February is here and the Kitsilano housing market is doing precisely what we expected from it. Both the attached (condo/townhome) and detached (houses) inventory levels are on the rise, with buyers finally starting to see a slightly better selection than what we have seen in months past. Sales volume is up slightly in both markets as well, which is typical when comparing to the often slow December. Prices have climbed substantially in the detached market in each of the past two months, with no real sign of slowing down, while the attached market saw prices slip back down after an unexpected spike in December. Multiple offers seem almost common place at the moment for detached homes, while we really aren’t seeing that at all in the attached market.
All indications suggest more of the same for February and March, with general stability prevailing. While the detached market is definitely leaning towards a ‘seller’s market’ at the moment, there are still plenty of good deals to be had in the condo market if you can find the right fit. More selection should improve buying choices in the coming months.
Don’t expect much of an impact from the new mortgage rules announced last week, as their effects will be far more muted than national media coverage would suggest. The new rules really only affect fringe buyers who are trying to push their affordability limits to the brink. For most, and for the market in general, the magnitude of these changes is slight.
Kitsilano - Attached
More stats and graphs after the jump…
Kitsilano - Detached
Vancouver West - Attached
Vancouver West - Detached
Last modified: February 3, 2011
Ben,
I take issue with your claim that the magnitude of new mortgages rules is/will be slight.
Anecdotally, more than 75% of new mortgages in the past year have been of the 5/35 variety. I would hardly call numbers of that proportion the fringe. I would encourage you to read this well-written analysis: http://bit.ly/fj2Zkl
We in Canada have a home ownership rate of 70%, which rivals that in the US before the meltdown (It now stands at 66.5% in the US). I have to believe that our ownership rate would not be as high as it is, and by extension, prices as high as they are, without this large proportion of so-called fringe buyers. These 5/35ers (or previously, 0/40ers) have taken advantage of low interest rates and relaxed lending standards to enter a marketing many ought not have entered, and their absence as predicated by tighter mortgage rules will be greatly missed on the demand side.
In short, your claim that the recently announced mortgage rules will have a meager impact is largely unsubstantiated, with no statistical support.
We have done everything we can to borrow demand for housing from the future, and I believe this will finally catch up to us as 30Y bond rates begin to creep up to fight what has been erroneously reported as insignificant core inflation.
The lack of a rebuttal from Ben is disappointing but not surprising.
Every realtor in town has a vested interest in keeping this city’s property bubble pumped up.
It’s in every realtor’s best interest to keep people emotionally invested in the market, motivated them to buy or sell.
Market direction is immaterial, as long as realtors can find a way to spin it into motivation to act, that’s really all that matters.
To wit: Realtor Michelle Alton’s missive to clients when the new regulations came out. If I may paraphrase from the original as published here http://bit.ly/hhb8Uv this is realtor conflict at its very worst:
Potential buyers: get in now, because you may not qualify for a mortgage after Mar 18.
Potential sellers: get out now, because there won’t be as many buyers come Mar 18, and you may not realize the price you want.
Make your own conclusions about who some realtors are looking after first.
Heinz & C7,
My apologies for the delayed response, as I have been away from the office.
Heinz, while I do not disagree or dispute the statistics you have offered, I do stand by my opinion on this one for several reasons:
The first, and most relevant at the moment in my mind, in the percentage of buyers, especially in the detached markets, that are not local. Foreign investment in Vancouver property is very strong right now and is, in my mind, a larger driver in current market conditions than low interest rates. I do not foresee this changing in the short term.
The second is that, while many mortgages are currently done using a 35 year term, more often than not this is done to protect cash-flow more so than it is to stretch affordability. I will use myself as an example, as I currently am on a mortgage with a 35 year term even though I easily qualified for the same mortgage on a 25 year term. With rates being low, extending the term created additional monthly cash flow to pursue other investment opportunities. Were the rates higher, I would simply go back to the 25 year term. This is a scenario that is extremely common with my client base.
And finally, I just simply believe that there is too much demand in the Vancouver market for ‘minor’ changes in mortgage lending to have a great impact. I did not mean to suggest that it would not impact the buying power, or even buying possibility, of some. I just don’t believe that it will have a large scale impact on market conditions at this time.