Vancouver Real Estate Market Update September 2025: Rate Cuts & Prices

Episode Transcript

Speakers:

• Jamie: Jamie Garbutt
• Denny: Denny Dumas

(Episode Begins)

Jamie: It’s kind of crazy to think we’re already at the end of September, but we’re sitting here on September 25th. The Bank of Canada has made another rate cut as of last week. We’ll delve into rates and what to expect. Has it affected the market? We are a few weeks into the fall market and not a lot has changed, but there is a lot of activity. I’d say it is not as all doom and gloom as media headlines suggest, but there’s definitely some differences in these slower markets where there’s more inventory. We’ll talk about some specific areas to give you some context on what inventory numbers look like today versus last year versus the peak of early 2022.

But let’s maybe start with rates, just kind of a quick summary. So, the Bank of Canada last week cut its overnight rate by another 25 basis points. That puts their overnight rate at 2.5%. And the prime rate for most banks—other than TD, because TD wants to be special and has a different prime rate—is 4.7. So if you are a variable-rate mortgage holder, congratulations. You are saving some money again this month, approximately $15 per $100,000 that you have in your mortgage amount.

And it’s actually interesting to see. I mean, there’s so much to talk about in the lending world, but for mortgages and variable rates, a lot of the banks are—we’re seeing higher discounts than we’ve seen in the last little while, pushing people to variable rate mortgages again rather than fixed rate mortgages.

Denny: And I’d say your typical discount off prime right now is like 0.8. I’ve seen 0.9 recently. Haven’t seen one in a while.

Jamie: We saw one.

Denny: 0.9. That’s quite a bit. So, I guess their risk tolerance is lowering, or they’re willing to take on a little more risk—the banks—if they’re willing to do a little more of a discount.

Jamie: Yeah. Last time we were at this prime rate, Denny, was July 2022. So, the bank rate hasn’t been—or prime rate hasn’t been at this level since then. And at that time, it was pretty rapid because in March 2022, it was 2% lower. So, the prime in March ‘22 was 2.7% and then it shot up to 4.7 by July. So, we’re back to July 2022 prime rates for the variable rate holders.

Fixed rates, though, to be announced. I would say in the time that we’ve had our little summer break from this podcast, I don’t feel like we’ve missed a lot. In terms of what we’re going to talk about today, it would have been a similar conversation a month ago, would have been a similar conversation two months ago. But I’ve noticed because I listen to a lot of mortgage and financial and lending podcasts, it seems like a couple of months ago a lot more were talking about fixed rates going up, bond yields going up, and now it’s a different conversation going the other direction. I think we just have to acknowledge there’s volatility in this market. When you hear something like “fixed rates, bonds went up,” it seems more like a longer-term trend, but reality is, it’s news. And I don’t know if this is a trend or what’s going right now, if three months from now we’re going to be talking about higher fixed rates or lower fixed rates.

My assumption is over the next year, two, three, we’re going to see lower fixed rates in order to stimulate the economy and boost things up, but there are factors that could go against that as well. So, how does this feel? I mean, in July 2022 when we were at this rate, we were used to low, cheap money. Now we’re coming off of expensive, high-interest money and getting down to this rate. If you were to predict, Denny, what if we’re talking about fixed rates and mortgage sentiments in three or six months from now, do you think we’re going to be talking about lower numbers or higher numbers? What’s your opinion on that?

Denny: The answer is I have no clue. I stopped trying to guess because I feel like we don’t do enough research in the economist world or just don’t have that knowledge set to be able to predict rates. But in talking to a couple of mortgage brokers recently, they obviously watched the 5-year Canadian bond yield quite closely, and over the last month or so, it’s come down about 20 basis points. And that usually is what predicts the future 5-year fixed rate. And so, in chatting with a couple of them, their sentiment is they think fixed rates will come down slightly in the next 3 months. So, if I had to guess, I’m going to use their information and say they will come down slightly.

Jamie: Come down slightly. So, maybe a three and a half, maybe?

Denny: I don’t know if it’ll go that low, but a typical 5-year fixed rate right now for a conventional mortgage is in the four to 4.2 range. I’ve seen some three-year fixed rates in the high 3s, 3.9, 3.85. In 3 months from now, I don’t think it’s going to be 3.5 for a 5-year fix, but it might be more like 3.85. Now, we go into next spring, March 2026, with 3.7-3.8 for a 5-year fixed or a 0.9 under prime variable. What do you think that spring market’s going to look like?

Jamie: I think it has to be busier than this year.

