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, 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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Here Are Some Great Ideas On Buying A Home, For First Time Home Buyers

Owning a home is a dream and a goal for most of us. But today’s first time homebuyers face numerous challenges in the form of higher prices and government regulation, which makes this dream more difficult and out of reach for some.

So as a potential first time homebuyer, you have to change the way you think and act differently. Here’s how:

Get a renter to help with the mortgage payment.

If you are buying a home, then convert the basement into a suite that can be rented out. If you are buying an apartment, get a 2 bedroom one and rent out the other bedroom. You will have to compromise your privacy, but this is a useful way to get that first home you always wanted.

Lower your expectations.

Instead of a 3-bedroom home in a desired neighborhood, settle for a smaller home in a more affordable neighborhood. Fewer people spend most of their lifetimes in one home. Think about your lifestyle for the next 5-10 years and make a decision based on that.

Share the ownership.

Buying a property with family or friends may be an easy way to get that first home. This is useful if you have friends or relatives who may have that extra cash and are keen on investing with you. You need to ensure that there is a watertight agreement that avoids any future problems when you decide to sell the home or buy out the other party.

Be patient and realistic.

Take your time to furnish or renovate the home. Yes the home may not be exactly what you want, but in time you can slowly make it into what you want it to be. So Don’t immediately jump into a large spend on furniture or start fixing things the way you want the home to look like, do it progressively.

If you cannot buy, then keep saving.

If you are determined to buy a home eventually, don’t let the prices and regulations deter you. Keep saving and putting your money away for the down payment. Eventually you will find that ideal home and your life will be changed forever!

If you have any questions about this blog, or any home-related issues, please contact us and one of our real estate professionals will be glad to help.

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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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