This week has brought significant developments to the Vancouver real estate market, with major changes both locally and internationally that are poised to impact buyers and sellers alike. The Federal Reserve held its key interest rate steady, but signaled potential rate cuts as early as September due to a cooling job market and easing inflation.

This announcement, coupled with disappointing U.S. job growth and a rising unemployment rate, has led to market volatility. The Sahm Rule, which predicts a recession when the unemployment rate rises by 0.5 percentage points within a year, has been triggered, adding to fears of an economic downturn. As a result, markets are now pricing in U.S. rate cuts below 4% over the next 12 months, which could open the door for similar or more aggressive reductions in Canada in 2024.

Locally, the B.C. government’s abrupt reversal of newly enacted tenancy laws has caused further uncertainty, broken trust and further aggravated landlord/tenant relationships. Originally, the law extended the notice period for vacating tenanted properties from two to four months, but widespread backlash from the real estate industry & the general public prompted a quick amendment to three months.

Adding to the complexity, the Federal government introduced 30-year amortizations for first-time home buyers (FTHB) on August 1, with the intention of making homeownership more affordable. However, while monthly payments might be lower, the total interest paid over the life of the mortgage will be higher, effectively increasing costs for buyers.

This policy, like previous initiatives, appears to have been implemented with little consultation and may benefit Banks more than homebuyers - or anyone for that matter. The impact on the market remains to be seen, but it is clear that such measures are more about political optics than providing meaningful relief.

At the same time, Canadians are grappling with an increasingly burdensome tax environment, with 47% of income now going toward taxes—more than what is spent on shelter, food, and clothing combined. This high tax burden makes it difficult for many to save for a down payment or enter the housing market, exacerbating the challenges facing potential homebuyers.

The latest real estate statistics for July indicate a softening market in Vancouver. Average home prices dropped by $60,000, and total sales were 5% below both the previous month and the same time last year, marking the third consecutive month of declining sales. The market appears to be grinding to a halt, with buyers hesitating due to high costs and economic uncertainty.

New listings also decreased for the third month in a row, although overall inventory remains high, particularly for detached homes, which are now at a five-year high.

Overall, the Vancouver real estate market is entering a more conservative phase, characterized by slowing sales, high inventory, and softening prices. With economic uncertainty and a high cost of living, many potential buyers are holding off, waiting for clearer signs of stability or more favorable conditions. As the market adjusts to these recent developments, both buyers and sellers will need to navigate a complex and rapidly changing landscape.

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Dan Wurtele, PREC, REIA

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dan@thevancouverlife.com

Ryan Dash PREC

778.898.0089
ryan@thevancouverlife.com

www.thevancouverlife.com

The economic landscape in both the US and Canada is showing significant shifts that have important implications for homeowners, the housing market, and the broader economy. Recently, the Bank of Canada (BoC) made a notable move by cutting interest rates by 0.25%, hinting at further cuts to come. This action aligns with market expectations, with a cumulative 0.5% cut so far and forward guidance pointing to an additional 0.50% reduction, potentially ending 2024 at a 4% rate. This decrease from 5% to 4% has offered some relief to variable mortgage rate holders. For instance, a $500,000 mortgage would see monthly payments drop from $2,684 to $2,387, a substantial annual saving of $3,600 or about 12%.

In the United States, inflation has eased from 3.3% to 3%, primarily due to lower consumer spending, raising the likelihood of a rate cut in September by 85.7%. The Federal Reserve has maintained a 5.5% rate for 12 months, a full 100 basis points higher than Canada’s current rate. As both countries trend towards lower inflation, the sentiment grows that inflation is under control, with a path to 2% inflation expected within a year, accompanied by gradual rate cuts potentially ending at 3% by late 2025.

