What it Takes to Be Different in Vancouver

Different

You may have heard that in Vancouver B.C. all things real estate are different. It is a chorus sung when in the absence of fact an opinion is proclaimed. After all, how else do you explain the vagaries? A strange and wonderful space, Vancouver real estate’s erratic is justified by saying – “it is different” here.

Lot’s of Sales

Of late you may have read, viewed or listened to local and distant news entertaining the topic of Vancouver’s high volume of sales and equally high prices. Prices that have changed our world. Globe and Mail report on Business tell us of 10 year averages increasing by 26% for detached homes and 53% for condos and town homes. These are dramatic big news numbers worthy of a big news organization.

Cron-IDX-Graphs-2015-04-24

Fewer Listings

While those high drama reports of exceptional sales numbers are burning up the news wires less noted is the substantial drop in the number of homes for sale during the past two years. A broad view of the total active listing inventory of three real estate boards in the lower mainland is down 19.6% from 25,092 in 2013 to 20,174 in 2015. This represents a significant number of homes not on the market!

Little Inventory

Depending on whether you are buying or selling specific areas may or may not prove advantageous. The statistics released by the Real Estate Board of Greater Vancouver for March 2015 show that the East side of Vancouver experienced a 39% drop in detached Active Listings compared to 2013. Big news? It should be and the question asked is why are east side residents not selling their homes?

East Side Story

Realtors® like to regale market place stories. Some are rooted in fact while others in their retelling garner a patina verging on embellishment that at first glance seems unreal. Embellishment aside, the current East Side story does seem unreal!

If fact is premised on trusting statistics you find a story which says that listings are almost non-existent and further, between March of 2013 and March of 2015 detached home sales increased by 121%.

By any measure that is a fantastical increase in the number of sales in a market with a marked drop in inventory. As a market watcher this can only lead to one thing – higher prices which for that same period resulted in a Median price increase from $868,000 to $1,137,500 – a 58% increase in two years!

Untenable Ramblings

Regardless of our deep blue ocean and tall majestic mountains price levels may have reached an untenable level. As a risk taking conservative when I consider the effort required by a family to service an on going financial mortgage commitment of $800,000 at 4% and a 5 year term on a purchase of $1,137,500, I shudder!

Indentured

It is a mean word that few would accept as descriptive of their decision to buy a home. For aside from the monthly mortgage payment there is the over reaching aspect of lender’s profit. In this 25 year mortgage $491,349.78 in interest must be paid with after tax dollars and represents more than one half of the purchase price.

Tidbits

With the acceptance of being indentured for 25 years or more I wonder, will there be enough money left in marginal budgets to pay for the new roof that will be needed, the 3 new hot water tanks, new sun deck, washer, dryer and fridge – all due before the mortgage is retired. What of the children? Let’s not forget the thousands of dollars spent on music lessons, ballet, hockey camps, special schools and the cost of family transport to and fro. Last, it may be blasphemous to draw attention to the infrequent dinner dates with your partner. Has that been accounted for?

Reflections

Tidbit reflections of Vancouver real estate perhaps! More likely these are reflections of personal undertaking that sets many Vancouver home buyers apart and leads us to ask if Vancouver real estate is really different?

With the understanding that real estate only functions when people are involved it becomes evident that these people who prepared to assume a lengthy and costly indenture, surely have strength of character. The presumption that follows is that it is this character which makes Vancouver real estate different.

Note: You can roll over the ‘green’ graphs to see the monthly changes.

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

April 25th, 2015 at 2:12 pm

Your description of what it takes to own a house in this market just causes me to continue to ask myself: what am I missing? How are families able to afford owning a SFH anywhere in Vancouver let alone on the west side? The influx of offshore money may explain some of the price increase over the years, but it certainly doesn’t explain how the average family can buy a house on the east side. Are there really average families buying houses anywhere in Vancouver? If there are, I fear for their situations if or when the market starts to make sense again. If either prices start to decline or interest rates start to rise it could get very uncomfortable for those homeowners.

April 25th, 2015 at 2:36 pm

@Mark
Re: Average Family: This may seem rhetorical but does that adjective exist in Vancouver?

April 25th, 2015 at 3:05 pm

I honestly don’t know what the reality is. In 2012 the median Vancouver total FAMILY income was $71,000.

I wish that I could take an accurate survey of homeowners on the west side to find out exactly how they afford their lifestyle. What is their job, their salary, the size of their mortgage, the size of their HELOC etc.

I know that this would never be possible but think how educational it could be for the rest of us on the outside looking in.

April 25th, 2015 at 3:18 pm

…we might find out that we all have cause for concern.

April 25th, 2015 at 3:33 pm

@Mark
re west side information: You have a good time with that one! In general off shore buyers won’t give you a local address nor might I add are they required to do so. It is almost as if you are selling your house to a Ghost. So many people, so much money, so many secrets.

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