First of all we apologize for not posting for a while now. Many of you have been messaging us when the next blog going to be posted. We have been really busy with life. Since it has been while let’s dive right in on what’s happening in the market as we speak.
For those that’s been hunting for a home lately, you must noticed the market has picked up dramatically again. What’s different this time around is the condo/townhouse segment is white hot right now. Basically what happened to detach houses last couple years has been happening now to condos/townhouses. Houses are picking up as well just not selling as fast.
We are sure most of you would like to know what Colin’s and Angel’s think tank predicts the market will go from here but first I’ll point out the major factors at play here:
- This is the biggest factor driving multiple bids/rapid increase in prices in condo/townhouse right now – the number of listing ( = supply) at 20 years low. Noticed “supply” here is NOT what the media and government have been saying, which is to build for housing to match demand. This “supply” here is on existing properties where homeowners are reluctant to put their homes for sale. Why is that you say? Put yourself into their shoes, why put the unit on sale today when you know you can sell at the higher price next week? People who are selling now mostly because they HAVE to sell today (ie they are upsizing to a house (committed) / moving out of town etc).
2. The value of the CDN$. The CDN$ took a further beating this year. And Colin’s and Angel’s think tank predicts there will be further downward pressure on the CDN$ due to relatively weaker economy than the US and it is unlikely Bank of Canada will match increases in overnight rate with the Feds in the next 12 months, thus widening the interest rate differential between CDN & USD. Let’s be honest, there’s foreign money at play here, especially RMD and USD.
3. The introduction of the 15% foreign tax in Ontario. For the past 8 months people are favoring Toronto because of this. Now both cities have it, they are back at the same level of playing field. And let’s be honest again, Vancouver > Toronto.
4. The lessor known factor, which will increase investor demand for properties in Vancouver, is the Rent Control policy change in Toronto effective just last month Apr 20, 2017. Before Apr 2017, unlike in BC, there’s no annual CAP a landlord could rise rents in buildings built after 1991. However there is a CAP now. And looking closely, the CAP is even tighter than the one in BC. This CAP is at inflation AND capped at max 2.5%. (FYI BC is 3.7% in 2017). All else equal this will result in some investors moving investment properties from Toronto to Vancouver. For the nerds: https://news.ontario.ca/mof/en/2017/04/ontarios-fair-housing-plan.html
5. On the other hand, the current ultra tight supply is unsustainable at current level as there are tons of pre sales completing in the next couple years which, all else equal, will result in less multiple bids situation.
So do we have a crystal ball on where’s the market is heading in the near-mid term? Yes we do. Are we going to share on our next blog? Maybe. Want to know is it a good time to buy/sell your condo/townhouse/house now? feel free to contact us any questions you might have.
It’s 1am we are going to bed now. K thanks bye.
P.S. We rushed though this and didn’t even prof read this article. Again this is our personal opinion only. Actual turnout might various.