Denny: And I know we’ve said that before, but when you look at specific neighborhoods and product types and what we’ve seen in terms of inventory levels and sales numbers over the last couple years… And when you look at the sales numbers comparatively to more active years, we’re now approaching—well I guess we’re now just over 3 years of much slower sales volume. And I think at some point that just has to change. And when I look at what product is more active right now, and looking at July and August comparatively to the beginning of the year, the upsizer product—the townhome and the single-family home—is actually up in sales volume comparatively to 2024, versus condos are down. So, it seems like that trend where people are wanting to move again, people are wanting to upsize, is slowly, slowly coming back. And we’re not talking great percentages here; we’re talking like 3 to 5% sales volume increasing this past summer to 2024. So, I just think that that’s probably going to increase overall volume next spring comparatively to this spring.

Jamie: I mean, have you seen a slower spring than this spring?

Denny: No. I think we can only live below the 10-year average for so long. And I don’t think we need—I mean, even with more job loss and less immigration and maybe a little bit more negative economic news for a period of time, there’s a lot of people that want to move. And even we, as realtors, we get these monthly emails from the real estate board for market stats. And the market stats that we’re getting are pretty bleak compared to the past markets we’ve experienced in the city of years ago. But the headlines from these statistic emails have slowly gotten softer and kinder over time. What I mean by that is the last one for August sales is kind of a message that’s trying to say, “easing home prices help lift sales in August.”

The reality is the sales in August were still 19.2% below the 10-year average and they were 3% up from last August, which was a slow August. So, I love that. And quite frankly, you know, media message is important. A lot of people pay attention to the news and if there’s more of a positive sentiment in the market, more people will transact and make moves. But it’s funny that the real estate board is spinning the most positive message on the market to try to encourage those media outlets to have a little more positive message, too. That’s my take on it.

Jamie: What was that? Sorry, what was that number? Sales are up what percentage from last year?

Denny: So, August sales are up 3% compared to August 2024 in terms of volume.

Jamie: Okay. When you break that down, it’s interesting to just look at the different product types. So, detached homes in Greater Vancouver, sales volume up 12% from last August. Townhouses up 10.3% from last August. Condo sales down 5.4%. There you go, which makes sense. Condos have been not really in the limelight lately and a lot of condo sales. Specifically, I think if you isolated those condo sales to like maybe 2010 to 2020 built condos, it probably wouldn’t be as skewed in terms of this year’s volume to last year’s volume. But I think the number of brand new condo sales and newer condo sales has dropped off considerably.

Denny: Yeah. Also, August listings are up 17.6% compared to last August and 36.9% above the 10-year average. So, realistically, these stats aren’t great. But I think my guess is actually September is going to show a little bit of a different story. And maybe in our little micro-bubble of our own business, we’ve just noticed an uptick of business. But I think the message has been communicated from the board, but the stats are still showing a slow market. And I thought August was pretty dead slow. I thought July had a little bit of life in our business, August was pretty dead slow. It’s ramping up, but our business doesn’t reflect the whole market. I’m optimistic that this fall is going to be busier, but that doesn’t mean in terms of sales stats. I think we’re still going to be living below the 10-year average. I just think we might achieve more sales than month-over-month from last year.

Jamie: From a consumer sentiment point of view, have you noticed that adjust at all as we come into the fall? Like you said, July was our team’s busiest month of the year. August normally is a slow month, but the Greater Vancouver stats show that it was busier than last year. Is sentiment changing? Are the conversations with people looking to buy right now more optimistic? Is there any more urgency or is that just kind of flatlined the last couple of years?

Denny: I think… I can only speak with a few clients that I’m working with. I think more people are accepting today’s prices and willing to make the move. I think when they feel like it… well, mind you, I thought the bottom was last fall, and the fall before that, so I didn’t expect tariffs and Trump to stir up this spring and now it feels like it is more of an upward sentiment. It feels like it’s more likely to go up than down. I think there are more people that… well this rate cut sends a message that if money gets cheaper, well money supply increases and assets go up and real estate prices go up. Because people, when they don’t have the fear of losing their shirt, their job, and their shelter, they’re going to spend whatever the bank gives them to get the best home they can. That’s kind of how Vancouverites have done it in the last decade or two.

But I think we’re in a more of an optimistic sentiment. I think the herd will move together and that herd will really show up next spring. But I think this fall more people should consider making that move. If you’re upsizing, it’s a great time to be a buyer. And personally, if you know you need to move and you can afford to move, take the hit on the sale and buy. In a lot of cases—it’s case by case, of course—but a lot of the times you wait for a better day and your buy is going to go up, too. So, it’s all relative.

Jamie: Should we go into stats? And just to prepare our listeners, if you like stats, this is going to be an episode for you. But should we go into stats in terms of some specific product types and what they’re doing comparatively to the last few years?

Denny: Let’s go into the numbers and then let’s see where we get—how we go off course from there.

Jamie: Are we going to look at how the year’s gone to date in certain markets? So like from January 1st to September?

Denny: Yeah, maybe. Let’s… so the stats we kind of want to share today are how the first three quarters of the year have gone this year comparatively to last year, and then comparing those sales numbers and sales ratios and days on market and average median sale prices to the peak, which was the first few months of 2022.

Jamie: Alright, let me throw up an example here, Denny. So, I looked at Burnaby Houses. This year there have been 323 sales of Burnaby houses compared to last year’s 451 sales. Okay, so we’re 28% down year-over-year. And from 2022, we’re 42% down from the 2022 number of sales, which had 560. And the crazy year of 2021 had 892 sales; we’re 64% down from that. So, just a reminder, 323 house sales this year, 892 in the crazy 2021 market.

Median price this year has been $2.1 million, average was $2.23 million. Similar numbers last year; they were a little bit higher last year, but not significant. Median price was $2.1 million this year, last year was $2.178 million. All in all, Burnaby’s probably one of the markets that’s going against the grain in terms of prices, especially when you look at North Burnaby sales. Single-family homes have outperformed most other areas in the market, maybe partly due to Burnaby’s adoption of the small-scale multi-unit zoning quickly. But yeah, Burnaby is an example of a suburb that is probably one of the least affected suburbs in this current market, but it is still affected. Do you have an example, Denny? Do you have one you want to share?

Denny: Yeah, New West houses, not as optimistic I’d say. From January to today, there have been 75 sales and there are currently 153 listings. Comparatively to last year, there were 100 sales at this time. So we’re down 25% in terms of sales volume. And listings last year were 118, so we’re up… what’s that, like 35-40%. It’s a little bleaker.

Jamie: I’d say it across the board, actually, whether we’re looking at condos, townhomes, or single-family, in a lot of areas this year comparatively to last year, the median and average sale prices are relatively close, like within a few percentage points in most areas. The average and median days on market are within a few days; they’re very close. But the stats skew when you look back to the first half of 2022 and the craziness.

Denny: Average days on market this year for a single-family home in New West is 26 days; last year was 23 days. Then you go back to the first half of 2022 and that was cut in half.

Jamie: Oh, it’s night and day from the 2022 mark. Sorry, did you share the price difference between today and those years for single-family homes? Because I think one thing that stands out to me in New West, one, you said 75 sales—Burnaby had 323—so sales data is more likely to be skewed the smaller the sample is. But also, New West as a whole has not had many high-end homes sold this year. So I just think the caliber of homes that have been selling in New West this year have been more entry-level and not nearly as many $2 million-plus homes. So, I could see those average and median prices being quite down compared to before.

Denny: The average sale price this year for a single-family home is $1.69 million versus early 2022 was $1.8 million.

Jamie: There you go. Just over… that’s a pretty good comp there. And I think one thing, well we can get into this too, but you’re talking about let’s say March 2022 as the peak compared to today. Oh, that example is not quite a 10% drop, but let’s say it’s in the 5 to 10% range. Let’s say if you rounded it to 10% off, a lot of properties are 10% off that peak price. Inflation-adjusted is another 10% off. So, we’re talking Canadian funds, things are 10% down, but it’s really 20% down if you’re talking about inflation-adjusted numbers. So, the longer you wait to chase that number that represents the number you paid, just know there’s inflation as well. So, it’s not as pretty when you compare our prices to other assets.

I did this for… I mean, not to go on too much of a tangent here, Denny, but I looked at—and I think I mentioned this before, but I just get a kick out of it—inflation adjustment from March 2022 to today is about 10%. If you bought a million-dollar home in Bitcoin in March 2022, you’re down 64%. If you bought in gold, you’re down like 55%. I mean, those are extreme, obviously both of those have screamed through the roof, not the best example, but real estate hasn’t been thriving compared to other assets if you’re looking at it with an investor hat. Now, a home shouldn’t be strictly an investment; it’s a place to live. So, I think it’s probably better to look at the inflation number as opposed to, “Oh, I wish I’d bought that home in Bitcoin.” But I think it’s just important to say, like, sometimes it makes sense to cut your losses today if you’re trying to move on. If you wait for your investment to recoup, you’re waiting for our money supply to loosen up more, rates to go down more, more inflation to happen. And yeah, one day you’ll get that number back, but it won’t be the same as it was in 2022.

Denny: The other interesting thing that I’ll mention for each of these product types that I was pulling stats for is the number of listings today versus in March 2022, and just seeing how significantly higher the inventory is today.

Jamie: Did you tell? So today there are 153 single-family homes for sale in New West. In March 2022, there were 70. So less than half. They would sell through quickly back then. And I think a good chunk of them are land assemblies today that are not moving.

