On February 28, BCREA released a comprehensive white paper titled A Better Way Home: Strengthening Consumer Protection in Real Estate, which includes a set of recommendations for the BC Government on better-protecting consumers in real estate transactions and addressing the root causes of BC’s lack of housing affordability.
Here’s what you need to know about A Better Way Home.
The recommendations fall into four core categories:
- improving housing affordability,
- enhancing consumer protection in transactions,
- evolving the real estate sector, and
- creating a world-leading regulatory structure.
Addressing the root cause: housing supply
Improve housing affordability include implementing supply-side measures and calls to action made by the Development Approvals Process Review and The Expert Panel of Housing Supply and Affordability, establishing a permanent National Housing Roundtable in coordination with the federal government and making infrastructure investments to local government conditionals on Official Community Plans.
Enhancing consumer protection in real estate transactions
Enhance consumer protection in real estate transactions, including implementing a mandatory five business-day “pre-offer period” from the time of listing instead of a “cooling off period.” During this pre-offer period, offers cannot be presented, allowing prospective buyers time to conduct due diligence.
Evolving the real estate sector
Continue evolving the real estate sector, include raising qualification standards for new licensees and providing more targeted re-licensing education for managing brokers, implementing a Professional Standing Committee within the BCFSA, modelled after the BC Teachers’ Council, to ensure the BCFSA benefits from the on-the-ground professional experienced Realtors when making practice changes.
Creating a world leading regulator structure
Raising entry qualification standards for new licensees and provide more targeted re-licensing education for managing brokers ensure high consumer satisfaction. Establishing a Professional Standing Committee within BCFSA, modelled after the BC Teachers’ Council also ensures BCFSA benefits from the on-the-ground perspective of experienced Realtors when making practice changes.
Bank of Canada Interest Rate Announcement
As widely expected, the Bank of Canada raised its overnight policy rate yesterday to 0.5 per cent, an increase of 25 basis points. In the statement accompanying the decision, the Bank noted that the invasion of Ukraine by Russia has added a major new source of uncertainty to the global economy, and it expects the fallout to include upward pressure on inflation and possible supply disruptions. However, economic growth in Canada finished 2021 stronger than expected and persistently higher inflation increases the risk up a continued upward move in inflation expectations. As such, the Bank states that it believes interest rates will need to rise further.
The Bank must now contend with inflation and inflation expectations that are much higher than the Bank is comfortable with, while also monitoring the potential impact of the Russian invasion of Ukraine on financial markets and commodity prices. While the BCREA economists expect the Bank will continue to tighten, ultimately bringing its overnight rate to 1.75 per cent by early 2023, there is clearly more uncertainty in the global economy now than when the Bank decided to embark on this tightening cycle. That uncertainty is already being reflected in long-term Canadian interest rates, with the once rapidly ascending 5-year Govt of Canada bond yield falling about 30 basis points in recent days.
The Metro Vancouver housing market saw steady home sales activity, modest increases in home listings and continued upward trends in pricing in February. The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,424 in February 2022, an 8.1 per cent decrease from the 3,727 sales recorded in February 2021, and a 49.8 per cent increase from the 2,285 homes sold in January 2022.
Last month’s sales were 26.9 per cent above the 10-year February sales average. As we prepare to enter what’s traditionally the busiest season of the year, the Metro Vancouver housing market is seeing more historically typical home sale activity and a modest uptick in home listing activity compared to last year.
There were 5,471 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service in Metro Vancouver in February 2022. This represents an 8.4 per cent increase compared to the 5,048 homes listed in February 2021 and a 31.2 per cent increase compared to January 2022 when 4,170 homes were listed. The total number of homes currently listed for sale on the MLS system in Metro Vancouver is 6,742, a 19.3 per cent decrease compared to February 2021 (8,358) and a 19.1 per cent increase compared to January 2022 (5,663).
Despite having a higher volume of people listing their homes for sale in February, the region’s housing market remains significantly undersupplied, which has been pushing home prices to new highs month after month. For all property types, the sales-to-active listings ratio for February 2022 is 50.8 per cent. By property type, the ratio is 34.9 per cent for detached homes, 64.3 per cent for townhomes, and 62.2 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,313,400. This represents a 20.7 per cent increase over February 2021 and a 4.6 per cent increase compared to January 2022.
A lack of housing supply is at the heart of the affordability challenges in Metro Vancouver today. We need more coordinated action from stakeholders at all levels to help create an ample, diverse supply of housing options for residents in the region today and into the future.
Sales of detached homes in February 2022 reached 1,010, an 18 per cent decrease from the 1,231 detached sales recorded in February 2021. The benchmark price for detached properties is $2,044,800. This represents a 25 per cent increase from February 2021 and a 4.7 per cent increase compared to January 2022.
Sales of apartment homes reached 1,854 in February 2022, a 5.4 per cent increase compared to the 1,759 sales in February 2021. The benchmark price of an apartment property is $807,900. This represents a 15.9 per cent increase from February 2021 and a 4.1 per cent increase compared to January 2022.
Attached home sales in February 2022 totalled 560, a 24 per cent decrease compared to the 737 sales in February 2021. The benchmark price of an attached unit is $1,090,000. This represents a 27.2 per cent increase from February 2021 and a 5.9 per cent increase compared to January 2022.