2019 had its ups and downs
Tina Mak
other
Wow! What a year of ups and downs for Vancouver real estate! There were no shortage of negative news in the first 6 months. It reminded me of year 1996 to 2000 (read my attached graph). Coincidently, NDP was in power during that time and that was a long downturn till we hit rock bottom in year 2000.
Since the beginning of this year, new home sales drop nearly 90%, developers offer creative incentives to buyers such as luxury handbags, watches, fancy events, free booze etc. 10,000 realtors didn’t make a sale in the first 6 months. Yep, not one single sale! This dip is new and a tough challenge to agents who came to the business after 2010 and home owners/buyers especially for the new Vancouverites & millennials involve in the real estate market in the last 10 years. I personally have seen market dips like this 6-7 time since 1992 and love it every time it happens. It allows clients to have more time to think without being rushed into making the biggest investment decision in their life. Having said that, I am seeing the light is at the end of the tunnel! One theory never changed: Sell high buy high; Sell low buy low! I’m very grateful to all of your trust, support, loyalty and referrals over the years. The diversification clientele keeps my business strong every time when the down cycle happens.
Politics and Real Estate
Politics affects all type of business especially in both real estate and stock markets. It is more so now than ever. Enclosed 2 graphic charts from the real estate board shows the market trends since 1977. I added the global, national and local politics that affected our cycles on the right graph. If you read carefully, you will see the next peak is always higher than the previous peak price. Also compare it to the latest one with the trends up to November on the left. Please see the price differences between September and November…it is inching up steadily. Click and watch the Vancouver real estate board market update video for November.
Why is Vancouver housing market bouncing back faster than expected ? (click the link to read full article)
Here’s my 2 cents:
Canada on the global stage: Canada is not big brother, the global politicians don’t respect our Prime Minster, our stock market is not significant. All of these sounds negative but in fact, it is very positive to our real estate market. Immigrants and global investors come here to enjoy an undisputed nation. Both Hong Kong & Huawi Meng Wanzhou are part of the political chess game between US and China. It has never been the so called 5G security. It’s all about power struggle between democratic and communist countries. Comparing to Hong Kong, Canada is insignificant in this game. We are considered a very stable both politically and economically country. As prosperous and powerful as China is, there is so much under current complicated matters that many Chinese (Hong Kong, China and Taiwan) would still like to immigrate to country like Canada while all other developed countries are tightening their immigration policy. I have been to Hong Kong 4 times since the beginning of the crisis in June. There is no doubt many of our 320,000 non resident Canadian is coming back.
Local market:
We all know the lending stress test is the major reason for the market downturn which disqualified 10% to 20% of the home buyers who have 20% down payments. 95% of real estate market is local market. It’s been 2 years and it shown all 3 levels of governments combined efforts to crack down the housing price has been successful. The market has absorbed and digested all the adjustments so the local market is BACK! The rebound isn’t just in the urban areas, it also applies to the suburb like Maple Ridge and Pitt Meadows. Multiple offers are definitely back. I experienced multiple offers in Vancouver, Burnaby, Port Coquitlam and Squamish areas. One shocking case was 4777 Shepherd St in Burnaby. A lot value house sold $376,000 over asking with 38 offers! That’s a record in a soft market. This craziness doesn’t happen everywhere but multiple offers are back for sure. This just tell us the market has bottom out and no more “deals” can be found. Even though NDP is in power, the global political environment is very different from the 1990s. Canada is in good place, prime city like Vancouver for sure is in demand.
Luxury market is where the deals still exist:
The luxury market (5m and up) sales is still soft. 2017: 322 sales; 2018: 172 sales; 2019 so far: 125 sales. There is no doubt Chinese buyers from Mainland China are main buyers for this price range. China capital control certainly is a main reason why the luxury market is suffering however, there is a will, there is a way. As a Chinese buyer, they need to be aware that they have to take the risk that if they purchase double digit millions properties, their personal privacy could be exposed by the local medias. Vancouver medias have been aggressively targeting Chinese buyers. Will the luxury market bounces back? I personally think it will. Vancouver’s beauty definitely has made our view luxury properties as one of the best if not the best value in the world. This is the BEST TIME to buy!
General observation: Investors have gradually digested different type of taxes in the city and aware of all the prime cities in the world have similar taxes. Should they wish to buy, they are willing to pay for it, at least my out of town buyers are willing to pay the empty home and speculation & vacancy home tax.
Hidden power: International Students and Silicon Valley North
- Federal government set a 450,000 international students goal for 2023 and in 2018, it reached 494,525 students, almost 50,000 surpassed the original goal. Vancouver housed at least 150,000 of them in the lower mainland. Read the image below.
- Vancouver has always been viewed as a retired resort community. Well, think twice. The recent news on Vancouver is set to become Amazon’s unofficial HQ2 as well as a concentration of San Francisco Bay Area business have started looking north for new headquarters in the past 12 months. Those companies believes Vancouver is a great place for talent because of its highly rated universities. Our best outdoor activities are another reason why the young talents would like to work in Vancouver. Click and read full article of Why so many Silicon Valley companies are moving to Vancouver? Believe me or not, Vancouver is soon to be housing a lot of IT talents.
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The above 2 sectors will continuously put pressure on housing demands on top of the 40,000 annual new immigrants. Federal government immigration goal is to welcome more than 1 million new immigrants by 2021. Developers have pulled back developing just like they did back in 2008. As a result of that, it created pent up demand. History will repeat itself. Chinese has a saying: Rather buy up but don’t buy down! The bottom is over and it’s inching up. Time to get back to the market. Call me if you wish to have further discussion! Let me know if I can assist any of your friends/families in their real estate needs.