Denny: I looked at North Vancouver houses sold in the first three quarters of this year; there were 508 sales. The median sale price was $2.125 million. 508 sales compared to 2022’s 590 sales—not a huge difference. Last year was 523 sales, so it’s only down 2.8% in terms of sales volume for detached compared to last year. At the peak of the market in 2021, there were 934 sales, so we’re down 46% from that one outrageous year. But North Van detached hasn’t fluctuated as much as other markets. And I went with median price because that was a market where the average and median had a bit of a gap, because it’s skewed by some luxury sales, and I thought median represents more of what’s going on. So the median price in 2025 was $2.125 million for a single-family home and the median price in 2022 was $2.186 million. So $2.125 million to $2.186 million. Not a big difference.

Jamie: Okay. Coquitlam single-family under $2 million is very, very similar. Sales this year: 319. In 2024 to this point: 338, so very close. Median sale price $1.63 million this year; last year $1.629 million. Not too far off. Identical. Average days on market very similar: 29 this year, 26 last year. The biggest difference is inventory. Listings at the end of August were 227 in Coquitlam under $2 million versus last year was 172. And you compare that inventory number again—227 this year to March 2022’s 113. So, double.

Denny: I’ll share some more numbers here. East Van: 551 sales this year compared to the peak of 2022, which had 779 sales. So we’re down 29% from the peak. And East Van is down 15% compared to last year. I looked at Langley as a market that’s probably a little bit more extreme, that’s going to show its colors. Langley single-family homes sold this year is 753 sales, down from the peak of 2021 which was 1,586. So it’s 53% lower than the peak of that crazy year. The median price also, I would say, has the most drastic change in the last couple of years. The median price for a single-family home in Langley sold this year is $1.485 million. Last year it was $1.549 million and in 2022 it was $1.625 million. So going from $1.625 million to $1.485 million, I think that kind of sums up a Langley detached home pretty well, doesn’t it?

Jamie: Really well, honestly. When you look at a 3-bedroom townhouse in Langley, that number or that percentage of sale price might be quite a bit higher. Remember, Langley just had that crazy run through COVID. The same unit in the same complex, it seemed like it went from $850,000 to $1.05 million in a few months.

Denny: There was one extreme example in a townhouse that we sold, I think it was Panorama Ridge in Surrey, I could be off on the sub-area, but it was out that way. In townhouse complexes, you get great data because you see there are lots of similar units that sell. But I think the difference from August 2021, there were a couple of examples that sold for $800,000, and then by March 2022, they got up to $1.2 million, and then by August 2022, they backtracked to a million. So, it went from $800k to $1.2M to $1M for a typical townhouse in this complex. It was madness.

Jamie: I’ve been seeing a couple of homes out in Langley lately with some clients and one thing I will say is, when I first got in the business, Walnut Grove was a very desirable hot spot, talked about a lot, probably because Willoughby Heights didn’t exist. But Willoughby Heights, they’re doing so much out there for young families, whether it’s row homes, townhomes, or new single-family homes. The amount of parks and soccer fields and catwalks to get to them and kids running around… If you’re looking for a family home not connected to a neighborhood, maybe consider Willoughby Heights because it’s impressive when you see how much money they’re putting into their parks out there. Speaking from a guy with three kids, so I value parks. What else you got, Denny?

Denny: Should we go to some strata? Tri-Cities three-bedroom townhomes. This year, 339 sales. Last year, 385. So, slightly down 5%. Average sale price this year, $1.03 million. Average sale price last year, $1.049 million, so just slightly down. Average days on market pretty similar: 22 this year to 17 last year. The number of listings this year is 173; last year 126. That seems to be the biggest difference in stats is just the number of listings available right now comparatively to last year and 2022. This year again, three-bedroom townhouses in the Tri-Cities, 173 listings. In March 2022, there were 54.

Jamie: Oh, that’s three times the amount of inventory.

Denny: I’m glad you looked at listings. I was looking at sales, not listings. I looked at Burnaby condos, North Van condos, East Van condos, and Langley condos. Similar kind of data to single-family in terms of, you know, Burnaby is down 14-15% in sales from last year and 41% from 2021. But a couple of interesting little anomalies here. The median sale price for North Vancouver condos was $787,500 this year, and in 2022, the peak of the market, it was $789,000. So it’s almost identical, very close to the peak. So the median sale price of condos in North Van, maybe there were different calibers of condos sold, but the median price hasn’t changed much from this year to 2022. And same with East Van. The median sale price in East Van was $680,000 this year and in 2022 it was $675,000 in the same months. Langley is a little bit down, obviously. The median was $549,000 this year and the median in 2022 was $578,500. So it’s down a little bit but doesn’t show as much of a decrease as houses. But again, what this story is not telling is the age of these condos selling, the size of them selling, and I think there’s a different mix of properties selling this year when it comes to strata properties compared to 2022.

