David Setton : Answers In Real Estate

Please find below the Video Market Update from the Greater Vancouver Real Estate Board. 

The 2012 BC Property Assessment values grabbed the front page of The Vancouver Sun Wednesday (January 4). The headline (“West Van home values soar nearly one-third”) was slightly misleading, implying that West Vancouver homes outpaced other regions when in fact, comparable Vancouver West Side homes on a 50’ lot (more akin to suburban sized lots) increased by over 38%.

Needless to say, I was personally relieved to find my West Side condo’s assessed value had decreased by $60,000, mainly in the land value, despite units in my development selling for record-high prices throughout 2011.

These apparent discrepancies highlight some valuable home pricing tips:

1. Assessed values are lagging indicators – they represent a price based on a ‘snapshot’ value as of July 1, 2011. By the time the notices are mailed, the market may have changed dramatically.

2. Assessed values depreciate the buildings based on a formula, and do not capture all property improvements.

3. Some neighbourhoods, developments, streets, or even individual homes are more highly valued based on reputation, appearance, and other factors that may not be tangible.

Realtors use a combination of factors to value a home, most importantly, a much more granular comparison of market based or “sold” values. List prices are also used cautiously as a gauge of the ‘competition’ that a unique property may be facing (although List prices should never be used as an estimate of a home’s value).

How may BC Assessment’s Assessed Value be applied in relation to a market valuation when listing your home? Assessed values should be reviewed within the context of a relative comparison. For example, I recall Point Grey homes selling for roughly 25% above assessed values when working for a client in 2011. If I came across a similar Point Grey home selling for, say, 40% above its assessed value, I would investigate the reason, or conclude that the list price was inflated.

If you’d like a market assessment of your home, please feel free to contact me. In the meantime, let’s hope you are enjoying a lower assessed value to minimize your 2012 tax bill!

The 2011 Greater Vancouver housing market began with heightened demand in regional hot spots and concluded with greater balance between seller supply and buyer demand.

The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2011 reached 32,390, a 5.9 per cent increase from the 30,595 sales recorded in 2010, and a 9.2 per cent decrease from the 35,669 residential sales in 2009. Last year’s home sale total was 6.3 per cent below the ten-year average for annual Multiple Listing Service® (MLS®) sales in the region.

The number of residential properties listed for sale on the MLS® in Greater Vancouver increased 2.7 per cent in 2011 to 59,549 compared to the 58,009 properties listed in 2010. Looking back further, last year’s total represents a 12.8 per cent increase compared to the 52,869 residential properties listed in 2009. Last year’s listing total was 11.1 per cent above the ten-year average for annual Multiple Listing Service® (MLS®) property listings in the region.

“It was a relatively balanced year for the real estate market in Greater Vancouver with listing totals slightly above historical norms and sale numbers slightly below,” Rosario Setticasi,REBGV president said.

Residential property sales in Greater Vancouver totalled 1,658 in December 2011, a decrease of 12.7 per cent from the 1,899 sales recorded in December 2010 and a 29.7 per cent decline compared to November 2011 when 2,360 home sales occurred.

More broadly, last month’s residential sales represent a 34.1 per cent decrease over the 2,515 residential sales in December 2009, a 79.4 per cent increase compared to December 2008’s 924 sales, and a 12.6 per cent decrease compared to the 1,897 sales in December 2007.

The overall residential benchmark price, as calculated by the MLSLink Housing Price Index®, for Greater Vancouver increased 7.6 per cent to $621,674 between Decembers 2010 and 2011. However, prices have decreased 1.5 per cent since hitting a peak of $630,921 in June 2011.

“Our market remained in a balanced state for most of the year, although higher levels of demand for detached properties in the region’s largest communities caused prices in certain areas to rise higher than others,” Setticasi said. “For example, the benchmark price of a single-family detached home experienced double-digit increases in nine areas within the region over the last 12 months.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,629 in December 2011. This represents a 4.1 per cent decline compared to the 1,699 units listed in December 2010 and a 49.4 per cent decline compared to November 2011 when 3,222 properties were listed.