However, the housing market’s health is nuanced. While mortgage originations are increasing, signaling a potential recovery, several key metrics still require careful consideration. In Canada, rental market dynamics are shifting significantly. The recent CPI print showed an 8.5% year-over-year increase in rent, though the month-over-month increase was the lowest in two years, influenced by a record number of rental completions. There are currently 140,000 rental units in the construction pipeline, expected to add 6% more rental stock nationally and 15% in British Columbia over the next two years. This surge in supply might alleviate high rental rates, but challenges persist as private investors shy away from rental investments due to new policies. For instance, Bosa recently halted two purpose-built rental towers due to financial unfeasibility driven by new amenity cost charges and revised development cost charges.

Housing starts have been declining steadily for three years, with new starts down 9% nationally in June to 241,000, below expectations of 255,000. Building permit applications also dropped 12% in May, indicating potential future supply constraints. In British Columbia, permits fell 53% month-over-month, partly due to a rush to secure favorable CMHC financing before regulatory changes.

Despite these challenges, there are signs of stabilization. Mortgage originations rose 0.3% month-over-month in May, with annual growth at 3.5%, suggesting a potential bottoming out in late 2023. Predicted future rate cuts could further support this recovery over the next 18 months. Fixed-rate mortgages, particularly 3 and 4-year terms, dominate new loans, accounting for 55% of all new mortgages.

As we approach the end of the month, preliminary sales data shows a balanced market for the second consecutive month, with slight declines in median and average home prices. Inventory levels and sales figures are stabilizing, indicating a cautiously optimistic outlook for the housing market. However, the overall economic environment remains complex, requiring ongoing monitoring of key metrics and trends.

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Dan Wurtele, PREC, REIA

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dan@thevancouverlife.com

Ryan Dash PREC

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ryan@thevancouverlife.com

www.thevancouverlife.com

In June, inflation unexpectedly dropped from 2.9% to 2.7%, surpassing expectations of 2.8%. Despite this decrease, the shelter cost index remains a significant driver of inflation, with a current increase rate of 6.2%, compared to 4.8% last year. Mortgage interest costs surged by 22%, and rent has increased by 8.8%, marking the highest rise since March 1983. However, excluding shelter costs, consumer prices only rose by 1.3%.

This better-than-expected inflation report led to market predictions of a 90% chance of a rate cut at the upcoming Bank of Canada (BOC) meeting. With employment at 22-year low and business insolvencies rising, a 0.25% rate cut seems likely, potentially bringing the current rate of 4.5% down, which we hope is still high enough to exert downward pressure on inflation. The impact on the housing market remains uncertain; another rate cut might increase the number of sellers, although buyers seem to remain on the sidelines.

Retail sales data also supports the likelihood of a rate cut. Retail sales fell by 0.8% month-over-month, and excluding volatile items, they dropped by 1.4%. In 2024, retail sales increased in only one month and have been flat since 2022, despite a 6% increase in the population. This stagnation suggests that Canadian consumers are financially stretched, likely due to high mortgage payments.

Housing starts provide further context to the economic challenges. In April, Prime Minister Trudeau promised to build 3.87 million homes by 2031. However, housing starts fell by 9% month-over-month in June and are down 14% from the same month last year. To meet Trudeau's target, housing starts would need to double from last year’s levels, but they are currently 114% below the required mark. The situation is particularly dire in British Columbia, where starts fell by 12% and are 38% below June 2023 levels. In Toronto, new condo sales, a leading indicator for housing starts, are at their lowest since 1997.

This decline contradicts the government's promises, with little incentive for builders to increase housing supply due to rising taxes, fees, and restricted access to affordable credit. The government's efforts have only expanded the size of the government by 42% since 2015, without noticeable improvements in efficiency.

The Prime Minister and parts of his cabinet have also been flirting with the idea of a primary home equity tax with a government-funded think tank, Generation Squeeze. This proposed tax aims to address housing inequity by adding a surtax on homes valued over $1 million, supposedly affecting only the top 12% of high-value homes. Critics argue this approach is politically motivated and overlooks the real issues driving housing prices, such as immigration, development costs, and availability of credit - plus in markets where the average house price exceeds $1mil are many.

