Open House. Open House on Saturday, January 12, 2019 2:00PM - 4:00PM Open house is at the show home at 6525 Iron Street.
Open House. Open House on Sunday, January 13, 2019 2:00PM - 4:00PM Open house is at the show home at 6525 Iron Street.
What do housing pundits predict will happen to the B.C. housing market over the next year?
2018 was an extremely taxing – quite literally – year for B.C. real estate, in which taxation measures and other government interventions slowed down market activity considerably and creating a softening in average sale prices.
So what will the forthcoming year hold? A further sales slowdown, a plateau, or a recovery? Falling or rising prices?
As ever, industry organizations, brokerages and economists all have their opinions – which can differ widely, but often overlap.
Here’s a look at a range of forecasts and the general consensus in several areas of B.C.’s real estate market.
According to Central 1 Credit Union’s B.C. forecast, the provincial housing market is expected to remain “subdued” over the next three years. This is, said the report, “driven largely by the drag of federal B-20 mortgage ‘stress-tests’, government policies to constrain demand and higher interest rates.”
However, that doesn’t mean sales will fall further, said the credit union. Although they are expected to stay much lower than 2015-2017 levels, after a weak 2018, B.C. resale transactions are predicted to rise by 0.6 per cent in 2019, 3.8 per cent in 2020 and 2.2 per cent in 2021.
“In order for there to be a deeper crash, there would need to be a global economic recession, something that throws a lot of B.C. and the Lower Mainland out of work,” said Bryan Yu, Central 1’s chief economist. “That’s not something we have in our forecast right now.”
The Canada Mortgage and Housing Corporation’s (CMHC) Housing Market Outlook largely agreed, predicting, “Overall, we anticipate MLS sales to trough in 2018 and see some recovery in 2019-20.”
The Canadian Real Estate Association’s forecastwas much less optimistic about B.C. sales activity next year. CREA said that, following an overall 24.2 per cent annual decline in home sales across B.C. in 2018, resale transactions would drop in the province by a further 5.2 per cent in 2019.
The B.C. Real Estate Association went in the other direction with its sales predictions, taking a bullish stance. It said in its November forecast that sales in 2018 would total around 80,000 by the end of December, down 23 per cent from a year ago, but would then rise in 2019 by around 12 per cent to total 89,500 home sales across B.C.
Cameron Muir, BCREA’s chief economist, said, “Continuing strong performance in the economy combined with favourable demographics is expected to push home sales above their 10-year average in 2019.”
General consensus: With one group predicting a notable recovery, one a further dip and two a slight increase, perhaps we will see B.C. home sales largely remain at subdued 2018 levels through this coming year.
Home prices – B.C. and urban centres
The Canadian Real Estate Association is pegging the average sale price of a B.C. home in 2019 at $720,000 – a rise of 0.9 per cent over 2018’s figure. That’s following a year-over-year increase of 0.6 per cent in 2018 to $713,700 – despite slow sales activity.
Central 1’s forecast looked at median prices rather than averages, and said it expected the median provincial resale price to fall two per cent (or around $10,000) in 2019 to $520,000 but then see a slight increase in 2020. The credit union stressed in its forecast that no price crash was forecast.
Looking at Vancouver Island, Yu said, “I think the market in Victoria and the rest of the Island is still quite solid. But prices have essentially flat-lined.” In the capital region, median resale prices are expected to edge up in 2019 by 0.3 per cent from this year to $588,000 (following a 6.1 per cent annual increase in 2018).
However, prices are expected to rise in Island communities that are attracting retirees, Yu said. Overall on Vancouver Island, Central 1 expects the median residential resale price is set to increase next year to $465,000, up 2.2 per cent from 2018, the report predicted.
For Metro Vancouver, Central 1 had a different prediction. “The expectation is that we will see about a few per cent drop-off, which will bring us down to $1.2 million. It’s still very high for a lot of households, for many it will be out of reach,” said Yu. “But we will also see a decline in the condo market, which is clearly looking at higher supply levels.”
