April was a hot month for housing news. I'll just briefly summarize here with some links.
The actions taken by government and activists to curb the housing crisis is drawing some pretty strong reaction from home owners. A particular flashpoint is the "school tax" on $3M+ homes. This tax is calculated on the portion of the home value assessed above $3M. There are protesters who cite that they cannot afford to pay such a tax.
Here is a quote from the mayor of West Vancouver, "There are an awful lot of people that might have paid $30,000 or $40,000 for their house that’s now worth $4 million or $5 million. They’re not wealthy people." In what world is having $4 million not wealthy? I'd just like to point out that at .20%, the proceeds of selling the home could pay for the tax for 500 years.
REBGV released sales stats for April and transaction volumes are cratering. Single family home sales were down (-33.4%) and condos are down (up 23.7%) compared to April 2017. Last year was a banner year though, so the pullback just gets us to historical norms. Inventory is starting to build, so the increase in housing availability is not limited to the rental market.
Tom Davidoff, a professor in economics at UBC, is getting some heat from Shaughnessy homeowners for supporting the school tax. These protesters complained to UBC. Thankfully, UBC did the right thing and defended professor Davidoff's academic freedom. A statement from UBC reads, "Calls to interfere with the communication of scholarly opinions amount to a request to violate University policy. Respectfully, we cannot accede to such requests".
Kathy Tomlinson dug up the (paywall warning) flipping of condo units by developer insiders. While probably not the sole cause of price escalation, this does contribute to the feeling that the housing market is a rigged game.
AirBnB has agreed to help Vancouver enforce short-term rental laws. Homeowners now need a business license and can face steep fines for nocompliance.
Big banks are raising mortgage rates. TD now stands at 5.54% for a five year fixed mortgage. At this rate, it will take a few years to get back to pre-financial crisis territory of ~7%. Mortgage rates generally move in the opposite direction of housing prices, so this is yet another factor weighing on housing prices.
Amazon announced it's intent to hire 3,000 new tech workers in the downtown area. The company aims to fill these positions by 2022. These highly paid workers will, no doubt, be looking for housing close by.
April Rental Stats
- Studios $1695 (+4.3%)
- 1 bedrooms $1950 (-1.5%)
- 2 bedrooms $2700 (+0.2%)
- 3 bedrooms $3000 (0.0%)
Volumes are down 4.8% from March, but up 12.8% YoY. Our 3 month moving average shows that volumes have steadily increased since July last year. We have more rental units available now than at any point last year.
Like I mentioned last month, there was a structural shift in rental prices last July. We are still seeing these large YoY gains, with prices up between 5% and 9% from last April.
|Beds||Median 2017||Median 2018||Pct Change|
Here are the premiums for furnishing a unit:
|Beds||Median Unfurnished||Median Furnished||Pct Premium|
If you want to stay up-to-date on Vancouver's rental market, sign up for my newsletter in the navigation bar.