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If You Have Investment Properties Earning Rent – You Must Read This

 If You Have Investment Properties Earning Rent – You Must Read This 

As COVID-19 makes its way through our lives and the economy like a hurricane sweeping over land, it leaves nothing untouched. Its has also affected rents. Cities like Vancouver and Toronto are seeing rent reduction rates that would have been unheard of at the beginning of the year. 

While rents in some Canadian cities have declined a bit or even risen slightly in the last few months, the cities of Vancouver and Toronto, homes of the priciest rental market in the country, have seen rents falling fast because of the pandemic. 

Last week, Rental.ca posted figures showing that compared to a year ago, rents in Metro Vancouver are down by about 9%.  The average rent demanded for a 2 bedroom apartment in Metro Vancouver had dropped by almost $450 to $2,478 a month. 

Reasons for rental declines: 

Flood of new rental inventory has hit the market   

In the pre COVID-19 economy, real estate investors with a portfolio of homes would be renting them out on the short-term rental market. They would be making more money renting out homes for days or weeks, than they would with traditional long-term leases. But now with the lockdown and restrictions on movement across borders and regions, the short-term market has virtually dried up overnight.  

This has made some owners seriously think about selling their investment properties, while others are being forced into the long-term rental market, adding much needed supply to the tight rental markets that the Lower Mainland has been experiencing for the longest time. 

New home owners stuck with 2 homes 

Some homeowners bought a new home before the lockdown and have yet to sell the old one. They are in a bind as this is no longer in a seller’s market and selling has become much more difficult. An option they face is to rent out the home that is for sale, bringing in some much needed funds, while they wait and hope for prices to rise again. 

Decline in international students 

The lockdown has forced a ban on international travel. Many universities are contemplating on line education that will not require international students to be physically on campus. Canada has over 300,000 international students per year studying at its institutes of higher learning. Their absence will be noticed and make a noticeable impact on rental properties and the economy. 

Decline in seasonal workers and visitors

Canada will have less immigration, fewer international students and, with the border closed for the foreseeable future, not nearly as many seasonal and part-time workers. All typically are renters. 

Tighter borders provincially and internationally means landlords who once offered costly short-term rentals, like those on Airbnb, have been hit hard in attractive cities like ours, whose economies rely more than most on the traveller. Former airbnb properties are now being marketed as long-term rentals. 

More rental units built ready for occupation

The dire rental-housing situation that Vancouver has faced over the last few years, has prompted the municipal and provincial governments to push for an increase in the construction and availability of purpose built rental units. Many of these building which were on the drawing board a 2-3 years ago, are now fully constructed and inviting tenants to rent. This has further increased the inventory of rental units available in the region. 

 
Home buyers are buying homes today for potential move-in dates 30, 60, or 90 days from now. If you are contemplating a move, contact us. We have the experience, tools and know how, to navigate this uncertain market.  

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REBGV Market Update For April 2020 – April Home Sales In Metro Vancouver Lowest Since 1982.

Last month life as we knew it, ground to a halt because of COVID-19, and so did Metro Vancouver’s real estate market. This was reflected in The April 2020 market report released by the Real Estate Board of Greater Vancouver (REBGV).

“Predictably, the number of home sales and listings declined in April given the physical distancing measures in place. People are, however, adapting. They’re working with their realtors to get information, advice, and to explore their options so they’re best positioned in the market during and after this pandemic,” said Colette Gerber, REBGV president-elect.

She added, “We’re seeing more innovation in today’s market, with realtors using different technology to showcase homes virtually, assess neighborhood amenities with their clients and handle paperwork electronically.”

Home Sales

April 2020 sales were 62.7% below the 10 year April average and were the lowest total for the month since 1982.

There were 1,109 residential property sales. This represented a 39.4% decrease from the 1,829 sales in April 2019 and a decrease of 56.1% from March 2020 when 2,524 homes were sold.