Jamie: Yeah, I’d say this is probably one of the more surprising stats. So I also kind of looked at just this summer, because the inventory numbers are so high, it sounds bleak and tough to be a seller in these markets, but it is such a price-dependent market. And when you look at the stats of what is selling in the last couple of months, what their list price to sale price ratios are, they’re actually pretty good. Like Tri-Cities Townhomes, there were 89 sales in the last two months, so July and August. The average list price to sale price was 98.1%. So very close to list price. And this was the most surprising thing I found in doing this exercise the last few days is the number selling at or above asking for Tri-Cities 3-bedroom townhomes in the last 2 months. Any guesses what the percentage of at or above asking is? 89 sales.

Denny: I am going to say one out of 20. What is that? 5%?

Jamie: 24 out of 89 sold at or above asking price.

Denny: Oh jeez.

Jamie: So this is going to show again, like I’ve mentioned so many times in the last couple of years, is we are in a slower market in Greater Vancouver real estate and your list price strategy is the most important thing. Listing correctly out of the gates. A lot of even condos in higher inventory markets are getting attention and selling. We have one in Kits right now that had 16 groups through the open house because we priced correctly. We had one in Brentwood last week that had 13 or 14 groups through an open house because we priced correctly.

But then you look at what’s sitting on the market, and I have a handful of buyers that are looking in that condo market, let’s say in the Burnaby range at $800k-$850k for a two-bedroom. And 75% of the stuff that they send me, they’re like, “You know, what do you think this is worth?” and you’re like, “It’s priced $75,000 or $100,000 too high.” It literally has no chance of selling. And that is the majority of these… like again using a Tri-Cities three-bedroom townhouse for example, 173 listings sounds like a lot because that is three times the amount that there was in 2022, but when you look at the actual sales numbers of what’s selling, things that are listing correctly are selling fairly quickly. Fairly quickly, meaning average days on market is 21 and very close to list price, 98.1% on average.

Denny: I mean, it makes sense. I luckily had at the start of this month two full-price sales, and a lot of other listings are struggling. And I think that really sums it up: probably two-thirds of the listings that are selling are brand new listings that are the right product, the right price, and then that other third just lingers and lingers and then they have to adjust the price. It might be a good product, but they might have just come out at the wrong price. Luck and timing are a major factor in this market. And if we didn’t get a full price offer initially on one of these listings, it’s hard to say if that price would have repeated. There are definitely other examples I can pull from where we had a full-price offer collapse on a condo we have listed and we’re still, months later, trying to find a buyer.

Jamie: So, the question that I asked you a few minutes ago is what do you think that number is that have sold at or above asking? And it’s funny that that is a bit of the perception. And even that’s kind of what I thought going into this. But looking at the other product types that I’ve mentioned, so New West single-family homes in the last couple of months, there have been 19 sales. Two sold at or above asking. Super small sample size, but that’s one in 10. I think that shows potentially the first-time buyer market having stronger demand, like there’s more buyers in those lower price points. Even though the number you shared is a surprisingly high number of full-price and above sales, my guess is that half of those are new construction. But even if half of those are new construction, the other half is the resale market, it’s still a high number.

Denny: Still a high number. And when it’s new construction, full-price sales, you never know what the truth is. You don’t know what the incentives they’re throwing behind it are, or the kickbacks or rebates or whatever it is. So, it’s in a developer’s best interest to post a high sale on the MLS to hold the sales values up for future units. But you don’t know what sort of deals are in between behind that to encourage my point.

Jamie: What’s… even with a larger sample size, Coquitlam single-family homes under $2 million in the last two months, July and August, there were 105 sales. 12 of them, so a little over 1 in 10, selling at or above asking. Average sale price was 97% of the list price.

Denny: When I was looking at the last 60 days of sales, the condos were doing better than the single-family homes in terms of achieving full price or above. Like, just to give you an example, Burnaby North single-family in the last 60 days: 2 out of 33 sales were full price or above. Okay. And that’s very… I mean, for Burnaby North I was expecting a higher number because at the start of this year, I know there were just more developers going for those properties. But the Burnaby North last 60 days average sale price to list price is 93.3%. So when you’re talking about a $2.4 million home, which is the median price sold, and it’s coming off the market 6.7% in the negotiation, it’s like $130,000 or something like that, $140,000.

Jamie: 93%. Yeah, that was a… Actually, Burnaby North was 93.3%; Burnaby as a whole was 93.5%. 4 out of 60 sales in Burnaby as a whole in the last 60 days for single-family detached homes. If I were to isolate the more prominent ones like Burnaby North, for example, between $1.5 to $2 million, you know, that’s a pretty hot property type. There have been nine sales in the last 60 days out of 50 listings, so an 18% sales ratio or 5.5 months of inventory. So, it’s a balanced market, but not screaming up or screaming down. That’s between $1.5 to $2 million in North Burnaby. Between $2 and $3 million in North Burnaby, there’s about 14 months of inventory. So it goes from 5.5 months to 14 months. Seven sales in the last 60 days, 98 listings. So a bit of a jump up for that.

