WARNING - Due to last month's methodology change, I can no longer track studio pricing. Onwards!
June Real Estate Happenings
It's been six months since the City of Vancouver adopted a ten year housing plan. As a reminder, the plan's aim is to create 72,000 new homes affordable to local incomes by 2028. In June, the city released the first status report on progress so far. How are we doing? I'll spare you the 200+ pages of suspense - we're on track! The city approved 7, 141 new units in 2017, falling just a hair short of their annual target of 7, 200. I might just be a worry wart but 2017 was a banner year for housing, and I'd be impressed if CoV could stay the course for the coming decade. Here's a snapshot of the approvals:
Source: Affordable Housing Delivery and Financial Strategy and Annual Progress Report and Housing Vancouver Data Book
CoV approvals are overweight on condos (128%), and supportive housing (142%), but severely lagging on PBRs (41%), and townhomes (38%). To the city's credit, these shortfalls were called out and will hopefully be addressed in 2018.
In tangentally related news, the government of BC released a bombshell report on money laundering. This study was backed by David Eby and details how criminal money is flooding into our economy. Peter German, the report's author, conservatively estimates that at least $100M has been laundered in BC in the last decade. While, the report doesn't attempt to detail the flow of dirty money, it does highlight real estate as a likely destination for these funds. The report was such a hit that there will be a sequel. The target? BC's real estate sector.
Usually we focus on rentals here, but let's talk about sales for a minute. Real estate sales and rental markets should move in opposite directions because they are alternative uses for the same unit. In a rapidly appreciating market, investors can afford to keep a unit empty while the value balloons. However, flat prices mean they are bleeding cash through interest, maintenance and taxes every month. Thanks to Steve Saretsky, we have some numbers from behind the shroud of MLS secrecy. Last month, condo sales dropped ~30% to match 2012 lows, and detached homes haven't seen this sort of sales drought since 1991. Don't expect prices to fall off a cliff though, because RE prices can be incredibly sticky. Without a catalyst, recent buyers will likely sit pat for the next few years of 0% growth rather than sell at a loss.
June Rental Stats
- 1 bedrooms $1900 (-2.7%)
- 2 bedrooms $2612.50 (-3.2%)
- 3 bedrooms $3000 (-5.3%)
Rental prices are finally dropping in the face of consistently higher volumes. Last month, we discussed how prices have been flat since March. They seem to have finally succumbed to the economic gravity of higher supply.
In June there was a 15% drop in the number of listings. This matches last year's pattern of unit volumes dropping between May and June. I guess everyone wants to come here for the summer. The 3 month trend continues to move upwards, and there was a +15% YoY change compared to June last year.
With the latest drop in prices, we are no longer seeing large YoY gains. These price increases are actually in line with inflation, and slightly below the maximum raise that landlords are entitled to by the province.
|Beds||Median 2017||Median 2018||Pct Change|
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