November 28, 2016 Foreign Buyers Tax - Condo Sales Remain Strong

In August 2016, the Province of British Columbia introduced a 15 per cent foreign buyers tax as a way to cool demand for Metro Vancouver real estate. Although the market was starting to cool from its peak in the spring, the tax had the largest impact in the single family market and the upper end of the housing spectrum.

It is anticipated that the multi-million-dollar single family home market will continue to see slower sales rates and experience downward price pressure. However, condo and townhome resales and pre-sale developments continue to have very strong sales activity with high demand and limited supply telling another story.

Strong Resale for Condos and Townhomes

Townhomes under $1,000,000 in Vancouver and Burnaby are still seeing healthy sales activity with sales-to-listings ratios over 38 per cent. A sales-to-listing ratio over 20 per cent is a seller’s market and generally indicates upward price pressure for homes. There continues to be a need for more townhome product in the Greater Vancouver Area as inventory levels for this product type and price point are low.

The condo resale market is still seeing strong activity. Homes at $499,999 or less have a high sales-to-listing ratio of over 50 per cent for Vancouver East and Westside. For apartments selling between $500,000 to $749,999, the sales-to-listing ratio is over 40 per cent.

An Increased Demand for Pre-sale Developments

As people continue to be bullish on real estate, home buyers are turning to pre-sales where move-in is delayed for two to three years. This shows buyers confidence in the long-term health of the market with their focus on future planning and savings.

Between August and October, 23 new projects were released in Greater Vancouver and 60 per cent or 1603 of the 2676 homes have been sold. Three pre-sale developments have sold out within weeks of launching in Burnaby, Vancouver and Richmond.

The pre-sale market is anticipated to remain strong and active with continued low interest rates and limited supply levels for attainable housing options for price sensitive home buyers.

Statistics and data was collected from the Real Estate Board of Greater Vancouver, Fraser Valley Real Estate Board, Altus Group, Urban Analytics and MAC Marketing Solutions and BLVD’s Marketing Group’s Advisory department. Results are reliable within +/- 5 percent at the 95% confidence level.