Fall Market Update – 2019
The Fifth Dimension Fall Edition
Welcome to Fall edition of Fifth Avenue Real Estate Marketing Limited’s: The Fifth Dimension. Click here to download the Fifth Dimension | Quarterly Market Report
The fall is like a second start of the year to me. In some cultures and religions it actually is more of a fresh start than January. Summer comes to an end, days shorten, school and community-related activities accelerate and before we all know it the holiday season is here.
The older I get, the more I appreciate the splendor of the fall colours. This change fascinates and exhilarates me. This seems to also be an appropriate way to describe the market for new multifamily homes in Metro Vancouver.
Speaking of fascinating, on October 16th Fifth Avenue and Bosa Properties once again sponsored a presentation by Michael Ferreira, Principal of Urban Analytics to the Urban Development Institute (UDI). The audience has grown each year as Michael becomes a more and more influential and sought after speaker.
His talk for this sold out session was appropriately entitled “What’s Going On?” Michael’s presentation began with a collection of recent headlines on our market. He acknowledged that the market has shifted further from this time last year but that signs of stabilization are on the horizon.
With the federal election campaign in full-force, Michael concentrated on the single biggest influencer on market today… politicians. He highlighted a number of government causes of the current market conditions and the effects on the market. These included: the provincial foreign buyer’s tax, the Vancouver empty homes tax, the federal mandated stress test, and additional NDP moves including the “school” or “ not so school tax” and rent controls. He was certainly critical and I would say it is safe to say his view was aligned with the majority of the attentive crowd.
One of Michael’s more compelling talking points pertained to “(the)…government addiction to fees and taxes”. By his firm’s math, over 26 percent of the cost of a new home can be attributed to government taxes and fees. Does the consumer understand this? How can this be? Next to fuel, can you think of another consumer good taxed this heavily?
In an interesting segway, Ferreira did address the supply issue with a unique take on rental. Given the tax base and escalating construction costs, Michael predicts a greater percentage of residents opting to rent vs. own. As in world cities such as Central London and Manhattan, there is no longer any shame in that. The issue, however, is the serious lack of supply and the inability of bureaucracy to address this in a compelling and timely manner. As a result, he expected significant inflation with respect to rental rates for new offerings. Michael looked south of the border to Seattle for a solution and apparently he is not the only one as Vancouver’s mayor was quoted saying “I want to get a better understanding of how Seattle has developed so much rental housing”. Hmm… Michael, who remained calm yet passionate, attacking the anti-development sentiment of some and calling out one municipality in particular.
He concluded with a look ahead stating a continued improvement in the market, led strangely in a non-traditional “reversed geographic” pattern highlighting successes such as Scott & Nicholson in North Delta and Fleetwood Village in Surrey. He sees continued success South of the Fraser River and more of a “wait and see” approach prior to 2020, North of the Fraser River.
He commented on the uncertainty with respect to the luxury market and pushed for government reform regarding fees and restrictive REDMA policies such as the allowed timeframe for pre-sales. Based on Daryl Simpson of Bosa’s complimentary remarks and the audience’s response, we look forward to working together with Michael, Jon Bennest, co-principal and their team at UA as we navigate what’s going on, add Mission and
possibly Squamish and Chilliwack to this report and sponsor this speech in the same time of 2020, our 40th year in business.