Vancouver Housing Market: October 2020 Update

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Home prices in Vancouver have broken new highs for the third month in a row as detached homes reach benchmark prices of $1,523,800 in October, an 8% increase compared to Oct. 2019. Home prices for all property types was $1,045,100 with prices of both both townhouses and condo apartments growing by 5% yoy.

Transaction volume has also increased significantly with 3,687 homes sold in the Metro Vancouver Area, a 29% increase compared to Oct. 2019. Most of the increased activity has been focused on larger homes such as detached properties and townhouses, but even the weaker condo market experienced a 13% increase in sales yoy.

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Demand continues to outstrip supply as lower inventory pushes bidding wars for properties in the Vancouver area. Detached homes spent an average of only 38 days on market, almost two weeks shorter than what similar homes would have taken back in 2019. Despite their weaker market, townhouses and apartments stayed listed for an even shorter amount of time at 29 days and 32 days, respectively. This likely reflects their lower prices and larger audience of potential buyers.

Record-low mortgage rates and pent up demand have pushed real estate sales to new highs despite the uncertainty caused by COVID-19. This growth, however, still pales in comparison to Toronto housing pricesor Ottawa housing prices, which have increased by more than 10% and 19% year over year respectively, and continue to show signs of exuberance.

This increase follows recent announcements by the Bank of Canada promising continued Quantitative Easing and low interest rates into 2021. In addition, Prime Minister Justin Trudeau and the Federal Government have announced the extension of the Canadian Emergency Wage Subsidy until the end of 2020. While the continued effect of British Columbia's speculation and vacancy taxes remains a headwind, loose monetary policy continues to drive real estate upwards.

Vancouver Housing Market Statistics for All Property Types in September 2020

Total Transactions

Property Type Distribution

Impacts on Mortgages and Mortgage Rates

Due in part to the continued growth in real estate as well as loose monetary policy, mortgage lenders, including members of the Big Five (RBC, TD, CIBC, Scotiabank, and BMO), are increasingly willing to discount risk in the housing market and are offering record-low mortgage rates. Although this highly-competitive market may not last past the end of 2020, mortgage rates are not expected to rise significantly by 2022.

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Market Overview for Detached Homes in October 2020

Benchmark Price

Transactions

Market Overview for Townhouses in October 2020

Benchmark Price

Transactions

Market Overview for Condo Apartments in October 2020

Benchmark Price

Transactions

Regulation of Strata Insurance

Condo owners in Vancouver and B.C. have recently faced significant increases in their their strata insurance rates. According to a 2019 report commissioned by the B.C. Financial Services Authority, strata insurance premiums in B.C. increased by on average 40% in 2019 alone. Owners in Metro Vancouver faced even greater increases with an average increase of 50%. These costs have placed a headwind to condo prices in Vancouver as condo fees adjust to the new costs.

In response to the financial hardships caused by strata insurance premiums and COVID-19, the B.C. Ministry of Finance recently announced an amendment that, along with a proposed bill, will:

  • End referral fees between insurers or insurance brokers and strata property managers or other third parties
  • Require strata corporations to inform owners about insurance coverage, policy changes, and allow use of the contingency reserve fund
  • Protect strata unit owners against large lawsuits where the owner was not at fault
  • Change the minimum required contributions made by strata unit owners and developers to a strata corporation's contingency reserve fund

These changes will help condo owners deal with the financial burden of strata insurance and open the industry to more transparency.

What is Strata Insurance?

Glossary and Definitions

MLS® HPI: The MLS® Home Price Index (HPI) is an index by the Canadian Real Estate Association (CREA) that tracks the prices of homes in a neighborhood. It allows Canadians to quickly compare home prices across Canada and between periods of time without having to account for specific features of a property. Unlike market prices, which can fluctuate from month to month based on seasonal dynamics, the HPI provides a stable view tracks trends across a longer period of time. The HPI is reviewed every year in May to adjust for changes in the real estate marketplace.

MLS® HPI Benchmark Price: The MLS® Home Price Index (HPI) Benchmark Price is the HPI translated into a real-world price number.

Strata Insurance: Strata insurance is insurance used by a strata like a condominium to covers damages to common areas and assets and liability to the strata. It can also include fixtures built or installed as part of the original construction of each unit, even though these may not be common structures. The insurance can cover:

  • Buildings and structures associated with the strata including common areas such as the roof, parking garages, driveways, gyms, pools, etc.
  • Liability for any property damage or bodily injury suffered on strata property
  • Any fixtures that are part of the "standard unit" or original construction of each unit

Strata insurance does not usually include personal items and appliances that are part of a condo unit. It also does not cover the damages made by individual unit owners, such as in the case of water damage caused by a unit owner. These are usually covered by personal condo insurance.

Property types

Detached home: A detached home is your standard single-family home. It is a residential building that stands alone and is separately titled or legally a single unit.

Semi-detached home: A semi-detached home is similar to a detached home, except it shares a wall with another home. This pair of homes must make up an independent building and each should be separately titled or legally two separate units. There can only be two homes in a semi-detached building.

Townhouses: A townhouse is the middle between a detached/semi-detached home and a condo apartment. Like detached and semi-detached homes, they are often single-family units that have their own land and may be attached to other units. However, like condo apartments, they typically have to pay co-ownership fees for maintenance and may share some common features with their neighbors.

Condo apartment: This category includes all apartments and condominiums. These are complexes of residential units with common areas such as hallways, parking lots, stairwells, etc. They can be low-rise, mid-rise, or high-rise buildings. Unlike townhouses, there are no parts of the lot (the land of the building) where access is reserved for only one owner or occupant. There can be privately owned units and spaces inside the building.

Plexes are multi-story buildings with two to four individual units, usually one on each floor. They are a mainstay in Montreal and other cities in Quebec. Each unit is usually individually accessible via an external entrance with higher floors connected by staircases.

Property Classes

Freeholds: A freehold is any property where the owner owns both the house and the land it is built on. Common freehold property types include: detached, semi-detached, some townhouses, and farmland.

Condominiums: A condominium or condo is any property where the owner owns the home (or unit) but shares ownership of the land and other improvements with a condominium corporation. Common condominium property types include condo apartments and some townhouses.

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Data sourced from the Real Estate Board of Greater Vancouver (REBGV) and the Canadian Real Estate Association (CREA). Any analysis or commentary is the opinion of the analysts at WOWA.ca and should not be construed as investment advice. Please consult a licensed real estate professional before making a real estate investment decision. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA.