The Vancouver Life Real Estate Podcast The Vancouver Life Real Estate Podcast

In April 2024, the Vancouver real estate market experienced an unprecedented surge in inventory, reaching its highest point in four years. This surge was particularly notable given the market's recent trends and economic uncertainties. The sudden influx of properties for sale had significant implications for both buyers and sellers, prompting a re-evaluation of market dynamics.
Total sales in April showed a modest increase compared to the previous year, suggesting some resilience despite prevailing economic challenges. However, the more substantial jump from the previous month indicated a potential shift in momentum. Despite these increases, sales remained below the 10-year average, signaling a sluggish market characterized by cautious buyer behavior and constrained affordability.
The most striking aspect of April's market data was the sharp rise in new listings, which surged by a remarkable 65% compared to the same period last year. This surge was also significant when compared to the previous month, with a 40% increase in listings. Moreover, new listings exceeded the 10-year average by a considerable margin, marking a departure from recent trends. This sudden influx of listings can be attributed to various factors, including delayed expectations of interest rate cuts and economic uncertainties affecting both buyers and sellers.
Looking ahead, predicting the market's trajectory remains challenging due to various economic and policy factors. The potential for rate cuts by the Bank of Canada in June could influence market dynamics, although their immediate impact may be limited. Broader economic challenges, such as declining GDP and increasing business insolvencies, suggest that significant changes in the real estate market may take time to materialize.
Despite the increased inventory providing more options for buyers, uncertainties persist, making it difficult to gauge the market's future direction. Economic indicators, such as declining per capita GDP and rising unemployment in the United States, add further complexity to the outlook - not to mention the pending US election. 
However,  we should recognize that Canada has all the tools necessary to change its current trajectory and if we look at better leveraging other parts of our economy, like focusing on Canada's robust resource-based economy, our economy will not only recover but return to state of growth, confidence and affordability - especially in the housing market .
April's market data reflects a complex interplay of economic factors shaping Vancouver's real estate landscape. While the surge in inventory offers opportunities for buyers, uncertainties surrounding economic performance and policy decisions highlight the need for  them to be cautious as well. This will put pressure on Sellers as inventory climbs and doesn't get consumed at the levels we've become accustom to. The market's trajectory will depend on various factors, including future rate cuts, economic recovery efforts, and broader policy changes aimed at revitalizing Canada's economy - but it is possible we could see a recession before things get better.


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Contact Us To Book Your Private Consultation:
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Dan Wurtele, PREC, REIA
604.809.0834
dan@thevancouverlife.com


Ryan Dash PREC
778.898.0089
ryan@thevancouverlife.com


www.thevancouverlife.com

The recent developments in the Canadian housing market paint a daunting picture, especially in light of the ambitious promises made in Budget 2024. The government's pledge to construct an additional 2 million homes over the next 7 years appears increasingly improbable when examined against the current realities across various industries.
Consider housing starts - Despite the government's optimistic goals, data reveals a staggering housing supply deficit in Canada. The ratio of growth in the working-age population to housing starts has widened significantly, indicating a severe shortfall in housing construction. Moreover, building permits, a leading indicator, have plummeted to their lowest levels since 1983, foreshadowing a bleak outlook for future construction.
When we look to mortgages, renewal rates for fixed-rate mortgages have seen an unexpected increase in payment obligations, while there has been a notable shift towards shorter-term fixed-rate mortgages. However, the majority of homeowners possess substantial equity in their properties, signaling a sense of stability in the housing market. 
The government has also woken up to the amount of mortgage Fraud we are seeing in our system. The government has finally acknowledged the prevalence of it, and has proposed solutions including direct income verification from the CRA, a measure that is long overdue and essential for maintaining the integrity of the mortgage system.
Credit card loans and HELOC payments are also on the rise, indicating increased financial strain among Canadians. Corporate insolvencies are climbing, and banks are reducing their own exposure to local business loans, further exacerbating economic pressures and driving down our overall GDP.
Despite economic uncertainties, Canadians remain optimistic about the housing market, buoyed by prolonged stability and government promises... However, the disparity between sales volumes and population growth highlights underlying challenges in the market. Even though we have more sales this April over last April, the number of sales overall has continued to diminish compared to long term historical averages. Think 2005 when April saw over 4,000 sales (nearly 50% more than we see today) with 600,000 less people in the region.
Lastly, we look at the weakening Canadian Dollar. The potential for interest rate cuts by the Bank of Canada threatens to devalue the Canadian dollar, exacerbating inflationary pressures and lowering living standards. Economic indicators suggest a fragile recovery,
 characterized by labor market uncertainties, a cautious Federal Reserve, an inverted yield curve, and fluctuating oil prices.
While the Budget 2024's housing initiatives aim to address pressing issues, the prevailing economic landscape presents formidable obstacles to their successful implementation. From housing supply deficits to escalating debt levels and external economic factors, the road ahead is fraught with challenges that must be carefully navigated to achieve meaningful progress in the Canadian housing market.


_________________________________


Contact Us To Book Your Private Consultation:
📆 https://calendly.com/thevancouverlife


Dan Wurtele, PREC, REIA
604.809.0834
dan@thevancouverlife.com


Ryan Dash PREC
778.898.0089
ryan@thevancouverlife.com


www.thevancouverlife.com

The Consumer Price Index (CPI) for March revealed a 2.9% year-on-year increase, slightly up from February's 2.8%, primarily driven by surging gasoline prices. However, the report unveiled a concerning trend in the Bank of Canada's preferred measures of core inflation. Both CPI median and CPI trim not only declined on a 12-month basis but also fell well below 2% when measured over three and six months. This decline in core inflation underscores the dominance of shelter costs in driving overall inflation, with mortgage interest expenses rising by 25.4% and rent by 8.5%. Excluding shelter costs, consumer prices rose by a modest 1.5% year over year.


This data adds weight to arguments favoring a rate cut by the Bank of Canada in June, as lower rates could effectively address the rising shelter-driven inflation. However, the potential impact of such a cut might not be as significant as previously anticipated, given the approaching slower season and the likely modest reduction of only 0.25%. Yet, sentiment in the housing market remains buoyant, with recent months witnessing an increase in home prices, largely driven by optimistic sentiment.


In parallel, the Federal Budget 2024 places a significant emphasis on housing, earmarking $8.5 billion of the $53 billion total spending over the next five years for this sector. The government aims to address the affordability crisis by unlocking 3.87 million new homes by 2031, predominantly through initiatives focused on increasing supply - we'll see how realistic this is as there's an awful lot of skepticism arising around the feasibility of this ambitious target, as it necessitates a substantial increase in annual home constructions, potentially straining resources and exacerbating construction material costs.


The budget introduces various measures to incentivize housing supply, including the Housing Accelerator Fund, Apartment Construction Loan Program, and Affordable Housing Fund. Additionally, initiatives like leveraging federal land for housing development and investing in infrastructure aim to facilitate the creation of new homes. However, concerns are raised regarding the effectiveness of these measures, particularly in light of challenges such as a shortage of construction trades and logistical hurdles in implementing zoning reforms and building approvals.


Furthermore, changes in capital gains tax regulations, notably raising the tax rate for gains over $250,000 from 50% to 67%, could have profound implications for the housing market. Investors may expedite selling off assets to avoid the higher tax rate, potentially impacting market dynamics in the short term. Additionally, the budget's deficit spending raises concerns about future economic stability, as it may exacerbate inflationary pressures and hinder the ability to navigate future downturns or unprecedented events effectively causing potentially greater or deeper pain in future recessions


While the budget demonstrates a commitment to addressing housing affordability, questions persist regarding the feasibility and long-term implications of the proposed measures (think trades, speed, investment and cost) especially amidst broader economic uncertainties and challenges.