Market updates indicate that housing prices fell in June for the first time in 2024 and are expected to drop further in July. As of July 29th, average prices were down by $68,000, and median prices by $10,000. Sales volumes are slightly lower than last year, indicating a slow market. The rest of the summer is expected to see a gradual decline, with potential market stimulation in the fall if there is a third rate cut and an increase in inventory.

Overall, the Canadian economy is facing significant challenges with inflation, housing,

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Dan Wurtele, PREC, REIA

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dan@thevancouverlife.com

Ryan Dash PREC

778.898.0089
ryan@thevancouverlife.com

www.thevancouverlife.com

In June, inflation in the USA declined by 0.1% to 3%, marking the lowest rate in 12 months and a significant drop from the 9.1% peak two years prior. Despite this improvement, Federal Reserve Chair Jerome Powell emphasized that inflation remains a concern and further positive data is necessary to justify rate cuts. The next Fed announcement is scheduled for July 31, with markets predicting potential rate cuts starting in September.

In Canada, inflation was slightly higher than expected last month at 2.9%, compared to the forecasted 2.6%. This discrepancy is largely attributed to a recent change in the composition of the CPI basket by Statistics Canada. Mortgage interest continues to contribute significantly to the inflation rate, accounting for 1.3% of the total 2.9%. With the rate cut cycle ongoing and the weight adjustments in the CPI basket, the upcoming announcement on July 24 could yield surprising results. Markets are currently anticipating rate cuts in September.

A new report from the Bank of Canada (BoC) indicates that the overnight rate has risen higher than expected due to misjudged transitory inflation and liquidity issues stemming from government borrowing. This has led to an increase in mortgage payments, which has reduced borrowers' overall consumption by 3% since 2022, with a forecasted increase to 5% by 2027. Mortgage payments have risen by an average of 9% since 2022 and are expected to double to 17% by 2027. This shift diverts funds from consumption to debt servicing. Personal accounts suggest these figures might be underestimations, with some experiencing over 60% increase in mortgage payments, heavily weighted towards interest.

Canada's employment situation is deteriorating, with a loss of 1,000 jobs in June, falling short of the expected 25,000 gain. This has pushed the unemployment rate to 6.4%, a 1.6% increase from post-pandemic lows, and the highest in seven years excluding the pandemic spike. The construction industry is getting hammered, with a 3% decline over three months. 99% of new jobs created in the past quarter have been part-time, and the employment rate has dropped to 61%, the lowest in over 20 years. Job vacancies have decreased significantly from 1 million in 2022 to 575,000, driven by rising business delinquencies, now at 1.5%.

Toronto's real estate market saw a 4.5% increase in home sales in June, but this still represents the lowest June sales in 24 years, with a 16% year-over-year decline and a 28% drop for condos. Despite expectations that rate cuts would rejuvenate the market, inventory levels have surged, up 67% year-over-year and 84% for condos, reaching a 14-year high. The market is flooded with new units, leading to falling condo prices. The monthly condo cash flow index has improved since late 2023 but remains negative, with average condos running a $1,000 monthly deficit.

Vancouver's active inventory surpassed 15,000 listings for the first time in five years, with expectations of reaching a 10-year high soon. Detached homes are leading this increase in inventory, despite record-low single-family home starts over the past 35 years. The condo segment is expected to see a spike in listings in the coming months due to new regulations affecting investment properties.

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Dan Wurtele, PREC, REIA

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dan@thevancouverlife.com

Ryan Dash PREC

778.898.0089
ryan@thevancouverlife.com

www.thevancouverlife.com

The Vancouver real estate market has largely held strong in 2024, with prices rising for the first five months. However, a significant downturn appears to be building. High interest rates for two years, a ten-year low in sales volumes, and a spike in consumer and business insolvencies are all pointing to a decline in real estate prices.

The June numbers are out, and we’ll dive into them to discuss how low prices may go. Additionally, we’ll provide updates on insolvency figures, the SSMUH initiative, and new tenant laws requiring landlords to give four months’ notice if the new owner plans to live in the property.