Denny: And I also looked at North Van. The median sale price is $1.949 million. In the last 60 days, 8 out of 65 homes got full price or above. The average sale price to list was 95.6%, so a little better than what Burnaby’s experienced. Between $1.5 and $2 million, there were 15 sales out of 106 listings, so a little bit oversaturated in the listing department there. Between $2 and $3 million in North Van, there were 18 sales out of 168 listings. So, combined, it’s more of a buyer’s market. I mean, that’s like a 14.7% and a 10.7% sales ratio between the two. There was no segment of North Van single-family that had a smoking hot seller’s market that I could see, but it’s steady, just more in favor of the buyers by the data.

Jamie: It’s interesting with those stats that you’re mentioning. It’s interesting to look at, and historically in Greater Vancouver, the higher price point product typically has more room off of that list price to sale price ratio. So seeing 93% in North Burnaby as a whole I guess is not super surprising because it’s a higher price point market and there are probably a bunch of sales in the $3 to $4 million range that sell 10 or 12% off list price, versus the $1.8 million livable 1970s home that’s on a good street that’s probably pretty close to list price still.

Denny: I think by the number of sales in Burnaby it is kind of surprising. I don’t think I’ve ever seen a 93% average over that much of a sample. So yeah, even though in this market it is a big number.

Jamie: New West two-bedroom condos, January to September this year, 294 sales. Last year, 355. So slightly down. Average sale price $669,000 versus last year $678,000. So pretty much the same. Average days on market 34 this year to 26 last year; pretty much the same. Inventory: number of two-bedroom condos for sale right now is 223 in New West and last year it was 167. So again, up 35% in listing inventory.

Denny: I think one thing about New West that’s kind of skewed this year—and this has probably been the headline and something to watch in terms of the real estate market—is the Pier West development on the waterfront. And I say that just because New West is not a luxury market, but when you put in two giant luxury towers in a small city, you start skewing the condo stats. But I think it gives a good picture for where new condos are at. You know, the prices that they’re selling for, developers could not make money on. So Bosa, I don’t know how their profit ended up working out on that development, but I’m sure it wasn’t great. But they have a lot of floor plans that give us an example or paint a picture of how the year’s going.

Pier West has this 03 unit that’s a three-bedroom that’s had a number of sales throughout the year. And at the start of the year, there were a couple of sales for these three-bedroom 03 units. One was at $1.053 million, one was at $1.076 million. And then they all didn’t sell off and the inventory lingered and the market didn’t get better. And there are not many million-plus buyers in New West. So the prices, if you have to sell, you have to lower your price until you catch the next buyer. And right now, those sales I’m sharing there were $1.05 million, $1.076 million. Right now there are three active listings with the same floor plan, and the 1503 unit is listed at $998,000, below those sale prices. It hasn’t sold, been on the market forever. So whatever sold at the start of the year in that building, the next one that sells may be $100,000 less, and in some cases, it could be more dramatic. But on a price per square foot basis, we’re like below $900 a foot for new concrete construction on the water in New West. I don’t know if you could make a profit at that if you got the land for free.

And then they have these two-bedroom and den floor plans that front right onto the water in the Pier West development. Early in the year there was an example of a sale at $1.3 million, there was even one at $1.4 million. And there are still those plans that haven’t sold off. There have been four sales of this particular plan this year and there are seven listed right now on the MLS. These two-bedroom dens that front right on the water. There’s also more not on the market that are held back from Bosa. But these people that bought for $1.3 million for the two-bedroom and den facing the water, or $1.05 million for the three-bedroom on the backside, they bought it off people that lost $100,000 to $200,000. And the sales that are going to happen this month and next are another $100,000 off. I don’t think it’ll get much worse, but who knows? These are still a good value, well below replacement cost, prime waterfront, but there’s a lot available. So, Pier West, good luck. Hope more sell.

Jamie: We still get emails regularly from the sales center because they held back I think 50% of one of the towers and they still have a ton of inventory left. And they’re throwing some pretty big incentives at people. Even just asking for big decorating allowances, they’re pretty… I think like a lot of developers right now that are holding on to a lot of inventory, they just want to get a few sales on the books and they’ll take a bit of a haircut to just start unloading a bit of inventory.

Denny: This has some products you can’t find anywhere else. Like, if you want to live in a three-bedroom condo, they have a lot of three-beds that are pretty good value. And their two-bedroom and dens right on the water are just like a wall of glass over the water. The views are incredible. Ten years from now when the dust settles and they all sell through, there’s going to be certain plans that are very desirable and I could see them doing quite well in normal times. But right now it’s just too much product for the market and it’s going to take a while for it to get absorbed.

Jamie: Yeah.

Denny: Condos. Go ahead, I have one here for North Van.

Jamie: Well, I have a couple here, but last 60 days… well, I’ll go into Burnaby quickly. Median price in Burnaby is $680,000. In the last 60 days, 16% of the sales were at full price or above. I isolated two-bedrooms between $600,000 and $900,000 just to kind of see; that’s a popular category. And in that range, it’s an 18% sales ratio, 5.5 months of inventory. There were 111 sales out of 443 listings. And that’s for two-bedrooms in a pretty active price point in Burnaby. That’s to me a balanced market, not a sellers or buyers market.

Denny: North Van, median price last 60 days was $760,000. 13 out of 127 sales were at full price or above. Their sales ratio is similar to Burnaby’s at 5.5 months of inventory, 18.6% for two-bedrooms in that price range. I took an example of one specific development I pulled, it’s The Beacon in Seylynn Village, 1550 Fern. I used that because there were a couple of sales in the last 60 days. And two-bedrooms were selling at, call it, $925 a square foot in the last 60 days. And when I compare that to 2022, the similar floor plans were going for about $990 a square foot. So at the peak of the market in March—and mind you, this is skewed down at one building, but it wasn’t significant—it went from, let’s call it, $1,000 a foot to $925 a foot from the peak of 2022 to today for a concrete condo in Seylynn Village.

And then I also looked at an example in Brentwood, 4888 Brentwood, the Fitzgerald. A nice 2008 building that had some relevant data. It had a couple of recent sales. Unit 1405 sold for $563,000 recently. And unit 705 sold for $635,000 in 2022. It’s basically a lower-down unit sold for a higher price. It’s down about, give or take, 13% in that building. So, a two-bedroom that was bought in 2022 to today in that Fitzgerald is down about 13%.

Jamie: Well, we have a listing in there right now, so I’m very aware of that number.

Denny: Let’s go to some topics. That’s a lot of stats. Too many stats, overwhelmed with stats. Summary of stats: more inventory, slightly fewer sales compared to last year. Very close in a lot of the sales numbers. The biggest thing is more inventory, but days on market and average price points are very, very close to last year.

Jamie: Yeah, haven’t really changed too much. And I’d say if the property has a slight negative with it, it’s getting extra impacted. You know, the ones that have no negatives. I had one example of a house that backed onto a highway in Willoughby. There was a sale for a similar house at $1.9 million at the start of this year and there’s one struggling to sell at like $1.7 million. So, when there are blips in this market where there are just no buyers for a product, sometimes that shows its colors in a really low sale price.

Denny: There’s a lot of little topics that come up regularly right now. But maybe I’ll just mention a couple to you and get your reaction and how you kind of chat with consumers about these things. Because one that I’ve seen a handful of times recently—and I think this is coming up more personally because a lot of sellers are more, comparatively to like 2023 let’s say, a lot of sellers are more realistic and accepting of today’s market value versus 2022’s market value and are listing in a very appropriate range. And as a result, they’re getting more activity and more people through open houses. And multiple offers have happened a handful of times in the last few months. And one thing I hear from buyers quite regularly in this slower market that we’re in is, “Well, I don’t want to compete. I would never compete. This is not the market to compete in.” So how do you respond to a buyer that makes that objection?

Jamie: I think competing now doesn’t always mean that it’s going to get full price or above. We’ve had many multiple offer situations where the best offer is still below list. I think if it’s a rare property that doesn’t come up often, get in the mix. You don’t know what the outcome’s going to be. But if it’s a cookie-cutter condo and there are lots of them available, sure, don’t get caught up in a bidding war when you don’t have to. I think there is a moment where you step aside and there’s a moment where you don’t. The moment where you step aside is when you’re going after something that is pretty ordinary and plentiful and you know that there are lots of substitutes. But you don’t know until you try.

And so if you’re offering on a place, the assumption is that you like it. And maybe there’s a tactful approach where you can tell or you have a sense that the other offer they’re getting is a bogus offer and you’d rather them fail on that offer for a day before you step up. That makes sense, but that’s a calculated risk; you could be wrong. But multiple offers and not being willing to compete means that you could watch it sell for a price that you’d be willing to pay right in front of your eyes if you don’t step into the mix.

Denny: Focusing on the right things whenever you’re purchasing real estate. Not “am I competing or not,” but “what is the market value and let’s try to buy it at or slightly below that.” But there have been multiple times this year where in my opinion we’ve listed something high and it’s taken a little while but a buyer will come along and negotiate, and for whatever reason, the negotiation goes well for the seller and you get a number that is higher than what I think is market value today. I mean, a buyer’s willing to pay it, so I guess that’s the market value, but it seemed high. Versus there are other scenarios where we’ve had listings that have listed correctly, got multiple offers, and sold slightly below list price, but at a very reasonable market value rate.

