What does 2020 hold for Vancouver Real Estate

With the New Year fast approaching, we at Roomvu wanted to thank every single one of our readers who supported us throughout this past year. I would like to take this opportunity to share what we have learned this year and what we can expect for 2020 thanks to the countless hours we spent poring over real estate data this past year. Let’s start with some highlights from research conducted by Roomvu: the number of realtors in the Lower Mainland B.C. is declining. As B.C.’s real estate market boomed between 2014 and 2014, so too did the number of realtors in the region, increasing to more than 13,500 by 2017. As the market slowed over the past two years, the number of agents has dropped by approximately one-thousand. See our report published in the Vancouver Courier and Westen Investor. 

Next we managed to crack the code on how much prices increase in Greater Vancouver depending on which floor you live – the secret it out! So while you shouldn’t expect to pay too much more to live on a higher floor in Central Coquitlam, you can expect to really fork out some dough in Coal harbour. Read our report published on the Daily Hive, Vancouver Courier, Vancouver is Awesome or Read full report here. The data revealed that the biggest price increases are found in Coal Harbour and Central Lonsdale in North Van, whereas Brentwood Park in Burnaby and Central Coquitlam experience the lower increase in price by floor:

Zone 1: Floors 1-10: $28/sqft (approx. 3 per cent increase/floor)

Zone 2: Floors 2-25: $7/sqft (approx. 0.7 per cent increase)

Zone 3: Floors 25-35: $14/sqft (approx. 1.2 per cent increase)

Zone 4: Floor 35: $47/sqft (approx. 2.3 per cent increase)

Zone 5: Floors 35+: insufficient data

Later in the year, we learned that brand new condos depreciate up to 33% over a 10 year period. In other words by choosing to purchase a condo 10 years or older condo in these subareas, Vancouver home buyers can save up to 31%:

1. Kerrisdale 33.58% price drop over 10-years
2. South Cambie 31.65% price drop over 10-years
3. Marpole 31.08% price drop over 10-years

We then discovered that Vancouver home buyers are getting ripped off by purchasing pre-sales. For years, realtors and developers have tried to convince potential home buyers that getting in on pre-sales would actually save money. But our research determined that that couldn’t be further from the truth. We actually found that, on average, Vancouver pre-sale units sold for $16-$28/SqFt more than already-built (ready to move in) in Greater Vancouver. This has held true since 2015.

Taking a look ahead to 2020, we dove into Vancouver neighbourhoods that might struggle from a real estate point of view. These neighbourhoods included Mackenzie Heights, Marpole, South Cambie, Southlands and S.W. Marine. You can read the full report here 

Key industry players have also weighed in to make their predictions for 2020. Bryan Yu, from Central One Credit Union, has predicted a mild-price increase for Vancouver Real Estate in 2020. Yu attributes most this potential increase to a growing population, and declining mortgage rates resulting in greater housing sales: 

“Housing sales in British Columbia are climbing faster than anticipated after a downturn, but a rebound won’t be as inflamed as the sellers’ market two years ago, Declines in home prices, falling mortgage rates, a population increase and continued economic growth have prompted buyers to return to the market, especially in Metro Vancouver”. 

Read the full report here.

In other news, the BC Assessment Agency recently announced that homeowners should expect a mild decrease in the value of their home. Single-family home values are expected to drop across the province next year; while townhouse values are expected to remain the same. 

It is important that we understand that the Vancouver market effectively bottomed out in mid 2019. (The tax assessment of homes is compiled as of July of each year). So when the tax report comes out, we should be ready to look at actual sold price of comparative homes, not look at the assessment and try to drive value of homes based on that.  You can read the report here

Lastly, Federal Finance Minister Bill Morneau On other news, Bill Monroe recently announced a revision to the mortgage stress tests which caused a drop in prices in most real estate markets across the country in the past two years. A mandate letter sent by Trudeau to Morneau — which was released Friday, along with letters sent to other ministers — says the Finance Minister will “review and consider recommendations from financial agencies related to making the borrower stress test more dynamic”. This move was praised by executives of banks and credit unions. 

Depending on the revision of policies, we should expect to see increased financial strength for home buyers, which will in turn increase demand for higher-priced properties. The 2018 policies, reduced mortgage power of most Canadians by as much as 20%, and with future revised policy, we should be able to see more home buyers in the market for a new home. Read more here.

All in all, the vision for 2020’s housing market looks very promising for many markets in Greater Vancouver. 

We at Roomvu would like to extend our warmest thank you to everyone who supported us this past year and hope you’ll join us again next year. We’re working on a bunch of cool projects and topics that we can’t wait to share with you all! 

All the best,

Sam Mehrbod