WARNING - METHODOLOGY CHANGE: The way I gather rental listings had to be modified in mid-May for technical reasons. There may be a small discrepancy in the rental volume. A comparison of the first 14 days of April to May, where the methodology matches, suggests that the effect is minor.
May Housing News
Our provincial government worked overtime in May. They updated the rules protecting renters and started collecting information on presale assignments for taxation purposes. In contrast, nothing much happened on the municipal and national front.
The BC government amended the Residential Tenancy Act giving tenants more protection. This change provides a measure of security for renters, and discourages some scummy landlording behaviour. The result is another factor weighing down buyer demand. Let me explain. Anecdotally, I often hear people buying for fear of eviction. The BC government seems to have noticed and really brought the hammer down with two big changes. First, wrongful evictions will now cost a year's worth of compensation instead of 2 months. Second, landlords must now provide 4 months of notice instead of 2 for a legal eviction. A landlord will probably think twice before trying to boot a tenant to close the gap to market rents.
Our government recently passed Bill 25, the Real Estate Development Marketing Amendment Act. This bill didn't get as much coverage in the media but it requires that developers track assignment transactions and make them available to our government. Like ticket scalping, people are purchasing pre-sale units without any intention of owning it. Instead, they wait for the price to go up and flips contract to purchase that unit. Previously, this activity was done "off-the-books" resulting in hundreds of thousands of dollars in tax-free gains. The ways to make a quick buck off of RE are getting plugged one by one.
Over in Ottawa, Justin Trudeau was too busy buying us a pipeline to do much for housing. I've always wanted to be 1/36,000,000th an oil baron.
Finally, Vancouver was too embroiled in political jockeying for the upcoming mayoral election. Ken Sim ended up winning the nomination for NPA. Congrats Ken! So, everyone ready for sim-city?
OK, enough joking around. Time to hit those numbers.
May Rental Stats
- Studios $1700 (+.59%)
- 1 bedrooms $1952 (+.13%)
- 2 bedrooms $2800 (+0.0%)
- 3 bedrooms $3170 (5.8%)
Due to strong volume growth, prices have flatlined since March for most unit types. 3BRs seem to have gone up in both price in volume. These larger units saw a a marked increase $3170, which is well above prices we've seen previously.
We continue to see volume growth in rental listings. Vancouver saw 15% more listings between April 2018 and May 2018. I added a new chart showing that volume growth in the 1BR and 2BR segment is incredibly strong.
Once again, we are observing the structural shift in the rental market prices. While rents for a particular unit can only go up at inflation + 2%, we are seeing outsized increases in the turnover rent.
YoY statistics cannot be read off the graph due to the methodology change mentioned above. I estimated YoY change using just the first 15 days of each month, an apples-to-apples comparison. Rental volumes were up 13% YoY in the first half of the month.
|Beds||Median 2017||Median 2018||Pct Change|
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