Where Should We Buy?

The real estate market is very active now a day with a Sales-to-Active Ratio at 32% in Greater Vancouver, the highest it has ever been since 2007. A lot of buyers are buying, some for investment purposes and some for personal use. I also see more companies selling real estate investment seminars now that the market is hot. One of the most common questions we get as real estate agents are: WHERE SHOULD WE BUY?

My answer is: It depends. Are you buying as an investment or to live in? If it is an investment, do you want cash flow or appreciation? If you are buying a home to live in, it also depends on your lifestyle, where you work, and many other factors.

MAC Marketing Solutions, a marketing company for pre-sale constructions, has compiled an infographic overview of the economic factors and statistics affecting the Metro Vancouver Real Estate Market in 2015.

The graph below shows the area with the most price increase in an eight year span from November 2006 to November 2014. Vancouver Eastside has the most price increase in the eight year span, followed by West Vancouver and Vancouver Westside. So if you want appreciation, maybe this graph provides some hints.

top performer

The below graph shows the absorption rate of new concrete condo in 2014. Burnaby South/Metrotown’s new concrete condo has the best absorption rate at 75%. Meaning 75% of all new constructions released in 2014 were sold. It is followed by Vancouver Downtown and Burnaby North.

new condo

The below graph shows the condo rental rates per square foot for properties less than 20 years old that are currently rented out by ADVENT Property Management. According to the CMHC Rental Market Report, the condo vacancy rate in Metro Vancouver is only 0.7% in 2014, and it is way below the Average of 2.0% in major cities across Canada.

rental market

I combined the two graphs together to see which area give me the most return solely based on the rental amount. There are many other factors to consider such property tax rates, amount of down payments but this gives us a very simplified overview.


You can also compare this graph to the first graph that shows which city has the most appreciation. You can download the complete MAC-Intel-2015 here.


New Condo Sales Activity in Richmond 2015

Mac Marketing Solutions, a marketing company for developers, released an article last Wednesday about the outlook of Richmond condo market in 2015. They reported that “There are currently 35 new residential projects selling in this marketplace (mostly concrete construction) and within these projects, 80% of the homes have already sold.”

image1-600x300MAC Marketing expected that the demand for new condo sales in Richmond will continue to be strong in 2015. However, as more master-planned communities are being built, the increased supply of available homes could slow down the rate of absorption of these new condos.

According to their research, new concrete projects are selling around $535/sq ft to $580/sq ft depending on the location and the type of products (ie. Luxury, concrete or wood frame, etc). In addition, more end users (who buy to live in) prefer the Oval Village where it provides great value and amenities. The demographic of these end users are described as young, first-time home buyers or families that are looking to upgrade.

Where as investors (and a lot of Chinese investors) prefer to buy along No. 3 Road within walking distance to Lansdowne and Brighouse skytrain stations.

I personally find the new condos are so competitively priced that they are taking buyers away from the resale condo market. My buyers are mostly end users and after showing them both resale homes and pre-sale condos, the majority of them decided to spend a little bit of money and buy a brand new home instead of a condo even only a few years old.

Older condos do have their own benefits such as bigger floor area, bigger bedrooms and more affordable.

But as the statistics below shows, the activity in resale apartment condo is slower than the new construction in Richmond in 2015.