The Foreign buyers tax, Mortgage stress test and incremental mortgage hikes have severely impacted the Vancouver real estate market in the past 2 years. The luxury home market has been hit the hardest: In 2017 there were 4,282 homes that sold over $1 million – in 2018 only 3,151 units were sold – a drop of 26%.
The drop is even more staggering for the $4 million plus luxury homes: in 2017 there were 382 units sold – in 2018 only 195 units sold – a drop of 49%!
A recent report by Sotheby’s International Realty stated “The underlying cause for lackluster top-tier market performance was rising consumer anxiety over the implementation of multiple housing taxes, and concerns about the unintended outcomes of ongoing government intervention.”
“In particular, the increased Foreign Buyers Tax to 20%, newly implemented Empty Homes Tax, increased annual school taxes for the portion of assessed home values above $3 million, and the introduction of a new 0.5% speculation tax for the 2018 tax year dampened confidence in the Vancouver housing market.”
These downward conditions now open housing possibilities for individuals who held back due to the sky rocketing prices apparent only a few years ago. The report had a bullish undertone where it stated that “While top-tier activity is expected to lag previous years, pent up demand from buyers and sellers who refrained from participating in 2017 and 2018 will flow into the market in the spring.”
According to a recent report released by Royal Lepage, Canada’s largest real estate markets are “catching their breath” from the frantic price rises seen over the past few years. Positive economic fundamentals, a strong economy, strong job growth and limited new housing stock are just a few of the factors that will eventually turn the pendulum on the housing market.
Prices cannot keep falling indefinitely so the big question is “where is the bottom?” The answer may be sooner than later. Vancouver has a surprisingly low unemployment rate of around 4.4% and the future of its economy is looking very bright. When you add the fact that the best and brightest from around the world are gravitating to the city and lots of in migration, demand may eventually outstrip supply especially if the inventory is unable to keep up.
Before you buy, make sure you know when is the best time to buy a house, and if you’re selling, ensure you’ll selling your house for the highest price. We can help. Contact us by email or by phone on 604 613 9000.