The RE/MAX 2019 Housing Market Outlook similarly predicted that Metro Vancouver’s average home sale price would see a drop of three per cent in 2019 compared with 2018, due to the “low absorption rate.” This, said the brokerage, will follow a slight increase in the average home sale price across 2018 of two per cent, compared with 2017, to $1,049,362. A subsequent three per cent decline in 2019 would take that average price down to $1,017,881, which is slightly lower than 2017’s average price but still well above 2016 prices.
The Royal LePage Market Survey Forecast predicted that the median aggregate price of a home in Greater Vancouver would remain fairly level next year, rising a modest 0.6 per cent in 2019 compared with 2018, to $1,291,144.
Randy Ryalls, broker and manager of Royal LePage Sterling Realty, said, “The [mortgage] stress test, coupled with provincial tax policies, will continue to affect the real estate market in 2019. The possibility of rising interest rates will also keep some potential buyers on the sidelines as they wait to see how higher rates impact the market. For potential buyers whose purchasing ability is not limited through mortgage regulation or financing, the buying opportunities in Vancouver are excellent.”
RE/MAX also looked at Kelowna’s real estate market, and predicted that, following a six per cent annual increase in average prices in 2018, home values would shed half those gains in 2019. The brokerage predicted a drop of three per cent next year to take the average price just under the $700K mark, but still more than $20K above 2017’s average.
General consensus: Provincial average home prices flatlining, with no crash ahead; some slight declines in capital region and Metro Vancouver, which will recover later.
Central 1's Yu said that builders have noted the market slowdown and the result is a sharp drop in housing starts since September, especially in urban areas. Starts in B.C. are predicted to fall to about 32,000 units in each of the next two years after nearly 40,000 units were under construction in 2018 and 43,500 in 2017.
But the credit union’s update also predicts positive housing market outlooks in some areas including Vancouver Island, where retirees fuel the market. Casey Edge, executive director of the Victoria Residential Builders Association, said builders remain optimistic about the capital region, despite what appears to be a slight softening of the real estate market.
He said construction continues to be driven by strong migration from elsewhere in B.C. and across Canada by retirees or people attracted by the region’s robust and diverse economy – and that there are no signs that will change in 2019.
Starts are also predicted to rise in northern B.C. as demand is boosted by a liquefied natural gas project and associated pipelines. As work ramps up on the $40 billion LNG Canada project in and around Kitimat, Central 1 says housing markets in the north are forecast to outperform those in southern B.C., which were hit the hardest this year.
The CMHC forecast for B.C. agrees with that of Central 1. Following a few years of frenzied construction activity, it said, “Housing starts are anticipated to soften going into 2019 through to 2020, moving back towards the 10-year average pace of new construction.”
General consensus: Comparatively weak market will cause developers and builders to pull back on new home construction over next two years.
On the rental market, Central 1 Credit Union had this to say: “[B.C.’s] rental market conditions are forecast to remain tight. The apartment vacancy rate holds near 1.3 per cent from 2019 through 2021 as renters find greater difficulty shifting into homeownership given tighter credit conditions and rental demand remains strong due to moderate economic and population inflows. Rent growth is forecast to remain near 5 per cent annually, held back by restrictive rent control measures... For units turned over, rent growth will be much higher as landlords can charge market rents, which will continue to soar given low vacancy rates.”
The CMHC also predicted the next two years for the rental market in Metro Vancouver, which is currently standing at a one per cent vacancy rate. Its report said, “The rental market is expected to remain tight across the region, average rents will continue increasing faster than inflation. The vacancy rate is expected to rise slightly; however, it will remain low in absolute terms, reflecting the strong demand for rental housing in the region.”
General consensus: Slight, if any, easing of vacancy rates; average rents rising well above inflation despite rent control measures.
Dramatic swings in 2018 property values seen across B.C.
With 2019 property assessment notices officially online and en route to mailboxes across the province — many B.C. homeowners might be doing a double take after seeing how much their property values have fluctuated.
The assessments became available on the B.C. Assessment website this week and while detached homes in Metro Vancouver saw a 10 per cent decrease in value, single-family homes beyond that area had increases of five to 15 per cent.
Vancouver Island and Kitimat property values spiked close to 20 per cent, and the heated condo market of 2018 elevated assessments across much of the province.
The 2019 assessment notices reflect a property's market value as of July 1, 2018.