Sales of detached properties in December 2011 reached 630, a decrease of 18.1 per cent from the 769 detached sales recorded in December 2010, and a 30.2 per cent decrease from the 902 units sold in December 2009. The benchmark price for detached properties increased 11.2 per cent from December 2010 to $887,471.

Sales of apartment properties reached 774 in December 2011, a decline of 4.6 per cent compared to the 811 sales in December 2010, and a decrease of 32.9 per cent compared to the 1,154 sales in December 2009.The benchmark price of an apartment property increased 3.7 per cent from December 2010 to $401,396.

Attached property sales in December 2011 totalled 254, a decline of 20.4 per cent compared to the 319 sales in December 2010, and a 44.7 per cent decrease from the 459 attached properties sold in December 2009. The benchmark price of an attached unit increased 4.2 per cent between December 2010 and 2011 to $511,499. 

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To put it simply, now is a great time to invest in Arizona! Having lived and developed properties in Sedona, Phoenix, Chandler and Scottsdale for six years, I know it well. For those that have visited Arizona, it is known for its great shopping and golf courses. For me, it was the desert that always drew me back. Living here was a triathlon oasis and anyone who knows me well, knows that for half my life I competed in dozens of triathlon.

It seems like every day, news reporters tell us how poorly the US economy is doing. What these news reporters fail to recognize is that the United States remains the wealthiest country on the planet. The fact that the country is in a recession presents an opportunity to Canadians.

Many homes in Arizona are selling for less than it would cost to buy the dirt to build on. Most homes are insured at double the cost that they are actually selling for.

Once you have made the decision to invest, the first priority is to determine your goals. Are you looking for a second home to use as a vacation property? This scenario is simple and straight forward. Make sure you have a property manager to look after your home in your absence and look for a home in a gated community. If you are looking to rent the property to earn some income you can either choose a property close to downtown or in the outlying areas. Alternatively, there are even opportunities to 'rent back' to the original owner who has been unable to continue their mortgage.

Unlike in Vancouver, where you choose is not as important as the quality of the home itself. Because of the way Phoenix has developed over the years, many of the areas have a similar feel with major shopping centers never more than a few blocks away. I would recommend North Scottsdale if you are looking for something newer and Central Scottsdale for something close to the old shops and restaurants. That being said, buy into an area with good job growth and infrastructure that is already in place. A single level home is a good choice because Arizona is still a retirement state and you want to be able to attract older tenants.

Following, are a few pitfalls or things to be cognisant of. Be careful when buying with friends or family. Remember that they may have different goals than you do and always have a partnership agreement in place to resolve issues that may arise down the road. Have the home thoroughly inspected, especially if it has been vacant. Watch out for condominiums with high condo fees (Home Owner Association fees or HOA fees). Do not buy on leased land. Don't try to pick the perfect time to buy. Trying to find the bottom of the market is nearly impossible. Lastly, use a Realtor with at least 2 years of market knowledge. I know many experienced Realtors in Arizona and would be happy to refer you to one.

The Greater Vancouver housing market saw relatively typical home sale and listing activity in November.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties on the region’s Multiple Listing Service® (MLS®) reached 2,360 in November. This represents a 5.9 per cent decline compared to the 2,509 sales in November 2010 and a 1.9 per cent increase compared to the 2,317 sales recorded in October 2011.

Looking back further, last month’s residential sales total is 5.8 per cent below the ten-year average for sales in November.

“The pace of home listings entering the market eased slightly in November, compared to recent months, while sale levels remained fairly normal for this time of year,” Rosario Setticasi, REBGV president said. “November activity helped put our market firmly in balanced territory.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 3,222 in November. This represents a 26.3 per cent decline compared to the 4,374 new listings reported in October 2011, but a 6.3 per cent increase compared to November 2010 when 3,030 properties were listed for sale on the MLS®.

