Greater Vancouver Real Estate: Buyer and Seller Preferences Revealed

The real estate market throughout the Greater Vancouver region has undergone some pretty interesting changes over the past couple of years. From the economic downturn until now we've seen dramatic drops and drastic rebounds that have been affected by a variety of conditions including legislative changes, technological innovation, environmental influences, and changes in the financial sector.
In an effort to understand market trends and the behavior of buyers and sellers, the Real Estate Board of Greater Vancouver (REBGV), which represents nearly 10,000 realtors, conducts an annual research review. This information is used to follow trends and predict customer expectations.

The most recent research of this kind was conducted in 2009 along with the BC Real Estate Association and the Fraser Valley Real Estate Board. This research tried to develop understanding of what consumers want from their realtors as well as differences between realtor and client points of view. Most surprisingly, this research has found that changing technology and easy access to information is changing the way consumers view realtors.

In today's technologically advanced society, traditional norms are sometimes inappropriate. Contemporary homebuyers research the markets themselves using the internet. They are more knowledgeable about the market and they've already sourced property information. In the past, realtors were the primary source for real estate information but this isn't true anymore. Consumers still expect realtors to conduct property searches but the more savvy clients want to work with a realtor who can facilitate the purchase; realtor knowledge about the process, negotiating, and making offers are more crucial to today's homebuyers.

This research showed a contrast between realtor's thinking and client thinking. Most realtors still believe that their main role is to provide customers information about properties. Clearly, the research from customers says otherwise so here is a great example of how this research can make a difference. Realtors need to change the way they approach their job in order to create a cooperative and effective realtor-client relationship.

The study also suggests that realtors may not understand the importance of their role with regards to establishing fair prices for homes according to sellers. Indeed, sellers are more confident in a realtor's knowledge about fair prices than they are in themselves.

In 2008, the REBGV and the Fraser Valley Real Estate Board also released a survey of 1,100 residential homebuyers in the Lower Mainland. In this survey, realtors learn that the majority of homes sold in 2008 were pre-sales, those bought before construction was complete. In fact, 53% of sales in Greater Vancouver and 65% of sales in the Fraser Valley were pre-sales. Moreover, the majority of buyers were paid what they had expected to pay for a home. Around 31% of buyers in Greater Vancouver and 23 per cent in the Fraser Valley felt they had paid more than they expected.

With regards to satisfaction, the results were also good. Most home sellers were happy with the final price reached: 77 per cent of home sellers in the Fraser Valley and 69 per cent in Greater Vancouver were satisfied with the final sale price.
Another aspect this research investigates is whether professional and regulatory guidelines in real estate projects satisfied buying and selling customers. In an annual survey, the public is polled about five statements. Most people have a positive opinion of the real estate profession with as many as 75 per cent of consumers viewing realtors as knowledgeable. Around 70 per cent of respondents feel that realtors are held to a high standard of professionalism giving them a positive public image and the same number see realtors as skilled professionals. With regards to the legislative guidelines set up to protect and support consumers, 58 per cent of survey respondents felt well represented.

This research is vital for following buying trends and how they change over time. 2003, for example, was the first year that condominium sales in Greater Vancouver were higher than sales for single-family detached homes. In today's real estate market almost 60 per cent of sales are condominium or townhouse properties. Through this research, realtors learn to re-position themselves not only according to market trends but also the needs and wants of buyers and sellers.

Metro Vancouver Real Estate Rebound

During the first quarter of 2010 the average home price in Metro Vancouver saw the largest jump of any market in Canada leading some experts to say the rebound is an unrealistic and even irrational response to current market conditions.

On the east side of Vancouver the price for a detached bungalow reached $674,180 during the first few months of 2010. This represents a 25 per cent hike from the same period of 2009. A condominium on the east side jumped around 29 per cent to $402,000. On the west side, the gains have been similar. The average price for a bungalow on the west side dropped to about $950,000 at the beginning of 2009 but had seen a 21 per cent increase on this to $1.15 million in the first quarter of 2010.

Many experts see these jumps as highly irrational: an overreaction based on fear of a poorer market. As the market has started to turn around, buyers have been somewhat quick to act. At the moment, sales figures do not appear to represent the reality of real estate in Canada. Averages prices are up across the board while some markets have obviously seen greater improvement.

Even national averages have risen around 11 per cent in the past year and the average price of a detached bungalow in Canada is nearly $330,000 and averages are up for all property types as well. Part of this market stimulation is based on concerns about raising mortgage rates and stricter lending practices. Over the next couple of years the real estate market will likely level off while other economic factors, like jobs, catch up.

In the Lower Mainland, there has been a recent bump in the number of new listings and this should hopefully limit bidding wars that are driving prices up. In fact, March saw a 60 per cent jump in new listings compared to a year ago. Yet, average prices have risen steadily as well. It will be interesting to see how the market reacts in the second quarter of 2010 but most experts are predicting a cooling period.

First-Time Canadian Home Buyers Ready Regardless of Market Conditions

The increase of first-time buyers in the recent real estate market has generally been attributed to lower prices and mortgage rates but some experts question how savvy these first-time buyers may be. Obviously, mortgage rates have hit 30 year lows and affordability appears to have returned to many markets across Canada but many first-time buyers may not be fully aware of the market conditions when they set out to buy.

