News Release - Real Estate Board of Greater Vancouver
FOR IMMEDIATE RELEASE
Home sale and listing activity dip below historical averages in October
VANCOUVER, BC – November 2nd, 2016
Reduced home sale and listing activity are changing
market dynamics in communities across Metro Vancouver.
Residential property sales in the region totaled 2,233 in October 2016, a 38.8 per cent decrease
from the 3,646 sales recorded in October 2015 and a 0.9 per cent decrease compared to
September 2016 when 2,253 homes sold.
Last month’s sales were 15 per cent below the 10-year October sales average.
“Changing market conditions compounded by a series of government interventions this year
have put home buyers and sellers in a holding pattern,” Dan Morrison, Real Estate Board of
Greater Vancouver (REBGV) president said. “Potential buyers and sellers are taking a wait-andsee
approach to try and better understand what these changes mean for them.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,981
in October 2016. This represents a decrease of 3.5 per cent compared to the 4,126 units listed in
October 2015 and a 17 per cent decrease compared to September 2016 when 4,799 properties
were listed.
Last month’s new listing count was 9.5 per cent below the region’s 10-year new listing average
for the month.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver
is 9,143, a 4.5 per cent decrease compared to October 2015 (9,569) and a 2.3 per cent decrease
compared to September 2016 (9,354).
The sales-to-active listings ratio for October 2016 is 24.4 per cent. Generally, analysts say that
downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a
sustained period, while home prices often experience upward pressure when it surpasses 20 per
cent over several months.
“While sales are down across the different property types, it’s the detached market that’s seen the
largest reduction in home buyer demand in recent months,” Morrison said. “It’s important to
work with your local REALTOR® to help you navigate today’s changing trends.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro
Vancouver is currently $919,300. This represents a 24.8 per cent increase compared to October
2015 and a 0.8 per cent decline compared to September 2016.
Sales of detached properties in October 2016 reached 652, a decrease of 54.6 per cent from the
1,437 detached sales recorded in October 2015. The benchmark price for detached properties is
$1,545,800. This represents a 28.9 per cent increase compared to October 2015 and a 1.4 per
cent decrease compared to September 2016.
Sales of apartment properties reached 1,178 in October 2016, a decrease of 23.7 per cent
compared to the 1,543 sales in October 2015.The benchmark price of an apartment property is
$512,300. This represents a 20.5 per cent increase compared to October 2015 and a 0.3 per cent
increase compared to September 2016.
Attached property sales in October 2016 totaled 403, a decrease of 39.5 per cent compared to
the 666 sales in October 2015. The benchmark price of an attached unit is $669,200. This
represents a 25.7 per cent increase compared to October 2015 and a 1.1 per cent decrease
compared to September 2016.
Correction Notice:
Altus Group, the provider of the national MLS® Home Price Index (MLS® HPI), discovered a
calculation error in their September 2016 reporting. This error resulted in variances of between
0.1 and 5 per cent in the benchmark prices the REBGV released for September 2016. Corrected
September MLS® HPI numbers can be found at www.rebgv.org.
CLICK HERE to download the complete stats package. (PDF \ 0.5 MB)
*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include:
Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, New Westminster, Pitt Meadows, Maple Ridge, and South Delta.
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New mortgage rate stress test for all insured mortgages
Why is the Department of Finance implementing these new changes?
These new regulations are aimed at protecting the financial security of Canadians and supporting the long term stability of the housing market in Canada.
CHANGE: mortgage rate stress test to all insured mortgages. What is it?
Currently insured mortgages with a term of less than 5 years, and/or a variable rate mortgage had to qualify on the Bank Of Canada (B.O.C) rate.
Under the new Department of Finance regulations, all insured mortgages, regardless of term (fixed or variable) will now have to qualify on the B.O.C rate.
How does this affect a home buyer with less than 20% down payment?
The biggest effect will be on the amount that the home buyer will be able to qualify for. Previously, the five year fixed qualified at the lender contract rate. Now, the home buyer must qualify at the Bank of Canada Rate.
Previously, for example, a five year fixed mortgage at 2.39% rate, was qualified at a 2.39% rate, under the new rules a five year fixed rate mortgage at 2.39% must be “stress tested” by qualifying at the B.O.C posted rate (Currently 4.64%).
The net result is an approximate 20% reduction in the amount of mortgage money available.
How does this affect a home buyer with a down payment of 20% or more?
There is no significant impact anticipated for home buyers placing 20% or more down. MCC has many different options and there are still a variety of solutions for the majority of home buyers.
Do I still have the option to refinance my home?
Yes, home buyers will still have the ability to refinance up to 80% of the value of their property. Specifics may differ from lender to lender.
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QUALIFYING RATE
is the Bank Of Canada Conventional 5 year fixed posted rate.
CONTRACT RATE
is the rate offered by the Lender on the home buyer’s actual mortgage payments are based upon.
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WHAT IS AN INSURED MORTGAGE (High Ratio) VS. NON-INSURED MORTGAGE
(Conventional/low ratio)
An Insured Mortgage is when a home buyer has less than 20% down or the mortgage is insured by either Canada Mortgage and Housing Corporation (CMHC), Genworth, or Canada Guaranty.
- The insurance premium is passed onto the borrower.
- This insurance provides security to the Lender in the event of home buyer default.
- A Non-Insured Mortgage is when a home buyer has 20% or more for a down payment and therefore is not required to pay mortgage insurance.
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LENDER DISTINCTION
Are all Lenders affected equally by the new regulations?
Some Lenders take out insurance on all of their mortgages regardless of whether they are high ratio or not. Under the new regulations, brokers may need to work with Lenders that do not insure all of their mortgages in order to help home buyers qualify.
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The challenge through the upcoming days will be to rethink strategy and get pre-approved again with the stress test factor included.
Start the conversation to perhaps either increase down payment or start the process of looking for a new home within your NEW imposed budget.
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To place this into perspective, in 2008, fixed rates were 5.99%. This is still much higher than the current qualifying rate of 4.64%. Interest rates that borrowers will actually get are still expected to remain near record lows.
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CHANGE: Restricted insurance for low-ratio mortgages. What is it?
Mortgage loans that Lenders insure for conventional mortgages will be required to meet the eligibility criteria that previously only applied to high ratio insured mortgages. The new criteria for low-ratio/conventional mortgages will include the following requirements:
- Property must be owner occupied - rental properities are now excluded.
- A maximum amortization of 25 years
- A maximum property purchase price of, or below $999,999.99
- Minimum credit score of 600
- Maximum gross debt service (GDS) of 39% of home buyers income and a total debt service (TDS) of 44% calculated by using the Bank of Canada conventional 5 – year fixed posted rate.
CHANGE: New reporting rules for primary residence capital gains exemption. What is it?
Currently, any financial gain from selling your primary residence is tax-free and does not have to be reported as income. As of this tax year, the capital gains tax is still waived, but the sale of the primary residence must be reported at tax time to the Canada Revenue Agency.
Who does it affect?
Everyone who sells their primary residence will have a new obligation to report the sale to the CRA; however, the change is aimed at preventing foreign buyers who buy and sell homes from claiming a primary residence tax exemption for which they are not entitled.
Why?
While officials say more data is needed, Ottawa is responding to extensive anecdotal evidence and media reports showing foreign investors are flipping homes in Canada and falsely claiming the primary residence exemption.
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