June's total sales were 2,398, down 19% year-over-year and 13% month-over-month, marking the second consecutive monthly decline and the slowest since 2019. With sales 24% below the ten-year average and rising inventory levels, owners are choosing to stay in their homes, while buyers remain hesitant. The expected rate cuts did not bring buyers but instead increased new listings and inventory.

June saw 5,737 new listings, a 7% increase year-over-year, and a 3% rise above the ten-year seasonal average, marking the third month of elevated listings. This year has seen more listings than usual, with sellers eager to get deals done, whether for more space or relocations due to work.

Inventory stood at 13,405, up 0.5% month-over-month and 35% year-over-year, reaching a four-year high and 20% above the ten-year average.

The sales-to-active ratio fell to 18%, down 3% month-over-month, indicating a balanced market for the first time since January. The ratios for detached homes, townhomes, and apartments all dropped, suggesting a continued downward trend over the summer.

Prices, which had been increasing every month of 2024, saw a decline in June. The Home Price Index (HPI) dropped by $5,000 to $1,207,000, though it remained up 0.5% year-over-year. The median price fell by $18,000 to $980,000, and the average price rose by $2,000 to a new all-time high of $1,350,000. However, with high rates, spiking inventory, and low sales, a peak in HPI prices for this cycle appears to have been reached, and a decline is expected over the next four months.

Insolvencies are a growing concern, with consumer and business insolvencies in British Columbia, Alberta, Ontario, and Quebec rising by 1,750% since mid-2022. This financial stress will likely lead to business layoffs and forced property sales, further driving prices down.

New tenant laws effective July 18th require landlords to give four months’ notice to tenants for personal use. This change could complicate transactions and mortgage approvals, making rental properties harder to sell and potentially pushing rental prices up as investors withdraw from the market.

While the Vancouver real estate market has shown resilience in early 2024, multiple factors are now converging to indicate a potential downturn in prices and lower sales volumes. High interest rates, rising inventory, low sales, increasing insolvencies, and new regulatory challenges are expected to exert downward pressure on prices for the foreseeable future.

_________________________________

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

In this engaging and informative video, Dan and Ryan from the Vancouver Life Real Estate Group welcome back Bill Laidler, a multifamily developer with over 500 doors under construction, to discuss the transformative Small Scale Multi-Unit Housing Initiative, also known as the Multiplex Plan. Bill, a pioneer in this initiative, shares his extensive expertise on how each municipality in BC is adopting the legislation and reveals which ones might be holding back. Bill's previous video on this topic is the most watched of all time on this channel, proving the massive interest in this game-changing legislation.

Bill Laidler dives into the current status of the Multiplex Plan implementation across various cities, highlighting the loopholes some municipalities are exploiting and those fully embracing the new zoning laws. He provides valuable insights into how the family-oriented housing crisis in Metro Vancouver can be addressed through this initiative, aiming to provide more homes with front doors, backyards, and three bedrooms, allowing local families to stay in their communities.

The conversation shifts to why developers and builders are moving away from single-family homes towards multiplex developments. Bill explains how this transition reduces sale prices and opens the market to local purchasers who can afford homes in the $1 million to $1.5 million range. He also discusses the significant costs and city fees associated with development, including potential million-dollar expenses for city fees and offsite upgrades, and how these impact land values and project feasibility.

Bill explores whether the current four to six-unit limit is sufficient to meet the growing demand for housing in Vancouver andl debate if more substantial changes are needed, such as increasing the unit limit or focusing on family-sized homes. Bill also breaks down the complexities of property tax implications for homeowners with properties in transit-oriented areas (TOAs) and explains what homeowners can expect in the coming years.

Bill teases an upcoming event with the Mayor of Burnaby, offering an in-depth look at the city's adoption of the multiplex zoning laws. This event is an excellent opportunity for those eager to learn more about the new regulations and their potential impacts. For those looking to dive deeper, Bill offers additional resources and programs, including a six-week intensive course designed for homeowners, realtors, investors, and developers to understand everything about development potential in the multiplex space, from acquisition to feasibility studies and equity raising.