Indeed, many first-time home buyers admit that they have little information about mortgage rules or market conditions. Moreover, many first-time home buyers share a similar quality: they're determined to buy regardless of mortgage rates or prices. These first-timers have been taught that it's never a bad time to buy a home and are entering the market as their personal economic conditions allow it rather than vice versa.

In addition, the vast majority of first-time home buyers, some 74 per cent of Canadians making their first purchase, are amortizing over 25 years or less rather than the current maximum of 35 years. It appears as though these buyers are interested in paying off their mortgages quickly and banks are applauding this trend.

At the moment, there are a number of key incentives for first-time home buyers like the First-Time Home Buyer's Plan, which allows interested buyers to transfer up to $25,000 from their RRSPs to a down payment on a qualifying home. While underutilized, this program can make it much easier to get into the real estate market. In addition, there is the First-Time Home Buyers' tax credit which provides up to $750 in credits that can be directed toward the purchase of a home. Married couples have also been able to direct RRSP funds from gifts to their down payments.
At the moment, lenders are beginning to follow more stringent lending practices and these changes began before the government introduced new lending rules on high ratio mortgages. Buyers with less than 20 per cent down face stricter regulations and all mortgage qualifications are now based on a five year fixed-rate mortgage. Apparently, these changes seem directed at maintaining a stable market as some first-time buyers may not be prepared for increased payments as mortgage rates go up.

Still, some first-timers are being drawn to the market because the cost of owning versus renting is fairly comparable. For example, a typical $300,000 mortgage will have a $1,700 monthly payment while rent for a similar property would hover around $1,200 per month. When you consider a yearly increase of 5 per cent in rents whereas mortgage rates are fixed, the difference is even smaller. The logic that it's better to pay your own mortgage than make payments toward somebody else's mortgage is truer than ever.

While many first-time buyers have shown indecisiveness when it comes to purchasing, most experts will say that it's best to get into the market when you have a viable plan in place. This includes savings for a down payment and a long term affordable budget.

Experts Predict Cool Spring...for Real Estate

The Canadian real estate market surged to recovery after the economic woes that plagued the country in 2008 and the market looks to remain heated through the spring. With low mortgage rates motivating buyers along with more favourable prices, sales have been steadily increasing throughout 2009 and the beginning of 2010.

Nevertheless, most experts are predicting that the market will cool toward the end of spring as mortgage rates are expected to rise. The last decade marked the strongest price appreciation in the past half century and the economy needs time to catch up. Job creation and wage increases need to be more balanced with the real estate market after an unprecedented decade for Canadian real estate.

But as the media continues to publish stories of an impending rise in interest rates, buyers have been swept up in a climate of urgency. As buying has soared, listings of new properties have actually lagged which has resulted in bidding wars. Consequently, average prices are setting new peaks both for new and resale homes. In fact, some experts estimate that national averages for house price are about 10 or 15 per cent above fair market value. And the markets that are most overpriced are those in the west.

During the recession, Vancouver suffered a dramatic drop in sales and prices but this was met with an equally dramatic recovery in 2009. Following these economic woes the average home price fell marginally, from $593,767 in 2008 to $592,441 in 2009. However, in the first quarter of 2010, average prices have jumped to $630,028.

The unique geography and popularity with foreign investors makes Vancouver real estate among the least affordable in Canada. Some experts expect low mortgage rates to continue and as long as the economy in Canada continues to improve it's unlikely that real estate prices will correct. Instead, property prices will plateau and a normal period of adjustment where other economic factors improve will balance the real estate market. Canadians will likely focus on paying off debt as a strong Canadian currency will slow economic recovery.

Greater Vancouver Real Estate Strong through Olympic Month

Although real estate experts predicted a slow month because of the Olympics, sales figures were much better than expected. Experts anticipated Olympic excitement would distract buyers from the market, but in fact, it remained a buyer's market throughout the Fraser Valley.

Sales figures continued to show month-over-month gains this February with a 23 per cent jump in sales compared to January. This figure, which represents 1,204 sales recorded by the Multiple Listing Service, was also 77 per cent higher than the 2009 figures for the same month. Lower mortgage rates are partly responsible but many real estate professionals credit changing mortgage rules and taxes for this jump in sales.

Buyers are well informed about changes that will make purchasing new homes more expensive. New mortgage rules are set to take hold in April and the harmonized sales tax will be unleashed in July so many buyers want to complete their sales before these changes come in effect.

Moreover, February saw a jump in the number of homes listed to 2,879 homes for sale during February, an increase of 14 per cent over January. More shockingly, this increase is 77 per cent higher than listings in February 2009 which indicates that the real estate market is recovering nicely.

Another statistic that supports market recovery is the drop in inventory of unsold homes throughout the Fraser Valley. In February 2010 there were 12 per cent fewer unsold homes than February 2009. This means 8,485 units went unsold last month. However, the market is inching toward balanced status as the proportion of sales to inventory equaled 14 per cent. While this is still within buyer's territory and price increases have been modest, balanced market territory is not far off.

The benchmark price for residential units in the Fraser Valley has increased less than one per cent from January to February and these moderate price gains have been the story for the last 3 months. Compared to a year ago, however, benchmark house prices have jumped 11.3 percent to $508,136. For townhouses, the benchmark is also up from February 2009 a total of about 10 per cent to #324,708.