular the Lower Mainland, you will realize that real estate values are cyclical between and within years. I would suggest the property assessment is merely a starting point established in part by some mathematical formula and assumptions. Only a licensed Realtor® or a certified appraiser would be able to provide the true current value of a property based on their local market knowledge.
If a property came up for sale priced below “assessed value”, would you jump on it without thinking twice? I wouldn’t bet my house on it. Would you be paying too much for a house priced well above the “assessed value”? Many might be led to believe so. But is it really?
-- Arthur Ng
Can it be? Is the Vancouver housing market seeing the first signs of buyer fatigue?
The Real Estate Board of Greater Vancouver released its property sale statistics for April based on the Multiple Listing Service and, while not the plunge many people are predicting, the numbers are trending down.
Residential property sales – including detached, attached, and apartment properties – in Greater Vancouver reached 3,225 in April 2011. Compared to the 3,512 residential sales in April 2010, that's an 8.2 per cent decrease, which is still modest when compared to the 21 per cent decrease from March of this year when 4,080 residential properties were sold.
It's the same story with new listings in Greater Vancouver. April 2011 saw 5,847 new listings for detached, attached and apartment properties. This is a 23.5 per cent decrease from April 2010 (admittedly an "all-time record for April") and a 14 per cent decrease from March 2011.
Rather than a sign of dropping market activity these statistics are more likely a sign of returning normality, especially compared to the strong sales we've witnessed over the last few months. These changes are only minor and it'll take several more months of statistics to get a real handle on the Vancouver real estate market trend. This slight fall could just be the lull before the spring storm, as sellers finish renovations, repairs and landscaping in preparation for a sunnier May. If sales and listing numbers keep inching down as they did in April, though, we can look forward to more balance between supply and demand for residential properties.
Buyer fatigue? Probably not. This is just the coffee break.
- Sarah Mah
ight now the Vancouver real estate market is changing and Coldwell Banker Westburn Realty is changing with it. Monday April 18th marks the launch of our new website and our new brand, “The Right” Real Estate. Coldwell Banker Westburn Realty is interested in more than just buying and selling property. We want to keep our readers up to date on all the changes and facets of real estate in Vancouver so you can make informed decisions and have confidence in your investment. To provide you with a consistent, reliable source for information we’re launching The Right Real Estate Experience, The Right Realtor ®, and The Right Career.
The Right Real Estate Experience is designed as an informal community gathering place where you have access to our growing library of real estate videos. These videos, released once a month, will explain everything from oil tanks to property negotiation to ethics in real estate and how they may affect your investment. Have a question about real estate? Email us and we’ll either post a video on your topic or forward your question to one of our experienced agents.
The Right Realtor is a new service we’re offering to find you a real estate agent that will fit your needs, because in an industry that changes as fast as real estate you want someone who stays ahead of the curve and who sets your best interests as the top priority. Fill out a short questionnaire and we’ll personally match you with the agent in our office that best suits your needs.
In order to provide our clients with the best possible service available in Vancouver we have the best possible agents. Our hiring procedure is strict because we put a lot of time and energy into supplying our agents with all the support services they need to build a successful career with us. Interested in joining the Westburn community? Fill out our short questionnaire here. We mentor our new agents to help them get off to the right start, and we always welcome the experience that veteran realtors can offer.
Coldwell Banker Westburn Realty is looking to change the expectations you have for your realtors. Enter the Vancouver real estate market knowing exactly what to expect. Use the tools provided on our website to learn about your area, your investment, or real estate in general, so when the market changes or when you’re ready to buy or sell, you have the knowledge and support to make the right decision.
- Sarah Mah