Looking back further, last month’s new listing total is 2.1 per cent above the ten-year average for November.

The total number of properties currently listed for sale on the Greater Vancouver MLS® sits at 14,090, a decline of 9 per cent compared to October 2011 but an increase of 13 per cent when compared to this time last year.

The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 7.2 per cent to $622,087 in November 2011 from $580,080 in November 2010.

Since reaching a peak in June of $630,921, the benchmark price for all residential properties in the region has declined 1.4 per cent.

Sales of detached properties on the MLS® in November 2011 reached 916, a decrease of 12.8 per cent from the 1,050 detached sales recorded in November 2010, and a 21.3 per cent decrease from the 1,164 units sold in November 2009. The benchmark price for detached properties increased 11.4 per cent from November 2010 to $890,204.

Sales of apartment properties reached 1,000 in November 2011, a 4.9 per cent decrease compared to the 1,052 sales in November 2010, and a decrease of 28.4 per cent compared to the 1,396 sales in November 2009. The benchmark price of an apartment property increased 2.7 per cent from November 2010 to $399,686.

Attached property sales in November 2011 totalled 444, a 9.1 per cent increase compared to the 407 sales in November 2010, and a 15.1 per cent decrease from the 523 attached properties sold in November 2009. The benchmark price of an attached unit increased 4.5 per cent between November 2010 and 2011 to $510,960.

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Latest Video Market Update

I spent the weekend touring the newly completed Patina Development.  This 42 story building is located in the heart of Vancouver at 1028 Barclay Street.  It is destined to be one of Vancouvers most prestigious developments. The units are well designed and the views are simply stunning.  

The new YMCA anchors the building.  My good friend just purchased a home at Patina.  His primary reason for buying into the building was to be close to this facility.  For those not familiar with the YMCA, it offers everything from child care to health and welfare centers across Canada.  The health center at Patina is well appointed with everything you need to stay in shape from a lap pool to a huge fitness facility.  The YMCA has been around for more than 125 years. Their slogan is "bringing people together" and they certainly have at Patina.

As a developer and realtor, I can appreciate a building that is planned from the inside out.  This is one of those buildings.  Each floor plan is carefully designed to minimize wasted space and takes advantage of the views. Homes range in size from 552 square foot studios up to 2700 square feet for the sub-penthouses and 3,170 square feet for the penthouse.  The penthouse itself comes with a 2,000 square foot roof terrace.

The finishes are what you would expect for a newly built modern high rise downtown.  Some of the appointments that I appreciated were the european style cabinetry, solid core interior doors, thick profile granite countertops and Miele appliances.  Below is a quick video of taken with my phone (sorry about the quality).

Please visit our Open House at 3021 15TH AVE W in Vancouver.

See details here

Open House on Sunday, November 20, 2011 1:00 pm - 5:00 pm

Rare find Heritage home. Perfect layout with two bedroom legal suite. Granite counters, stainless steel appliances, Kohler faucets, automatic awnings over your sundeck and the backyard. Built-in barbecue for your outdoor entertainment. Basement suite rent fully furnished at $2,400 per month.

Vancouver is known around the globe as one of the most livable cities in the world.  This is great, but it also makes it one of the most unaffordable cities in the world.  This is where laneway housing steps in to fill the void.  It creates "hidden" density in some of Vancouver's most desirable single family neighbourhoods and provides an opportunity for badly needed rental units.

Laneway houses are essentially tiny single family homes ranging in size from 500 square feet up to 1,000 square feet that are built in your back yard.  They cannot be subdivided or sold seperately from the main house.  They can only be used for additional family members or for rental income.

Affordable housing is a big topic with the municipal elections around the corner.  To give credit where it is due, Gregor Robertson did a great job coining laneway housing as a part of his "Eco-Density Initiative".  This form of housing is meant to "help reduce the city's carbon footprint, expand housing choices, and ensure Vancouver remains one of the most liveable cities in the world."