If you feel you've been unfairly assessed in comparison to your neighbours, you'll have to act quickly, as the deadline to appeal is Thursday, Jan. 31.
B.C. Assessment says most complaints get resolved through discussions between property owners and staff. Complainants should contact B.C. Assessment through its website, in person or by phone at 1-866-825-8322.
If your concerns still haven't been resolved with an appraiser, the next step is to go through an appeal process. You'll have to submit a written request to a B.C. Assessment office no later than Jan. 31, 2019.
The ministry has created a video outlining how to prepare for your hearing and what evidence you will need to support your claim. Hearings are open to the public and typically lasts 30 minutes.
During that time, you will have to provide evidence that your property assessment notice is inaccurate. The panel will likely ask you questions and you are allowed to ask the panel questions.
No harm in trying
UBC economist Tom Davidoff says there's no risk in appealing because B.C. Assessment doesn't always get it right.
"If you have a property that's different from the other stuff that's transactioning, it's easier for B.C. Assessment to blow it," he said.
"They just don't have a lot of close comparable sales, so there can be more error when a product has more differences from other properties."
The assessment panel typically gives its decision by the end of the hearing, after a short deliberation.
More than 98 per cent of property owners accept their assessment without proceeding to a formal, independent review.
$10B drop in values
Following the outcome of appeals in 2018, the total value of real estate dropped approximately $10 billion, according to B.C. Assessment.
While that figure may sound high, it represents just 0.05 per cent of property values in B.C., which stand at $1.86 trillion.
Open House. Open House on Saturday, January 5, 2019 2:00PM - 4:00PM Open house is at the show home at 6525 Iron Street.
Open House. Open House on Saturday, January 5, 2019 2:00PM - 4:00PM Open house is at the show home at 6525 Iron Street.
Metro Vancouver commercial market swaggers into new year with rare confluence of low vacancies, high prices and strong development
Metro Vancouver’s commercial and industrial real estate sector is coming into 2019 with arguably the best market conditions in Canada. It is witnessing a rare confluence of among the lowest vacancy rates in North America, record high prices and sustained development. While total sales dipped in the third quarter of last year from the previous quarter, sale volumes barely budged.
“It is a historical time for Metro Vancouver’s commercial real estate,” said market analyst Andrew Petrozzi of Avison Young’s Vancouver office.
Vancouver’s downtown office vacancy rate is experiencing record-high prices as leasing costs also nudge all-time highs, even as a rush of new construction continues.
There is 1.6 million square feet of new offices under development downtown, but most of the space is already claimed.
This includes the 1.1-million- square-foot redevelopment of the old Vancouver post office on West Georgia, where 60 per cent is pre-leased though ground has not been broken, and 400 West Georgia, where Spaces has already claimed one-third of the 375,000-square-foot Westbank tower.
Vancouver-based mobile game developer Kabam has pre-leased 105,000 square feet of office space at Vancouver Centre 2 (VC2), which is currently under construction by GWL Realty Advisors.
Kabam will be the tower’s lead tenant, leasing close to a third of the building’s 345,000-square-foot floor space across seven floors. The 33-storey building is currently under construction at 753 Seymour Street with completion expected in 2021. “We are confident that VC2 will be fully leased prior to completion,” said Geoff Heu, vice-president, development, with GWL.
Commercial agency Devencore notes that vacancy rates for all office classes in downtown Vancouver have fallen to 4.5 per cent, down from 5 per cent a year ago. Class A office vacancy rates are even lower, at 3.9 per cent. At the same time, Class A average gross rents are continuing to climb with rates exceeding $51 per square foot.
“The market is showing no signs of slowing down in terms of rental rates. With various developments underway, but no major new office buildings delivered to the market until 2021, tenants with upcoming leases are competing within a very tight market,” said Jon Bishop, executive vice-president and managing principal of Devencore’s Vancouver office. “We are seeing trends with large space users pre-leasing new AAA-class office space slated to be delivered in 2021 and beyond. In the meantime they are utilizing flexible swing space to hold them over until their new offices are completed.”
Across Metro Vancouver, an all-time high of 21 office buildings are under construction that will deliver 3.5 million square feet within the next five years – and suburban activity is outpacing downtown construction by a ratio of two to one, noted Jason Marriott, vice-president of office properties with Lee & Associates.