_________________________________


Contact Us To Book Your Private Consultation:
📆 https://calendly.com/thevancouverlife


Dan Wurtele, PREC, REIA
604.809.0834
dan@thevancouverlife.com


Ryan Dash PREC
778.898.0089
ryan@thevancouverlife.com


www.thevancouverlife.com

In a landscape of economic uncertainty and shifting market expectations, the Bank of Canada's decision to maintain its overnight rate at 5% on Wednesday marks the sixth consecutive hold. This is solidifying a rate that has remained unchanged since July, now spanning nine months. With the next announcement slated for June 5th, Canadians are hoping to find relief but a level of uncertainty still remains and expectations continue to be on the move. With that said, there has been extended period of stability over the last
 year and possibly lasting until at least 2025 when the Bank projects inflation to finally reach its 2% target.

Despite indications of excess supply in the Canadian economy, the Bank anticipates growth in the coming years, albeit amidst lingering inflationary pressures, particularly in the housing sector. Financial markets, however, foresee a departure from this status quo, anticipating a series of rate cuts starting in June. This speculation is fueled by mounting evidence of economic strain, including a recent uptick in unemployment, signaling potential challenges ahead.

Meanwhile, south of the border, the US economy continues to outperform expectations, buoyed by robust consumer spending and resilient business activity, albeit accompanied by stubborn inflationary pressures. However, recent data suggests that the Federal Reserve may postpone rate cuts until September, as consumer prices continue to rise, prompting concerns about how that could impact the upcoming presidential election.

The juxtaposition of economic indicators paints a complex picture, leaving analysts and policymakers grappling with the question of whether inflation can be tempered without triggering a recession. With each passing day, new data points emerge, fueling speculation and uncertainty about the future trajectory of interest rates and the possibility of recession.

In Canada's largest city, Toronto, the real estate market faces mixed signals, with declining home sales but resilient prices, especially in the condo segment. Conversely, Calgary and Edmonton experience surging demand and dwindling inventory, driving substantial price appreciation and highlighting migration patterns influenced by affordability.

Amidst these economic fluctuations, one thing remains clear: the road ahead is uncertain, and stakeholders must navigate a landscape fraught with both challenges and opportunities, as they await further developments in the months to come.


_________________________________


Contact Us To Book Your Private Consultation:
📆 https://calendly.com/thevancouverlife


Dan Wurtele, PREC, REIA
604.809.0834
dan@thevancouverlife.com


Ryan Dash PREC
778.898.0089
ryan@thevancouverlife.com


www.thevancouverlife.com

In March 2024, the Canadian housing market experienced another notable increase in home prices, particularly in the condominium segment, which reached a new all-time high. This surge in prices reflects ongoing trends in the housing market, characterized by persistent demand and limited supply. The condominium market's resilience, despite broader economic conditions and rising interest rates, underscores the segment's attractiveness to buyers seeking relatively more affordable options in an increasingly expensive market.

More and more we are hearing about rising mortgage delinquencies and When you consider the March 2024 statistics an analysis of Mortgage Delinquencies. Despite concerns about a potential mortgage renewal crisis, the data reveals that Canada's mortgage delinquency rate remains relatively low, especially compared to other countries like the UK and USA. The comparison offers insights into the robustness of Canada's housing market and its ability to weather economic fluctuations.

Moreover, we explore the impact of inflation on mortgage interest costs, a significant factor influencing housing affordability. In Canada, where mortgage interest costs are included in the Consumer Price Index (not the case in most countries), the surge in these costs contributes to inflationary pressures, affecting overall affordability for homeowners.

We also delve into the new 'Renters Bill of Rights' and its implications for rental housing providers. The government's initiatives to regulate the rental housing market are raising concerns among landlords, potentially affecting their profitability, usability
 and investment incentives for would be housing providers. This regulatory environment may lead to a slowdown in rental property development, exacerbating existing supply shortages in rental housing.

