After years of extreme growth, it appears that Vancouver’s residential real estate market is beginning to cool down on a longer term basis than the dip of 2016-2017. This could spell trouble for those who have obtained credit against the equity in their homes and have stretched themselves thin in the process.
Sales in Greater Vancouver are down almost 35% year over year October 2017-2018, and prices have started to fall, particularly since the early summer. Inventory is simultaneously increasing, and all of this suggests a shift to a buyer’s market and the risk of further drops in real estate values.
The slowdown can be attributed, in part, to tighter mortgage eligibility requirements being implemented at the federal level, the impact of the foreign buyer’s tax at the provincial level, and the anticipated speculation tax that provincial government has proposed to implement in many of BC’s most active housing markets. While these policies will continue to constrain the market, interest rates are increasing, and are predicted to be raised by the Bank of Canada several more times over the next year. These factors are creating an environment for a sustained depression of real estate values, which in Vancouver could mean a substantial loss of equity for homeowners, particularly those with detached homes on the higher end of the market, which has already begun to see drastic losses and will be further impaired by higher property transfer taxes coming into force for homes over $3,000,000 in 2019.
Homeowners who have relied on the growth of equity in their property to finance their lifestyle, or more significantly, their business, would be wise to seek the advice and assistance of experienced insolvency counsel to find the best available long term solutions and strategies for their particular situation.