Prices in North Vancouver are continuing their downward path but are still far beyond what most families would consider affordable. At this point, price declines appear to be part of a long-term trend in North Vancouver and across Metro Vancouver.
Some people blame higher interest rates and tighter mortgage rules for the weaker market, but these arguments don’t hold much weight. Mortgage rates are still at rock-bottom lows and the market weakness began in 2016 when foreign buyer taxes came into effect rather than in 2018 with the introduction of the stress test. North Van and Metro Vancouver house prices have primarily weakened because foreign direct investment has shifted to Toronto and Ottawa.
In this report:
Where are North Vancouver home prices headed?
What are Purchase and Listing Trends?
Should investors sell?
Is this a good time to buy?
The good news (for buyers) is that prices are dropping in North Vancouver, but the not-so-good news is that prices are still beyond the reach of a median North Vancouver household with an income of $67,000 (before taxes). There is, however, a glimmer of hope for buyers as prices continue dropping through 2019.
Since the peak in 2018, North Vancouver house prices have dropped over $200,000.
North Vancouver house prices have been jumping around like a roller coaster. From the beginning of 2015, North Vancouver house prices climbed $700,000 to a peak of $1.7 million. House prices subsequently dropped $150,000 the next year and then recovered. Now prices are dropping once again. North Vancouver house prices are so volatile, it is possible prices might drop $400,000 below the peak in 2019 or 2020. So, if you’re looking to buy or sell your home in the next three years, you should definitely pay close attention to recent trends with fewer buyers and lower seller expectations.
North Vancouver condo prices skyrocketed to a peak in April 2018. The good news for first-time home buyers is that since then prices dropped significantly. The benchmark North Vancouver condo is almost affordable without help from the bank of mom and dad.
North Vancouver townhouse prices are headed in the same direction as condos. Since house prices have dropped further than townhouse prices, the gap between the two has narrowed. For townhouse owners seeking to upgrade to a full house, this could be a huge opportunity.
Although North Vancouver home prices have dropped significantly they are still not very affordable. To put this into perspective, a first-time home buyer household earning $75,000 (the median Metro Vancouver household before tax income) can only get a $320,000 mortgage. This makes it painfully obvious that, to buy an entry level $500,000 condo, a first-time home buyer needs to save a $180,000 cash down payment or receive a very generous gift from mom and dad. For most people, it’s just not in the cards.
The brunt of 2019 price drops will likely be felt by higher priced properties (i.e., more expensive neighbourhoods and detached single family houses).
Given the forecasts, the current market weakness, and the increased downward price pressure, prices will likely remain flat or drop for the next few months. Homebuyers and homeowners shouldn’t expect much price appreciation between now and the end of 2020.
What does this mean exactly? Well, the markets for all homes (detached, townhome, condo) are all trending toward a position where buyers have more power than sellers and can leverage that to negotiate discounts and incentives. The positive outcomes for buyers are lower prices, more selection, fewer bidding wars, and ultimately a little less stress.
Not all markets have officially made it to full-blown buyer’s territory though. While the condo market is trending towards a buyer’s advantage, it is presently in a balanced market. Take note that as supply has increased, North Vancouver home prices have dropped. This means that the current North Vancouver condo prices may be unsustainable in a healthy balanced market. So, if new construction completions later this year push the condo market into a full-blown buyer’s advantage then we could see major prices discounts in late 2019-2020. Yay for first-time home buyers!
2019 is off to a slow start with condo purchases, which is certainly not something we’re used to seeing. Richmond, the Vancouver Westside, and West Vancouver have seen the most dramatic falls in purchase and sales. Our research suggests that foreign buyers are moving on to other cities and countries. These days Toronto, Ottawa and Montreal are very popular.
The number of North Vancouver houses sold is trending slightly below past years while the number North Vancouver houses listed for sale has been trending a little higher than past years.
In contrast, the number of North Vancouver condo and townhouse purchases (sales) have been far lower compared to previous years and they have seen dramatically higher active listings. Basic economic theory tells us that we can expect this to lead to condo and townhouse price reductions.
Pre-Sales, which are purchases of brand-new homes from developers, have trended down substantially. Since developers need to sell at least 70% of a project to secure financing and begin construction, they are trying to entice buyers with price discounts, move-in allowances, and cool amenities. Some developers have offered up to a $100,000 bonus to the buyer realtor who can convince their client to buy!
According to MLA advisory, the current pre-sale activity levels “reflect a more normalized pace of sales for the Lower Mainland.”
At Mortgage Sandbox, we break down our market analysis to five key factors: affordability, capital flows, government policy, supply and popular sentiment.
From a seller’s perspective, now is a better time to sell than in two years as CMHC, a Government of Canada Agency predicts that house prices will be flat or drop for the next two years.
To benefit from the best-case scenario, a home buyer should talk to their mortgage broker about prioritizing flexible loan conditions and mitigating risk. Find out more about the benefits of a mortgage broker.
There’s potential for an overwhelming surge in supply and this would bring more downward pressure on prices.
41,000 homes were under construction in Metro Vancouver (1,100 in North Vancouver) in February 2019, which are due to complete in 2019 and 2020. If a significant number of those homes were pre-purchased with the intention to flip them, they could bring a ton of supply to the North Vancouver market.
With buyer negotiating power and dropping prices, 2019 will be a good time to buy. 2020 however, may be even better.
If you are thinking of buying just be sure to drive a hard bargain, cover your bases with smart and educated decisions, and don’t bite off more than you can chew.
Buying a home is a big decision, so check out Mortgage Sandbox’s Canadian Home Buyer Guide so we can walk you through the end-to-end process and get you ready to buy your new home!
Here are some recent headlines and a video you may be interested in:
Sales slump could signal tough times ahead for B.C. realtors (Vancouver Sun)
Canadian Housing Market This Bad Normally Means Recession (Huffington Post)
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