ANITA BALAKRISHNAN (CANADIAN PRESS) - The real estate market in Vancouver had its best September on record this year in terms of the number of homes sold. The Real Estate Board of Greater Vancouver said on Friday that 3,643 homes were sold last month, up 56.

The real estate market in Vancouver had its best September on record this year in terms of the number of homes sold.

The Real Estate Board of Greater Vancouver said on Friday that 3,643 homes were sold last month, up 56.2 per cent from the 2,333 sold in September 2019.

Sales were also up 19.6 per cent from the 3,047 homes sold in August.

The MLS home price Index composite benchmark price for all residential properties hit $1,041,300 in September, up 5.8 per cent from September 2019.

While a wave of homes hit the market last month, it was not enough to keep up with demand and low supply has pushed prices higher, said real estate board chairwoman Colette Gerber. 

There were 6,402 properties newly listed for sale in September, up 10.1 per cent from August.  But the sales-to-active listings ratio — a key metric used to analyze home prices — was 27.8 per cent, above the 20-per-cent threshold where prices tend to rise.

Gerber says low interest rates and changing housing needs during the COVID-19 pandemic have also influenced the market, which is recovering from a lockdown that slowed sales in the spring selling season.

Agents sold 730 attached homes (such as townhomes and rowhouses) and 1,317 detached homes in September, as sales in both categories rose more than 70 per cent from the same time a year ago. 
Apartments, meanwhile, made up the biggest share of sales at 1,596, but were up 36.9 per cent year-over-year.

Detached homes are seeing the biggest price appreciation. At $1,507,500, the benchmark price of Vancouver detached homes in September was up 7.8 per cent from September 2019.

The benchmark price for Vancouver apartments in September was $683,500, up 4.5 per cent year-over year, while the benchmark price for attached homes was $809,900, up 5.2 per cent from September 2019.

KENNETH CHAN (DAILY HIVE) - New data shows home buyers in Metro Vancouver are still willing to pay for the premium of being within close walking distance from a SkyTrain station.

While there is currently an aversion to public transit, the health crisis has only had a minimal effect on buyers’ willingness to pay for the above-assessed value for an apartment, according to real estate marketing and analytics firm Roomvu.

For every kilometre away from the closest station, buyers are likely to pay 0.61% less over assessed value in the initial COVID period (March 15 to May 30) — down slightly from 0.63% in the pre-COVID period (January 1 to March 14).

“There was a strong relationship between the distance from the closest transit location and the percentage differences between sales price and assessed value,” reads the report.

“The result clearly indicates that apartment units close to the stations are still being sold at a premium over their assessed values in the post-COVID lockdown period.”

The distance penalty per km from the closest station is highest for Burnaby North (+3.7%), followed by Burnaby South (+2.1%), Vancouver East (+1.9%), New Westminster (+1.3%), Vancouver West (+0.7%), North Surrey (+0.1%), and Richmond (-0.3%).

“It looks like access to transit got more valuable over the course of time,” said Thomas Davidoff, economics and professor at UBC’s Sauder School of Business, in a statement.

“Prices of transit-friendly homes rose over the course of the year in spite of the far-reaching negative economic consequences of the pandemic.”
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On average across the region, most apartments sold are priced above their assessed value, with the final sales prices for these homes at 4.4% above the assessed value, with buyers willing to 4.6% above assessed values during COVID compared to 4.3% before the pandemic.

NICHOLA SAMINATHER (THOMSON REUTERS) — Bank of Canada Governor Tiff Macklem’s reassurance that interest rates will remain low for at least two years could unleash a wave of speculative demand in the country’s hottest housing markets, realtors and mortgage brokers warned.
Canadian authorities are hoping a raft of stimulus measures and decade-low interest rates will spur credit growth and housing investment, helping offset the economic hit from the coronavirus pandemic and oil prices hovering near multi-year lows.

“If you’ve got a mortgage, or you’re considering to make a major purchase … you can be confident that interest rates will be low for a long time,” Macklem told reporters after the central bank held rates steady on Wednesday.

That comment could boost housing demand in an economy with an unemployment rate close to the highest in decades and consumer insolvencies expected to spike in coming months, brokers said.

“In a country engaged in the most spectacular stimulus program … the suggestion that everybody should run out and buy a house or a car is a bit much,” said Ron Butler of Toronto-based Butler Mortgage. His office saw record inquiries this week even before Macklem’s statement.
Macklem’s comments on Wednesday also seemingly put the central bank at odds with the government’s mortgage agency, which last month tightened mortgage insurance rules for riskier borrowers to help curtail “excessive demand and unsustainable house price growth.”

In an emailed response on Thursday to a Reuters request for comment, Macklem said the Bank of Canada had highlighted that high household debt levels were a vulnerability but that the priority now was supporting a recovery and the return of jobs, which also ensures borrowers are able to pay their mortgages.

Supporting the recovery and reducing the vulnerability of high debt levels are “entirely aligned,” he said.

STIMULUS BLURS ECONOMIC PICTURE
Evan Siddall, chief executive of the Canada Mortgage and Housing Agency, tweeted on Thursday that low rates and stricter underwriting could co-exist.

“Surely you can reconcile the need for low rates to stimulate borrowing by people with strong credit characteristics with a policy that restrains excessive borrowing by those with weaker credit characteristics,” he said.

But unprecedented levels of government stimulus have made borrowers’ true economic status less clear, Butler said.

Canadian home sales rebounded sharply in May and June following the weakest April on record, data from the Canadian Real Estate Association showed. In Toronto, Canada’s biggest city, home prices jumped nearly 12 per cent in June from a year earlier.

The average sale price in June for all home types was $930,869 in Toronto and $1.03 million in Vancouver.

Government support — worth about $230 billion (US$170 billion), according to the Department of Finance — and loan deferrals by banks have bolstered home prices, and pushed expected declines toward the end of this year or early 2021, said Nathan Janzen, senior economist at Royal Bank of Canada.

“Then we will see the true health of household balance sheets,” he said.
People buying properties could now find themselves with negative equity in their homes if those declines materialize, said Vancouver-based Oakwyn Realty agent Steve Saretsky.

CMHC last month forecast home price declines of between 9 per cent and 18 per cent over the next 12 months.

“If you buy a home today, you have to be extremely confident in your work situation,” Saretsky said. “I don’t think you have a free market when you have mortgage deferrals and unlimited quantitative easing and $2,000 (unemployment) checks.”

John Pasalis, president of Realosophy Realty, said that while it was normal for central banks to encourage borrowing during economic downturns, Macklem’s explicit message to take on mortgages would likely encourage speculative buying.
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“When investors dominate the market, prices get inflated beyond where they should be,” he said.