A trend to commercial strata is surging despite nosebleed-level prices. Crestpoint Real Estate Investment paid $1,000 per square foot for a 19-storey office tower at 800 Burrard Street last year. Earlier in the year, Bosa Development sold pre-lease space at a new tower ascending on the northern edge of downtown at an average of $2,000 per square foot.
Only in Vancouver is bare concrete industrial space selling for higher prices than luxury residential condos in other Canadian cities. In Vancouver’s Mount Pleasant and the emerging Clark Drive and Hastings Street zone, light industrial space is fetching from $800 to $1,000 per square foot in trendy new low-rise buildings.
In the third quarter of last year 1.5 million square feet of new industrial space came to the Metro Vancouver market, but 1.4 million square feet was either sold or leased durng the same period. The new supply led to the first increase in industrial vacancy rates in two years, to 1.46 per cent, still the second lowest in Canada and among the tightest in North America.
Richmond and Delta have emerged as industrial destinations, which will carry well into 2019, according to Avison Young.
Vacancy in Richmond’s 37.7-million-square-foot industrial market – Metro Vancouver’s largest – increased to 2.3 per cent in fall 2018 from 1 per cent a year earlier due mainly to a couple of large vacant listings coming back to market. Delta, which has nearly 25 million square feet of industrial space, registered a decline in vacancy to 1.9 per cent, despite the addition of new inventory.
As vacancy has remained extraordinarily tight across the region rental rates have risen rapidly in recent years, a pace expected to continue but gradually slow in 2019, Avison Young forecast.
Major shopping malls across the region,` such as Park Royal, Oakridge Centre, Brentwood Town Centre, Lougheed Town Centre and others, are redeveloping, adding square footage or building condominium towers on mall parking lots, Cushman & Wakefield reports.
The second phase of McArthurGlen Group’s outlet mall near Vancouver International Airport will expand by 84,000 square feet this spring. This outlet centre is a top sales performer in Canada with a reported $1,220 in sales per square foot per annum, behind only Oakridge Centre at $1,579 per square foot and Pacific Centre at $1,531 per square foot in sales, according to the International Council of Shopping Centres.
Shape Properties and the Healthcare of Ontario Pension Plan are redeveloping the 28-acre Amazing Brentwood site in Burnaby with 11 residential towers. The project is underway with several new shops, dining venues and entertainment areas set to arrive early this year.
The largest retail development in Vancouver is QuadReal’s planned redevelopment of a 28.5-acre site at Cambie Street and West 41st Avenue, which includes Oakridge Centre. Oakridge’s development will include 10 towers and three mid-rise buildings with commercial, office, and residential uses, as well as 100,000 square feet of community space.
In West Vancouver, Park Royal is in the final stages of its multi-year redevelopment. The developer, Larco, has already added 1.4 million square feet of new retail, including a large Cineplex cinema.
Once the trump card in Metro Vancouver commercial real estate plays, the multi-family market will face headwinds in 2019. The sector still has about the lowest vacancy rate possible, in the 1 per cent range, according to Canada Mortgage and Housing Corp., but provincial and Vancouver regulations may threaten the sector.
Sales of condominiums in Greater Vancouver plunged 46.3 per cent in November, continuing a downward trend that started earlier in the year. Pre-sales of new condos were down to a take-up of 37.5 per cent in November, a low for the year after peaking at 94 per cent in January. Many condos are bought by rental investors, but B.C.’s new speculation tax, tight controls on pre-sale reporting and Vancouver’s empty-home tax are expected to make investors shy of the sector this year.
In December, the City of Vancouver introduced controversial rental legislation that some say will make it much more difficult for owners of older apartment buildings.
The new rules mean landlords will have to offer displaced tenants the option of temporarily moving out during renovations without having their leases end or their rent increase.
As well, the B.C. government is restricting annual rent increases to 2.5 per cent this year, which could stifle investment in the multi-family rental market.
The Urban Development Institute warns the new rules could also threaten construction of some 12,000 new purpose-built rental units across the region.
Multi-family dollar volumes increased 3.9 per cent from the second to the third quarter of 2018, reports the Real Estate Board of Greater Vancouver.