{"id":6828,"date":"2017-09-01T11:11:12","date_gmt":"2017-09-01T18:11:12","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=6828"},"modified":"2017-08-30T19:37:45","modified_gmt":"2017-08-31T02:37:45","slug":"whats-pushing-vancouver-home-prices-higher-now","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/09\/whats-pushing-vancouver-home-prices-higher-now\/","title":{"rendered":"What&#8217;s Pushing Vancouver Home Prices Higher Now?"},"content":{"rendered":"<p style=\"text-align: justify;\">Home prices in Vancouver continue their ascent a year after the BC government imposed a foreign-homebuyer tax on the metro area a year ago, and it has a lot to do with an insufficient supply of housing, TD Bank observes.<\/p>\n<p style=\"text-align: justify;\">\u201cWe don\u2019t anticipate a significant drop in home prices in any way. Interest rates are going up but they\u2019re going up very gradually, and really what matters is the supply-demand balance of home price,\u201d Diana Petramala, TD Bank economist, tells BuzzBuzzNews.<\/p>\n<p style=\"text-align: justify;\">In July, Vancouver saw a 14% drop in new listings year-to-date \u2014 the greatest drop in the number of homes for sale in any city across the nation, according to the Canadian Real Estate Association.<\/p>\n<p style=\"text-align: justify;\">With the benchmark price of a Greater Vancouver home, including condos, cracking the $1-million mark last month, a supply shortage appears to be behind the rising prices.<\/p>\n<p style=\"text-align: justify;\">\u201cThe market is still fairly tight, by most measures, which is why prices have rebounded and are still continuing to grow,\u201d says Petramala.<\/p>\n<p style=\"text-align: justify;\">Looking ahead, moderating price growth is in the cards for Vancouver, according to the bank\u2019s latest Canadian Regional Housing Outlook, published on Monday.<\/p>\n<p style=\"text-align: justify;\">In the report, Petramala and TD Economics Chief Economist Beata Caranci highlight key factors impacting market activity in Vancouver and beyond.<\/p>\n<p style=\"text-align: justify;\">For Greater Vancouver, policymakers played a significant role in cooling the formerly red-hot market, although home prices remain elevated there.<\/p>\n<p style=\"text-align: justify;\">For example, the region saw a dramatic drop in housing demand after the BC government announced measures to track foreign investment in February 2016.<\/p>\n<p style=\"text-align: justify;\">By the time the tax came into effect in August 2016, three quarters of the downturn in sales had already occurred, according to the report.<\/p>\n<p style=\"text-align: justify;\">However, within six to 12 months, markets typically bounce back to some extent following government policy changes like that, and that has been the case in Vancouver.<\/p>\n<p style=\"text-align: justify;\">\u201cWe had a bit of a Trump bump in interest rates between November and early 2017, and then that quickly reversed course by March which held for a little bit of a recovery. But sales are still structurally lower because of the amount of government policy that was implemented over 2016,\u201d says Petramala.<\/p>\n<p style=\"text-align: justify;\">This July, the Bank of Canada hiked the overnight rate by 25 basis points, the first move of its kind in seven years, and TD predicts the central bank isn\u2019t done yet. TD is calling for another hike before the year\u2019s end.<\/p>\n<p style=\"text-align: justify;\">Meantime, the five-year government bond yield, which influences the rates for fixed-rate mortgages of the same term, will increase another 45 basis points by the end of 2018, TD forecasts.<\/p>\n<p style=\"text-align: justify;\">With home prices that are unaffordable for many Vancouver households, the city faces an affordability crunch that makes the market among the most sensitive across the nation to increasing rates.<\/p>\n<p style=\"text-align: justify;\">\u201cEven though they had a bit of market correction there last year, because the market is so tight, prices have now surpassed last year\u2019s peaks\u201d says Petramala.<\/p>\n<p style=\"text-align: justify;\">\u201cHomes prices are still growing 8% year-over-year which is double the pace of what\u2019s expected to be income growth,\u201d she adds.<\/p>\n<p style=\"text-align: justify;\">As Vancouverites grapple with what some have called a full-blown affordability crisis, demand could decline because of weakened population growth.<\/p>\n<p style=\"text-align: justify;\">In BC, interprovincial migration peaked in mid-2016, but as economic conditions are improving in Alberta and elsewhere, population inflow to BC continues to slow, according to the TD report.<\/p>\n<p style=\"text-align: justify;\">\u201cThere\u2019s still some scope for past population growth to impact the housing market in 2017, but that population push has finished and that impact will start to wane later in 2018,\u201d says Petramala.<\/p>\n<p style=\"text-align: justify;\">As Vancouver gradually works through a soft landing, Petramala says rising interest rates will be the biggest factor impacting the housing market going forward.<\/p>\n<p style=\"text-align: justify;\">Also, supply from the city\u2019s new-home market should have a stabilizing effect on pricing.<\/p>\n<p style=\"text-align: justify;\">\u201c[A] lot of those units that are under construction are going to be absorbed and that\u2019s really what\u2019s going to keep the market well balanced and part of the reason why we expect the market to remain well balanced and not experience an outright correction,\u201d says Petramala.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/08\/whats-pushing-vancouver-home-prices-higher.html\" target=\"_blank\" rel=\"noopener\">What&#8217;s Pushing Vancouver Home Prices Higher Now?<\/a> by Kerrisa Wilson | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Home prices in Vancouver continue their ascent a year after the BC government imposed a foreign-homebuyer tax on the metro area a year ago, and it has a lot to &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/09\/whats-pushing-vancouver-home-prices-higher-now\/\">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":[8],"tags":[],"class_list":["post-6828","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What&#039;s Pushing Vancouver Home Prices Higher Now? 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