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Sales activity in Greater Vancouver and Fraser Valley continued to slow for the fourth consecutive month in July 2022. The Real Estate Board of Greater Vancouver reported 1,887 sales, a 43% decrease from last year. The Fraser Valley Real Estate Board processed 993 sales, a 51% decrease from last year. After two years of market conditions that favoured home sellers, the tables have turned as home buyers now have more bargaining power and time for due diligence.

The sales-to-active listings ratio is in balanced territory at 18% for Greater Vancouver, putting downward pressure on home prices. The detached segment in Greater Vancouver and Fraser Valley has entered a buyer’s market at a 12% sales-to-actives ratio. Despite rampant inflation and rising interest rates putting the brakes on demand, real estate is and always will be an asset with considerable upside over the long-term. As prices come down from the highs of recent months, there are opportunities for buyers who have been waiting to re-enter the market and shop for the right property.

While the housing market is resilient, there is still a chronic shortage of supply. Urban centres like Downtown Vancouver have remained relatively flat, but with high immigration rates, workers returning to the office, and entertainment back in full swing, it is the segment poised to outperform. Other areas of interest for investors, as per one of the top mortgage broker teams, are Vancouver Island, Kamloops, Prince George, Edmonton, and Calgary. Albeit, it is harder to cash flow with rising interest rates. Borrowing power has decreased ~20% when considering stress testing at the current benchmark rate of 5.25% or the desired mortgage rate +2% (whichever is highest).

Analysts are predicting an uptick in demand come September, as many have put real estate on the back-burner to enjoy summer with friends and family. The best course of action for investors is not to rush into a deal, ensure all ducks are in a row in terms of financing, and having proactive representation for when there is an opportunity to take action.

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City of Vancouver to Extend Leaseholds in False Creek

Vancouver City Council and the Strata Leaseholders Society (the Society) have concluded negotiations supporting a proposal to extend the leases in False Creek South for an additional 20 years. The Society is the bargaining agent for over 2/3 of the 669 strata leaseholders in the area, with the purpose of promoting the interests of its owners. The proposal forms part of the overall lease renewal package that requires agreement to:

  • rent prepayment amounts for each leasehold unit, and 
  • an agreed method for calculating the Leaseholder’s Interest in the Strata Lot (LISL), the value that is payable to the leaseholder at the lease end.

The proposal includes lease extensions for 20 years, with those: 

  • originally ending in 2036, extended to 2056;
  • those originally ending in 2040, extended to 2060 (including Harbour Terrace); and 
  • those originally ending in 2046, extended to 2066.
"In the proposal, the rent and prepayment would be based on (1) the mutually agreed-to current market value of the bare land for its current purpose on which the buildings have been constructed, and (2) agreed methods of determining the rent for the period of the lease extension and of discounting the rent in consideration of its advance payment. And (3), the provision for lease end value that provides a clear market-based method to calculate the lease end value – something that was absent in the original leases that refer to a value as if the lease did not end."
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SEARCH FALSE CREEK HOMES

Headlines


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Foreign buyers stuck to the sidelines through surging market
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Thank you for your time today.
Contact me with any questions you may have, I am always available.

 
Adam Naamani
REALTOR® with eXp Realty
+1 (604) 889-7943
adam.naamani@exprealty.com
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