Join us for an in-depth discussion on the future of housing in BC, packed with expert insights and practical advice to help you navigate this new landscape. Whether you’re a homeowner, investor, or simply interested in the evolving real estate market, this video is for you.

Connect with Bill
www.laidleracademy.com

Event Tickets
https://laidleracademy.com/hurley

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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

In this episode, we dive into a whirlwind week in the real estate landscape, packed with highs and lows that are enough to make your head spin. Canadians hit a new all-time high in household net worth, while mortgage originations reached record lows. Inflation rose, inventory spiked, and yet housing affordability somehow improved, all amidst rising debt insolvencies.

Join Dan and Ryan from the Vancouver Life Real Estate Group as they break down these perplexing trends and discuss what they mean for the summer months ahead. This episode covers:

Inflation Insights: Despite expectations, inflation surprised on the upside, impacting market predictions for rate cuts.
Mortgage Rates and Trends: The return of sub-5% mortgage rates, the rise in mortgage originations, and what types of mortgages are currently popular.
- Population Growth: Canada’s record-breaking population increase and its implications for the housing market.
- Building Permits: An unexpected surge in building permits driven by rental units, and the changes in CMHC’s MLI Select program.
- Inventory Levels: A detailed look at rising inventory levels across Canada, particularly in Ontario and Vancouver.
- High-End Real Estate: The highest sale price ever recorded in Greater Vancouver, and what it signifies about the economic gap.
- Development Challenges: The complexities and hurdles faced by developers due to shifting regulations and municipal fees.
- Multiplex Plan: Insights into BC’s new multiplex initiative and its potential impact on housing affordability.

This episode is a must-watch for anyone interested in understanding the current dynamics of the real estate market and what to expect moving forward. Dan and Ryan offer their expert analysis and predictions, ensuring you stay informed about the latest developments.

_________________________________

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

In this episode, we delve into the upcoming small-scale multi-unit housing initiative in British Columbia, which automatically rezones single-family lots to allow for multiple units to be built on them. This new policy, set to take effect next month, is sparking interest among both homeowners and investors looking to capitalize on the potential new value of their properties. While the plan could create a surge of "citizen developers" aiming to maximize their land's potential, developing real estate in Vancouver is no simple task and involves navigating numerous complexities.

To shed light on these challenges and opportunities, we have a special guest, Clint Murphy. With 25 years of experience in finance and over 15 years in real estate, Clint has worked with one of Vancouver's largest developers and has built a substantial real estate investment portfolio. He recently founded a development company focused on building the much-needed "missing middle" housing. Clint shares his journey, starting from his first investment in 2004 to his current ventures, providing valuable insights into the real estate market and the nuances of multi-family project development in Vancouver.

Clint discusses the multiplex plan's impact on the housing crisis, highlighting the benefits of increased density and walkable urban areas. However, he also points out that while the initiative is a step in the right direction, it may not go far enough in addressing the need for more substantial densification. Clint emphasizes the importance of thoughtful urban planning that includes a mix of housing types to create vibrant, livable neighborhoods.

We also explore the challenges faced by developers, such as rising construction costs, high interest rates, and regulatory hurdles. Clint provides a candid look at the realities of real estate development, including the financial and logistical obstacles that can make or break a project. He offers advice for potential developers, stressing the importance of understanding market demands, navigating municipal regulations, and planning for long-term success.

If you're curious about how the multiplex plan could affect your property, interested in the broader implications for BC's housing market, or simply want to learn more about the intricacies of real estate development, this episode is a must-watch. Clint's wealth of experience and practical advice make this a valuable resource for anyone considering entering the real estate market or looking to expand their investment portfolio.

Join us for this engaging and informative conversation as we explore the potential and pitfalls of BC's new housing policy and what it means for property owners and developers. Don't miss out on this opportunity to gain deeper insights into one of the most significant changes in BC's real estate landscape.

clint@frame.properties
www.frame.properties.
https://twitter.com/IAmClintMurphy

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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