{"id":6600,"date":"2017-08-07T10:10:36","date_gmt":"2017-08-07T17:10:36","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=6600"},"modified":"2017-08-03T19:28:03","modified_gmt":"2017-08-04T02:28:03","slug":"these-vulnerabilities-hurt-greater-vancouvers-housing-health","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/08\/these-vulnerabilities-hurt-greater-vancouvers-housing-health\/","title":{"rendered":"These Vulnerabilities Hurt Greater Vancouver&#8217;s &#8220;Housing Health&#8221;"},"content":{"rendered":"<p style=\"text-align: justify;\">As one of Canada\u2019s \u2014 and the world\u2019s \u2014 most expensive cities to live in, Greater Vancouver\u2019s affordability challenges put the area at risk of a potential housing downturn, suggests RBC bank.<\/p>\n<p style=\"text-align: justify;\">With stunted population growth and a risk of overbuilding beyond demand, the region shows signs of unhealthy conditions according to RBC\u2019s July 2017 Canadian Housing Health Check, which looks at the Toronto, Vancouver, Montreal and Calgary markets.<\/p>\n<p style=\"text-align: justify;\">The bank regularly determines if Canada\u2019s major residential real estate markets are healthy by focusing on key indicators that have been correlated with housing crashes and declines in the past three decades.<\/p>\n<p style=\"text-align: justify;\">Indicators include affordability, resale- and rental-market balance, interest rates, labour market, demographics, and supply levels of new housing and residential construction. .<\/p>\n<p style=\"text-align: justify;\">\u201cDespite further improvements this year, extremely poor affordability is still a major vulnerability,\u201d write RBC Chief Economist Craig Wright and RBC Senior Economist Robert Hogue in the report.<\/p>\n<p style=\"text-align: justify;\">In the first quarter of 2017, the region had an aggregate affordability measure of 79.7%, almost surpassing the area\u2019s worst level on record, according to RBC.<\/p>\n<p style=\"text-align: justify;\">The bank\u2019s affordability measure for a market is based on the average pre-tax household income required to cover mortgage payments (principal and interest), property taxes and utilities for a median-priced home.<\/p>\n<p style=\"text-align: justify;\">In response to record-breaking price gains, the BC government introduced a foreign-homebuyer tax of 15% in August 2016, leading to a cooling-off period.<\/p>\n<p style=\"text-align: justify;\">RBC says that poor affordability of both single-family homes and condos probably contributed to the market cooling as well with many buyers simply priced out of the market<\/p>\n<p style=\"text-align: justify;\">However, at the beginning of this year market activity started to rebound suggesting the tax\u2019s effect may have been temporary.<\/p>\n<p style=\"text-align: justify;\">With the market picking up steam, demand-supply conditions in the existing home market slightly tightened this year resulting in a sales-to-new listings ratio of 0.65 in June \u2014 indicating a seller\u2019s market.<\/p>\n<p style=\"text-align: justify;\">When the ratio is 0.60 or above, prices typically rise quickly and the market favours sellers, says RBC. Alternatively, when the market is 0.40 or below, downward pressure on prices occurs and the market favours buyers. A ratio in between is considered a balanced market.<\/p>\n<p style=\"text-align: justify;\">Even though demand-supply conditions are easing in the homeownership market compared to a year ago, the same cannot be said for the city\u2019s rental market.<\/p>\n<p style=\"text-align: justify;\">In October 2016, the region\u2019s rental vacancy rate reached an eight-year low of 0.7% \u2014 one of the nation\u2019s lowest vacancy rates.<\/p>\n<p style=\"text-align: justify;\">Another vulnerability RBC named is Greater Vancouver\u2019s slowing population growth.<\/p>\n<p style=\"text-align: justify;\">In June, the region\u2019s rate of population growth dropped to 1.4%, down from 1.9% year-over-year in March 2016.<\/p>\n<p style=\"text-align: justify;\">According to the bank, this rate signals a concern for elevated risks. It has dropped below the 1.5% threshold.<\/p>\n<p style=\"text-align: justify;\">Slackening population growth could be an issue if it exacerbates overbuilding issues.<\/p>\n<p style=\"text-align: justify;\">In response to a fiery of demand and a shortage of homes, construction of single-family homes in 2016 rose 12% annually, reaching its highest level in 23 years this May.<\/p>\n<p style=\"text-align: justify;\">Rapid housing starts can pose an increasing risk of oversupply in the future,RBC says But with a currently low inventory of unsold single-family homes the risk is minimal.<\/p>\n<p style=\"text-align: justify;\">In its report, RBC also highlighted healthy indicators in Greater Vancouver\u2019s market.<\/p>\n<p style=\"text-align: justify;\">Currently, Greater Vancouver\u2019s labour market is supporting the market, with the unemployment rate stabilizing around 5%.<\/p>\n<p style=\"text-align: justify;\">In addition, the region\u2019s amount of new supply in the market is considered healthy.<\/p>\n<p style=\"text-align: justify;\">According to RBC, the rate at which single and semi-detached homes as well as condo units are being absorbed is considered within the \u201csafe zone.\u201d<\/p>\n<p style=\"text-align: justify;\">Currently, single-family home completions have slightly edged downwards and condo completions remain stable, suggesting little evidence of overbuilding in the region at this point or in the near term.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/07\/vulnerabilities-hurt-greater-vancouvers-housing-health.html\" target=\"_blank\" rel=\"noopener\">These Vulnerabilities Hurt Greater Vancouver&#8217;s &#8220;Housing Health&#8221;<\/a> by Kerrisa Wilson | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As one of Canada\u2019s \u2014 and the world\u2019s \u2014 most expensive cities to live in, Greater Vancouver\u2019s affordability challenges put the area at risk of a potential housing downturn, suggests &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/08\/these-vulnerabilities-hurt-greater-vancouvers-housing-health\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-6600","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>These Vulnerabilities Hurt Greater Vancouver&#039;s &quot;Housing Health&quot; &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2017\/08\/these-vulnerabilities-hurt-greater-vancouvers-housing-health\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"These Vulnerabilities Hurt Greater Vancouver&#039;s &quot;Housing Health&quot; 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