The number of detached properties sold was 388, 33.8% less than April 2019.

The number of apartments sold was 503, 43.2% less than April 2019.

The number of attached properties sold was 218, 39.1% less than April 2019.

Home Listings

April saw a plunge in new home listings. There were only 2,313 newly listed properties for sale on the Multiple Listing Service (MLS) in Metro Vancouver. This was 59.7% lower than the 5,742 new homes listed in April 2019, and a 47.9% decrease when compared to March 2020 when 4,436 homes were listed.

The total number of homes listed for sale in April decreased to 9,389 – a figure well below the inventory of April 2019 when 14,357 homes were listed and a 2.3% decrease compared to the 9,606 homes listed in March 2020.

Sales-To-Active-Listings Ratio

This is a good indication of the supply and demand forces in the market. Downward pressure on home prices can occur when the ratio is below 12% for a sustained period, and there is upward pressure when the ratio is above 20% for a number of months.

For all property types, the ratio in April was 11.8%. When broken down by property types, the ratio was:

  • 10% for detached homes
  • 14.7% for townhomes
  • 12.4% for condos

Home Prices

The MLS Home Price index composite benchmark price for all residential properties in Metro Vancouver was $1,036,000 in April. This was 2.5% higher than April 2019 and 0.2% higher than March 2020. Despite ongoing concerns about the economy and millions of Canadians out of work, the average price of a home in Vancouver went up. 

Paul Kershaw, UBC professor and founder of Generation Squeeze, says the rising prices, as sales fall is worrisome. 

“During the COVID-19 pandemic, our entire economy has been upended, our housing system has been hit with a massive shock, and no one knows where all of this will go,” he said.

Click here for a full report.

Working with our real estate professionals will enable you to set realistic expectations that help you achieve your real estate goals. If you are looking to buy or sell a home, contact us by email or call us on 604 913 1000.

 

 

 

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REBGV Market Update May 2019 – Modest Bounce In May, But Sales Remain Below Historical Averages

The latest report released by the Real Estate Board of Greater Vancouver (REBGV) showed that sales in May 2019 crossed the 2,000 units sold for the first time this year.

However, homebuyer demand remains below historical averages.

“High home prices and mortgage qualification issues caused by the federal government’s B20 stress test remain significant factors behind the reduced demand that the market is experiencing today” remarked Ashley Smith, REBGV president.

Home Sales

Residential home sales totaled 2,638 in May 2019, a 6.9% decrease from 2,833 sales recorded in May 2018 and a 44% increase from homes sold in April 2019. Last month’s sales were 22.9% below the 10 year May sales average. This was the lowest total for the month since 2000.

Detached homes – 913 sales in May 2019 – 926 sales in May 2018

Apartments – 1,246 sales in May 2019 – 1,431 sales in May 2018

Attached homes – 479 sales in May 2019 – 476 sales in May 2018

Benchmark price of all residential homes $1,006,400 in May 2019.

New Listings

There were 5,861 new listings for May on the Multiple Listing Service (MLS). This represents an 8.1% decrease compared to the 6,35 homes listed in May 2018 and a 2.1% increase compared to the 5,724 homes newly listed in April 2019.

Total Listings

The number of listed homes across Metro Vancouver also edged upward 2.3% between April and May, to 14,685, marking the highest number of properties for sale in the region since September 2014. In April 2019 there were 14,357 listings and in May 2018 there were 11,292 home listings.

Sales-To-Active Listings ratio

This ratio explains the relationship between supply and demand that influences price. When the ratio is around or below 12% for a sustained period, then there is downward pressure on prices, and when it is above 20% for a sustained period, there is upward pressure.

Detached homes – 14.2%

Townhomes – 20%

Condominiums – 12%

If you are looking to get into this market before prices start escalating, we are offering a wide range of homes suitable for any budget. Visit our website and browse our wide range of listings.

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Vancouver, BC, Canada
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