Some Vancouver houses selling for well below assessed value as prices soften
It’s a glimmer of hope for those awaiting any sign of a cooling housing market. Not only is there a negative value in the "detached house" column of a real estate association report, but there are houses selling well below assessed value in the very neighbourhoods where they first start hitting stratospheric highs.
Sutton WestCoast realtor David Hutchinson has been highlighting the latter on his Twitter account, posting daily examples of houses selling for hundreds of thousands of dollars below the asking price, and assessed values.
"Buyers can negotiate down again. It’s a good thing to see," he told CTV News.
“It's still expensive, just not as expensive as before."
Notable examples include a South Granville property listed for $2,788,000 and sold for $2,650,000 with a BC Assessment value of $3,046,800.
He includes a Dunbar property was initially listed at $5,388,000 with the price steadily dropping until it was sold for $4,050,000. Its tax-assessed value is $4,519,000.
Hutchinson says he watches the sales figures at the closing of each business day and compares them to their BC Assessment value to get a better gauge of where the market is going.
His observations are supported by a Tuesday report from the BC Real Estate Association forecasting the housing outlook for 2018. It’s titled "Strong Economy Versus Housing Headwinds" and provides a tepid outlook on the new year due to various factors.
"Look for more balanced market conditions in 2018, as a surge in new home completions bolsters supply and eroding affordability tempers demand," it reads.
That affordability largely comes in the form of the so-called “stress test” that Canadian banks now have to impose on mortgages over one million dollars, essentially having applicants qualify for a mortgage rate higher than that they’ll actually have to pay in order to make sure buyers can afford a hike in the interest rate.
The report also includes a regional breakdown of housing prices. In Metro Vancouver, the price of a single detached house was down three per cent this year. Next year, analysts anticipate the price will rise a modest 1.2 per cent. That’s essentially a balanced market, a stark comparison to 2016, when detached homes skyrocketed 21.3 per cent in Greater Vancouver and a whopping 36.1 per cent in the Fraser Valley.
The forecast anticipates condos and townhomes will continue to sell for more, but single-digit percentages rather than double-digit hikes seen in the past two years.
The analysts took into account units coming on the market this year that’ll satisfy some of the demand forcing up prices for condo and townhouse properties, but they didn’t factor in the effect of Vancouver’s incoming empty home tax, which some believe could prompt homeowners to sell properties rather than pay an extra one percent of the home’s value if they keep it empty.
It also makes no mention of election promises made by the New Democrats during this year’s election campaign. Chief economist Cameron Muir tells CTV News without knowing what the changes could be, it’s impossible to factor them into their calculations.
Earlier this month Premier John Horgan kept tight-lipped about exactly what his government would do to cool the market, reiterating the promise that their plans would be made public in time for the upcoming budget.
"We're working tirelessly to February to launch what will be a comprehensive plan that includes supply side and demand side measures," he said at the time.
These changes are welcome news to those who’ve been waiting for prices to drop in order to get into the housing market, but retirees and those who’d been counting on cashing out will view the changes with trepidation.
Either way, Hutchinson says there will be both opportunities and disappointments.
"A lot of sellers are taking their home off the market if they're not getting the price they perceive it’s worth."