Here are four reasons why laneway housing makes sense:

1) They add hidden density to single family neighbourhoods

2) They're Green

3) They provide a new form of housing for those that can't afford Vancouver's expensive house prices

4) They are visually appealing and very livable 

November 2, 2011

With a sales-to-active property listings ratio of 15 per cent, the Greater Vancouver housing market continues to hover at the lower end of a balanced market and has been trending in that direction over the past five months.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties on the region’s Multiple Listing Service® (MLS®) system reached 2,317 in October, a 1 per cent decrease compared to the 2,337 sales in October 2010 and a 3.2 per cent increase compared to the previous month. Those sales rank as the second lowest total for October over the last 10 years.

“Right now, prospective home buyers have a good selection of properties to choose from and more time to make decisions,” Rosario Setticasi, REBGV president said. “Home sellers should be mindful of local market conditions to ensure they are pricing their properties competitively.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,374 in October, which is on par with the 10-year average. This represents an 18.3 per cent increase compared to October 2010, when 3,698 properties were listed for sale on the MLS®, and a 23 per cent decrease compared to the 5,680 new listings reported in September 2011.

The total number of properties listed for sale on the Greater Vancouver MLS® system currently sits at 15,377, which is 9.3 per cent higher than the 14,075 properties listed for sale during the same period last year. October was the first month that the total number of property listings showed a decrease this year.

The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 7.5 per cent to $622,955 in October 2011 from $579,349 in October 2010. However, since reaching a peak in June of $630,921, the benchmark price for all residential properties in the region has declined 1.3 per cent.

Sales of detached properties in October reached 974, which represents virtually no change from the 976 detached sales recorded in October 2010, and a 34.5 per cent decrease from the 1,487 units sold in October 2009. The benchmark price for detached properties increased 11 per cent from October 2010 to $884,778, but decreased 1.3 per cent compared to the previous month.

Sales of apartment properties reached 958 in October, a 2.6 per cent decrease compared to the 984 sales in October 2010, and a decrease of 40.4 per cent compared to the 1,607 sales in October 2009. The benchmark price of an apartment property increased 3.2 per cent from October 2010 to $402,702, but decreased 0.7 per cent compared to the previous month.

Attached property sales in October totalled 382, a 1.3 per cent increase compared to the 377 sales in October 2010, and a 37.4 per cent decrease from the 610 attached properties sold in October 2009. The benchmark price of an attached unit increased 6.5 per cent between October 2010 and 2011 to $519,455, and increased half a per cent compared to the previous month.

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BMO Capital Markets reported recently that "The averaged Priced Home in Vancouver is now 11.2 times family income, more than double the ratio of a decade ago." And "it is a market that is subject to an elevated risk of a correction." hinting that we are in a bubble and that prices could collapse at any time.

This statement is partly true. Let me explain further. Like many things, what makes this comment true boils down to the 80/20 rule. 20% of high priced homes in the lower mainland are skewing the statistics and it is important to remember that it is only the most desirable areas in the lower mainland that are now what I would classify as no longer affordable.

News reporters feed on statements like the one made by BMO and it makes the job of a real estate agent more challenging than needed.

As a comparison, imagine if two car dealerships moved into Vancouver. One dealership only sold Farraris and the other only sold Hondas. The average price for the cars in the Farrari lot sell for $500,000 and the average price for the Honda lot is $30,000. Therefore the average price for a car in town is $265,000. This is simply not an accurate statement

Take out the sales of homes priced over $1,000,000 and the actual price of a detached home is closer $600,000 and the average price of a condominium is around $315,000.

These findings come from a recent study from Vancouver-based Urban Futures which uses Landcor Data figures. The study breaks down the sales data into five quintiles representing equal sales in price brackets from the highest to lowest. Considering the top quintile (or top 20% of sales by value), which ranged up to $17,500,000, the average single family price was a lofty $1,690,000, twice the average price for all sales. The remaining 80% (where the typical buyer is found) the average price was $591,000 or 27% below the overall average price.

