I have analyzed all of the stats for the 1st Quarter and here are some insights to our market right here in Greater Vancouver:
24.2% of the houses that come on the market are selling on average. That trend is increasing and part of that increase is seasonal. However, these are some factors that are causing our 1st Quarter activity to be stronger than it was last year:
1) Interest rates: The big banks have reduced the mortgage rates to be back at our all time low levels again. 5 year borrowing is under 2.99% and the prime rate is at 3.0%.
2) Confidence in the market: Prices have not declined as the market has maintained it's balanced state since the summer of last year and into the new year. Market sales activity have picked up and their are not as many listings on the market this year as their were last year. We are trending towards a Seller's market with our selling percentages close to 21%, which is the level for entering into a Seller's market.
3) Increase in the 1st time Buyer Property Transfer Tax threshold: Last year that threshold price was $425,000. This year it has just been increased to $475,000 allowing Buyers to spend $50,000 more without having to pay the Property Transfer Tax.
This is helping the entry market sell more homes which in effect causes the next market to sell more homes as those Sellers become Buyers and the market turns. This is leaving our detached housing market with 4.8 months worth of inventory on average and our condo market with 5.7 months. Both in a balanced market state.
Now... there are some areas that are hotter than others. The ones I see as good opportunities for Buying and for Selling are:
Port Moody and Maple Ridge as their is a good selection of houses. The new "Evergreen" skytrain will be a fantastic amenity for Port Moody. In Maple Ridge, you can buy rental houses that cash flow. The activity is also at Buyers market activity level which allows us more of an opportunity to look and negotiate.
For selling: Port Coquitlam and the Pitt Meadows. This is where we are seeing the highest percentage of homes selling and the lowest amounts of monthly inventory. Levels that we have in a Seller's market.
For buying condos: Coquitlam because there is a lot of new inventory to chose from and the Evergreen skytrain line will provide an improvement for travel and accessibility. This bodes well for rental returns as well as for re-sale.
For selling condos: Burnaby and Port Moody are experiencing "Seller's Markets". Over 21% of the homes are selling every month. Buyers are recognizing the many amenities those areas have to offer and so are builders. However, there will be a lot more inventory coming to the market once the developers are finished building so if you have a condo or townhouse to sell in those areas... now might be a good time.
I have put the Percentage of homes selling as well as the months of inventory in a graph below for your review.
What is going to be interesting moving forward into our 2nd quarter is the impact that the raise in lenders insurance premiums is going to do on the market? As of May 1st, CMHC and Genworth is increasing it insurance premium .05% to .40% percent when they lend on high ratio financing (Less than 35% down).
This is a fairly substantial increase on certain loan to values. For example on a 650k price with 10% down (585k mortgage) on a 25 year amortization, the premium jumps from $11,700 now to $14,040 after May 1st.
If you have any questions about the market in your neighbourhood or need assistance in planning your next real estate move, please feel free in calling me or simply filling out our contact form.
Sincerely, Posted by Tony Cikes on