it's Spring and the 1st quarter of the year is done.
I have analyzed all of the stats for the 1st Quarter and here are some insights to our market here in Metro Vancouver:
20.7% of the houses that come on the market are selling. That trend is increasing and part of that increase is seasonal. However, their 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 throughout the winter 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 5.5 months worth of inventory on average and our attached market with 6.8 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:
For buying detached: West Vancouver as it offers a good selection of houses and bigger properties. You will find that you can get more than comparison to Vancouver's Westside. The activity is also at Buyers market activity level which allows us more of an opportunity to look and negotiate. However, the better properties attract multiple offers.
For selling detached: North Van and the Vancouver Eastside. This is where we are seeing the highest percentage of homes selling and the lowest amounts of monthly inventory. This is helping sellers attract multiple offers on good properties or on lots where one would build.
For buying attached: Richmond because there is a lot of inventory to chose from which helps put pressure on prices. Next would be the Vancouver Westside.
For selling attached: North Van, the Vancouver Eastside and Downtown Vancouver are experiencing "Seller's Markets". Over 21% of the homes are selling every month.it's Spring and the 1st quarter of the year is done.
I have put the Percentage of homes selling as well as the months of inventory we have in an graph form.
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 were thinking of Buying or anyone you know is thinking of Buying... now might be a very good time. One will save on the insurance premiums as well as interest with the current lower interest rates.
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.