Furthermore, the announcement of a $6 billion federal housing program aimed at funding provincial housing infrastructure signals government intervention to address housing affordability and supply issues, or at least attempt to. By incentivizing municipalities to adopt policies that promote housing development, the program aims to alleviate supply constraints and stimulate construction activity - such as putting a freeze on development costs for the next 3 years.

February 2024 housing stats are also out and we delve into them in detail on this week's podcast, providing additional insights into market dynamics, including sales volumes, new listings, inventory levels, and the sales-to-active ratio. Despite fluctuations in these indicators, largely to the upside, the overarching trend reflects a market that is skewed towards sellers, with limited inventory and high demand contributing to rising home prices.

Looking ahead, the housing market remains a hot topic amidst tight inventory and rising prices despite lending conditions. Anticipated adjustments in response to potential interest rate movements underscore the market's sensitivity to economic factors, policy changes and of course, affordability.


_________________________________


Contact Us To Book Your Private Consultation:
📆 https://calendly.com/thevancouverlife


Dan Wurtele, PREC, REIA
604.809.0834
dan@thevancouverlife.com


Ryan Dash PREC
778.898.0089
ryan@thevancouverlife.com


www.thevancouverlife.com

The recent announcement by the Immigration Minister to cap growth targets in Canada underscores the profound impact of immigration on the nation's demographic landscape. Over the past two years, Canada has experienced significant population growth, largely attributed to the influx of temporary workers and foreign students, which has exerted immense pressure on the rental market. This surge has seen rental rates skyrocket to unprecedented levels, with an annual increase of 8% and a staggering 30% surge since the pre-pandemic era.

Notably, there exists a striking correlation between the influx of non-permanent residents and the escalating rental rates, highlighting the crucial role played by this demographic segment in driving housing demand. The surge in non-permanent residents, which has risen  from comprising a mere 0.5% of Canada's population in 1975 to a current level of 6%, reflects a trend that is deemed unsustainable.

In response to these challenges, the government has announced plans to reduce the population of non-permanent residents by 20% over the next three years, aiming to alleviate the strain on the rental market and moderate population growth. However, concerns linger regarding the timeliness and effectiveness of this measure, given the significant downturn in permanent residency applications observed in recent months.

The anticipated decline in population growth is expected to have far-reaching implications for Canada's economic trajectory, with projected annual growth rates dropping to just 0.8% by the following year and further tapering to 0.7% by 2027. This represents a stark departure from the pre-pandemic years and presents substantial headwinds to economic expansion.

In tandem with these immigration-related developments, the government has unveiled a comprehensive Renters' Bill of Rights aimed at safeguarding tenant interests and ensuring fairness in the rental market. However outside of providing Renters with an opportunity to improve their credit score, it's really lip service by the federal government in an attempt to gain popularity among Gen Z & Millennials. 

Additionally, out east our friends in Toronto are dealing with a very strange announcement - Mayor Olivia Chow is pushing a new initiative that proposes taxing stormwater to address "environmental concerns" while generating dedicated funding for stormwater management. In
 other words, they are going to tax the rain water that falls on your home.

However, amidst these policy "interventions" or whatever you want to call them, challenges persist in the housing supply landscape, particularly for single-family homes. Housing starts have plummeted to a 34-year low, exacerbating existing shortages and further complicating efforts to address affordability concerns. Although condominium construction remains buoyant, with starts nearing all-time highs, the discrepancy between demand and supply continues to pose a formidable challenge.

In light of these multifaceted challenges, uncertainties abound regarding the efficacy of policy responses and their ability to address the underlying issues plaguing Canada's housing market and demographic dynamics. As stakeholders grapple with the intricacies of trying to create economic growth, affordability, and environmental sustainability, the path forward remains complex and fraught with uncertainties.




_________________________________


Contact Us To Book Your Private Consultation:
📆 https://calendly.com/thevancouverlife


Dan Wurtele, PREC, REIA
604.809.0834
dan@thevancouverlife.com


Ryan Dash PREC
778.898.0089
ryan@thevancouverlife.com


www.thevancouverlife.com