Home prices in Vancouver haven't gone down because people affected by COVID couldn't afford them to start with
Benchmark price for homes has stayed static; though rents have decreased
JUSTIN MCELROY (CBC NEWS) - COVID-19 has changed elements of living in Metro Vancouver in so many ways, from transportation to the economy to drug and liquor policy.
But the price of buying a home? Well, some things stay the same.
"There is a little bit of disconnect right now," said Central 1 deputy chief economist Bryan Yu.
Even with unemployment in B.C. at 13 per cent and a forecast GDP reduction of 7.8 per cent this year, the benchmark price of a property in Greater Vancouver has essentially remained constant — going from $1.02 million in February to $1.03 million in May.
While there's evidence on sites like Craigslist that the price of rentals has dropped in the last three months, Yu said that the ownership market has stayed static and could even see a slight uptick when official numbers are released next week for June.
He believes one key reason is that people most impacted by the economic downturn weren't players in Vancouver's housing market to begin with.
"Whether it's the accommodation sector or restaurant services ... the economic impact has predominantly hit the lower end of the income spectrum," said Yu.
"For higher income individuals still in the market, it's likely they were still in the market. They were able to work or stay at home, in some cases able to save money."
Troubles on horizon?
At the same time, Yu said Vancouver's real estate sector couldn't stay impervious to COVID-19 forever.
"As we move forward into the fall, there's going to be a little more pressure," he said, adding that lower immigration would also have an affect.
"The economy itself is not strong. It's going to be quite weak as we go forward."
On Monday, the Canada Mortgage and Housing Corporation released a housing outlook, forecasting the lower range for the average home price in Metro Vancouver would fall from $892,790 in 2020 to $809,215 by 2022.
"Average house prices will decline with weaker household budgets and the uncertain nature of the economic reopening," wrote CHMC senior analyst Braden Batch and senior specialist Eric Bond.
However, they also said Vancouver's "ownership markets are less exposed" to COVID-19, compared to the rental market.
"Real estate buyers tend to be older than renters. Therefore, they are less likely to have lost their employment as a result of the economic shutdown," they wrote.
The provincial government announced a host of housing policies in 2018 and 2019 — and have put in emergency COVID-19 measures to help protect renters — they have no immediate intention to make further changes.
Finance Minister Carole James says the government will be closely monitoring the situation.
"We're going to watch the housing market," said James.
"With COVID, there have been mixed results … but still a great challenge, so we're continuing on with our measures, and not letting up from making sure we look at affordable housing for people."
As COVID-19 dramatically slowed down public hearings and new staff reports, municipalities saw their housing plans effectively frozen, but that is beginning to change. The City of Vancouver is considering a new policy that would create rental tenure zoning in arterial streets across the city, in exchange for six-storey buildings for stratas, instead of the current four.
A public hearing is expected in July, and Housing Minister Selina Robinson is excited by the development.
"Local governments have been cautious, but we're starting to see more pick up," she said.
"During COVID, things changed in terms of acting on new things, but I'm really pleased to see the activity pick up. It means that local governments recognize we still need to be recognizing housing affordability."
MARTIN MCMAHON (NEWS 1130) – Home prices are expected to drop around Metro Vancouver, but questions remain about just how bad the decline will be, and when we’ll see it happen.
We could see price declines of as much as 18 percent nationally over the next year, in the assessment of the Canada Mortgage and Housing Corporation.
UBC housing economist Tom Davidoff says, given the economic shocks brought on by COVID-19, it’s surprising we haven’t seen more movement on housing prices.
“It’s hard to believe that if while employment rates and closed or barely functioning businesses persist for another year, that you wouldn’t see damage to the housing market and further damage to other asset markets,” he explains. “I think Evan Siddall made a reasonable forecast based on his guess of where the economy’s heading. It’s been remarkable to me that we haven’t seen much damage to the housing market except very few transactions.”
Davidoff notes that while there are fewer buyers, there are also fewer sellers, meaning price reductions have been limited so far.
“As time goes on, you expect that there’ll be more forced sales or people just deciding it’s time to sell,” he adds.
Meanwhile, others feel we’ll have to wait until mortgage deferrals start expiring to get a sense of the true impact.
Earlier this month, an assessment shared by credit rating agency DBRS Morningstar projected a decline of 10 to 15 percent in home prices in the Vancouver area, even under a moderate scenario.
The agency acknowledged there are many variables, but the big question, it noted, is how long it will take for the economy to bounce back, with the agency noting the speed of the recovery will be key in whatever happens in reality.
Opinion: Tuesday decision could bring relief for homeowners who feel they were hit unfairly with empty home tax after they missed deadlines.
DAN FUMANO (PROVINCE) - Some Vancouver homeowners previously left with no recourse after complaining they had been unfairly hit with the empty homes tax will now have another chance for justice.
Vancouver’s council voted Tuesday to approve staff recommendations for tweaks to the empty-home-tax bylaw, seeking to improve “fairness” and “alignment with the intent of the tax,” by reducing the number of homeowners stuck with the tax when they shouldn’t be. For owners whose properties were subject to the tax after they missed declaration deadlines for 2017 and/or 2018, this means they can now file complaints, and, if successful, could be eligible for refunds.
Vancouver’s empty homes tax, which came into effect for 2017 under the previous council and was described as the “first of its kind in North America,” has since generated millions of dollars for affordable housing initiatives. It was intended to encourage the conversion of underutilized properties into long-term homes, and has been recognized as a success on that front, by sources both inside and outside city hall. The Canada Mortgage and Housing Corp.’s most recent rental market report for Vancouver showed almost 6,000 condo units added to the long-term rental market between 2018 and 2019, citing government policies as a likely factor in this “unprecedented shift.”
But while many supported the tax’s goals, the city has acknowledged there was also a problem with it: The bylaw, as written, did not allow for late declarations after a cut-off point. To avoid the tax, property owners need to declare their properties were either occupied, or eligible for an exemption such as major renovations or the owner’s hospitalization. And while declarations were filed for more than 99 per cent of properties, hundreds went undeclared for reasons including confusion, incorrect mailing addresses or major life events like medical issues.
Some of those owners have said that even though their home was occupied or otherwise exempt, they were still assessed the full tax because they missed the deadline to declare, and the subsequent late-declaration deadline. After that, they were told, they had no recourse, regardless of their reason for missing the deadlines.
Those aggrieved homeowners included Jason Weselowski, who told Postmedia News last month that he had missed both the initial and late-declaration deadlines in 2018 because of his hospitalization for cancer treatment. Weselowski found himself on the hook for more than $8,000, he said, with no apparent chance for remedy.
Weselowski was optimistic Tuesday that council’s decision could give him the chance for relief.
He’s still fighting cancer, he said Tuesday, “and it’s definitely been hard, with the COVID-19 restrictions, I’ve had a number of procedures that have been put off.”
“But I’m feeling the healthiest I have in years, so I guess I’m going to be alive to get my refund, hopefully.”
The tax was initially set as an extra levy of one per cent of a property’s assessed value, but, last November, Vancouver’s current council hiked the rate to 1.25 per cent for 2020.
In addition to allowing complaints for older cases from 2017 and 2018, council’s decision Tuesday will also extend the late-declaration deadline going forward from December to July of the following year.
Updates on Real Estate news happening in your city.