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More than 1,000 detached houses sold on the Westside in 2017 at a benchmark price of around $3.5 million. Anywhere else in the world, such a multi-billion dollar performance in a relatively small area would be considered outstanding, perhaps historical.
But this is the Westside of Vancouver after two years of unprecedented sales and price increases, so many label 2017 as a downturn. Yet detached house sales on the Westside in the fourth quarter totalled 191 units, down just 1% from a year earlier, while the benchmark price was up 3.28% from Q3 to $3.55 million. This is not the sign of a distressed market; it is signal that in a year that saw two mortgage rate hikes, a continuing foreign-buyer tax, and a new empty home tax the Westside has remained amazingly resilient.
One has to consider that a purchase of a Westside house is often driven by more than simply a desire to live in Metro Vancouver’s best neighbourhood. Many buyers recognize the potential of adding one or two more housing units to the existing lot, which is now allowed under Vancouver zoning. Laneway houses, for example, can be stratified and sold, or held for rental income, which can dramatically offset the initial cost of buying a detached house.
There were 435 new listings for detached houses across the Westside in Q4 and 44% of them sold, which reflects a fairly balanced market leaning toward a buyer’s advantage. For the 62 Westside detached listings below $2.75 million in Q4, the sales ratio was 100%. But buyers were active in every price range: 33 detached houses sold for more than $5 million and 13 in excess of $8 million. We expect modest price corrections in 2018 across the Westside, but inherent demand will keep detached sales strong.
Benchmark prices for Westside townhouses in Q4 were 12.5% higher than in Q4 2016. Based on the current benchmark price of $1.24 million, this equates to a typical cash increase of $155,000. That is one reason why so many people are trying to purchase a Westside townhouse. It also explains why some townhouse owners are reluctant to sell, fearing that they will not be able to purchase a similar home or will miss out on further price appreciation. We understand the dilemma, which is among the reasons why Faith Wilson Group offers the Peace of Mind Guarantee for Sellers, which allows sellers to make a decision with calm confidence.
The Westside townhouse market, however, is subtly shifting towards a buyers advantage.
There were 169 new listings for Westside townhouses in Q4 and 89 of these sold, for a sales-to-new-listing ratio of 53%, which is a fairly balanced market. Buyers also discovered that it is possible to find Westside townhouses priced far below the Westside benchmark. For instance, 17 buyers purchased a townhouse for $800,000 or less and 4 buyers paid $600,000 or less. In fact, in Q4 there were 35 Westside townhouse listed below $1 million and 18 listed at $800,000 or less. As well, the overall benchmark price for Westside townhouses was down 1.7% in Q4 from Q3, a signal to buyers that this may be the time to act.
The typical new listing for a townhouse was on the market for a median of just 10 days before it sold in Q4. Kitsilano proved the most popular neighbourhood, with 23 townhouse sales at a benchmark of $1.08 million. Next was Fairview, with 15 sales at a benchmark of $1.06 million. In third place, the University area saw 9 buyers pay a benchmark of $1.66 million.
In the past six months, 2068 condominium apartments sold on the Westside and, in Q4, sales were up 19.5% from a year earlier to 950. This partly reflects a rush of condo buyers to the market during the final weeks of 2017 who were trying to purchase before the latest federal mortgage stress came into affect on January 1. This stress test requires buyers to qualify at a mortgage rate at least 2% higher than what they could easily acquire.
The increase in buyers attempting to close before New Years likely pulled some condo sales forward, meaning that we can expect to see subsequent lower sales early in Q1 2018, but we believe this is temporary. Current mortgage rates remain near historic lows – we remember rates as high as 18% – and there is wider spectrum of mortgage lenders and options today than at any time in history. Savvy Westside buyers will find a way to share in Canada’s most condo rewarding market.
The sales momentum is extremely strong and Q4 Westside buyers found success at all price levels. While the sales-to-new-listing ratio for Westside condos in Q4 was 72%, which is remarkable itself, the ratio spiked to 100% for condo apartments priced between $500,000 and $750,000. As well, 50 buyers bought a Westside condo for $500,000 or less in Q4, including 5 who paid less than $350,000. As well, 272 buyers paid $1 million or more and 59 bought a Westside condo apartment for more than $2 million.
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