For condominiums, when factoring in the upper quintile the comparison is $904,000 vs $311,000

The reality is that the average buyer can still find relatively affordable homes with detached prices at under $650,000 and condo prices at about half of that price. The Real Estate Board of Greater Vancouver notes that the one in every five homes sold this year for less than $350,000.

Vancouver home prices are the highest in Canada, but for the majority of buyers they are far below what most media suggests.

October 4, 2011 -

Consistent increases in property listings and fewer home sales over the summer months has helped move the Greater Vancouver housing market into the upper end of a buyers' market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties on the region's Multiple Listing Service® (MLS®) reached 2,246 in September, a 1.2 per cent increase compared to the 2,220 sales in September 2010. Those sales also rank as the third lowest total for September over the last 10 years.

"There's more competition amongst home sellers in today's market, providing more options for prospective buyers," Rosario Setticasi, REBGV president said."Buyers now have more properties to choose from and more time to make decisions compared to the spring season."

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,680 in September, the third highest volume for September in 17 years. This represents a 20.1 per cent increase compared to September 2010 when 4,731 properties were listed for sale

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My clients are always asking me to predict when and how the Vancouver housing market will change. Sellers want to know if they should sell now or if prices will continue to rise. Buyers want to know when the "bubble" is going to burst.

There are some fundamentals in Vancouver that keep price high - limited land base, strong immigration, basic geography and desireable lifestyle. But here is one more reason that you may not have thought of as to why Vancouver prices have remained high over the years: Vancouver politics.

As a developer, I can attest to the difficulty of building a multi-family project in the City of Vancouver. Zoning bylaws in Vancouver are extremely restrictive and it can take up to 6 years, with considerable cost and complexity along the way, to gain rezoning and other approvals for a single highrise tower. This introduces more risk to the developer, in addition to slower returns on investment.

The solution to introducing more supply, and therefore bringing down the cost of housing in Vancouver is simple:

1. Reduce planning regulations and red tape;

2.Allow property developers more leeway to build taller buildings faster;

Now we all know that politicans represent the people (at least leading up to an election), and that regulations are put in place for a reason. However, I see so many wasted opportunities that it makes me want to cry over my super-food-smoothie at times. For example, what is with the low roofed Canada Line stations on Cambie? Wouldn't a tower overhead be mutually beneficial to both residents and Cambie Village merchants, not to mention encouraging transit use? What a great missed opportunity to create housing! Instead, we are left with a pretty structure to enter the station.

People often talk about higher density housing and in some cases even support it. But when projects are planned and public hearings are held to gain community support, polititians more often than not cave to local (and vocal) "not-in-my-backyard" (NIMBY) protests. Legitimate concerns need to be addressed, but the cost of forever protecting large single-family lots, even against small density increases such as laneway homes, is one we all pay.

Contrary to popular belief, I have never seen the value of homes in a neighbourhood with increased density go down after rezoning! Ever. It always goes up because developers accept the risk of buying land, adding value through increased density, and selling the newly created homes at a higher price per square foot basis.

On May 10th Vancouver council voted to increase Cambie corridor building heights to 12 storeys, Developers immediately recognized the value of increased density allowances and for this reason, the lucky homeowners along Cambie are seeing their lots (with older, smaller homes) sell for $3 to $3.5 million.

In my opinion, much higher buildings are neccessary in these locations, esspecially around the Oakridge and South East Marine Drive transit stations (which would have led to even higher values for the Cambie Corridor lots).

One more trend to consider: 70% of the residential housing in Vancouver is still detached homes, and yet Baby Boomers and busy young families alike are asking for smaller homes, homes on smaller lots with less maintenance, and homes with revenue suites (higher density). Not keeping up with this demand continues to drive up our property prices.

Next time a developer comes knocking at your door, invite him in! He (or she) may just have an offer you don't want to refuse.