So, I will always try to make sure that buyers are focused on the correct things, which is paying the right amount for the property regardless of the situation or the time that it’s been on market. But I would say there’s a lot of consumers out there right now that just assume no matter what a place is listed at—whether it’s listed at a million or $1—we’re in a market that I can just negotiate whatever I want out of it. There was one recent listing where we listed it really competitively, like at or maybe slightly even below sales from the spring in the building, and the first offer we get is like 10% below list price. And the conversation with the buyer’s agent is just like, “Where are you getting this number? It’s obviously not going to be a number that the seller’s willing to work with.” And the response is just, “We’re in a buyer’s market.” And there’s no context, there’s no data. My rebuttal to that always is like, “Okay, well, do you want me to just increase the price by $100k and then you can offer 10% below and then we’ll be in and around market value?” Just finding out the right information rather than focusing on the actual situation I think is the way to go regardless of whether it’s a busy or slow market.

This idea that you’re going to get caught up in a bidding war and spend hundreds of thousands of dollars too much, it doesn’t really exist. Like maybe once in a while in these crazy markets we see a sale price that is surprising, but it’s even more common in those markets where realtors are just pricing things $200k on the low end on purpose to get multiple offers, to get clean offers, to demand the dates that the seller’s looking for. But the home is selling in most cases in and around the range that it should 90% of the time.

Jamie: I think in short, don’t have fixed principles on not competing or competing. The idea of “I will never compete for a property,” yeah, it might work in a market like this where you can get away with it more often and maybe be right. But we’ve had many clients in other markets that watched the market climb $100,000-$200,000 in front of their face, where the house that they started looking at was X and then they had to settle for Y a year or two later because they just never wanted to compete or never put a good enough offer on the table. There’s a handful of people I can think of throughout my career that lowered the caliber of property they bought because of how sticky they were in the situation. And right now, it’s as good as you can ask for buying conditions. So, if you’re competing, you’re going after something really good. If there’s competition in this market, you know, I can think of the homes that I’ve sold this year that had competition and they were well worth it. And if they had four or five offers this year, they would have had 15 in another market. And a much higher price and outcome.

Denny: That’s a big thing to take into consideration is just how often does this product come available? And if you’ve been looking for a year—which there are a lot of buyers out there right now that have been actively going to open houses and seeing properties for a long period of time—and this is the first one that’s come up that you’re like, “Yeah, I love that,” well, chances are if you don’t get that one, it’s going to take another year or longer for a similar product to come up.

Jamie: One topic that I’ve heard a lot in the news and content I’m absorbing is the struggle that new developments are having nowadays. It’s been the headline of the year. What do developers do? Like, where’s the light? It is such gloom and doom for the condo developer. Like there’s going to be a gap of no work. The prices that people are paying today do not make sense to rebuild more product at right now. You can’t make a profit at it. Developers are in a tough situation where they’re sitting on land, they’re probably bleeding money, and they’re deciding whether they’re going to go forward with a building that’s not going to make any money.

Denny: But the federal government has promised us 1.4 million new homes in the next 3 years, Jamie.

Jamie: Yeah, I think the federal government needs to reverse some changes they made in the last decade to save that part of the segment. I mean, do you see regular firemen, nurses, teachers, young realtors, regular people that were born and live in this city buying new condos anymore that they intend to live in?

Denny: I’d say it’s really rare. I’d say there are specific circumstances, like I’ve had a few clients this year wanting to invest in real estate, not really knowing where, but the plan is a very long-term plan. The plan is like, “I have two children, they’re eight and 10. I’m worried about them being able to afford their first home when they’re in their mid-20s. I’m going to buy something, rent it out for 15 years, and then help them with it.” So, I’d say I’ve had a few people like that. But overall, comparatively to 2016, ‘17, 2020, 2021, the era where we had lineups at pre-sales and you put your name into a lottery… Pier West is a good example in New West that had 3,600 request forms for 600 units and you get a phone call saying, “Congratulations, you got unit 2303. It costs this. Do you want it or not? You have 20 minutes to get back to me.” And let’s acknowledge that the prices were kind of hidden on that sales day; the prices in the morning kind of raised as they sold more, they’d raise the prices throughout the day. And the people that bought in the morning… because they could.

Yeah, I think we’re in a scenario right now where a lot of developers are struggling for sure to decide whether or not to put projects together, but also confused about what product to offer people. I think the days of the shoebox 520 sq. ft. one-bedroom that sells 87% to investors—I made that number up, but it’s probably close to that—I think they’re just gone for the foreseeable future. I don’t see that changing next year, I don’t see that changing in 2027. When you’re offering a one-bedroom condo in Brentwood or East Vancouver for $1,300 a foot and the resale product is $900 a foot, I don’t really see that market coming back in the short term. The short-term fix for developers, I think, is offering more product that is end-user friendly. So, more larger units, creative floor plans, dens for work-at-home space. The challenge with that currently is just the cost that it takes to build that product and the price per square foot that you’re going to need to charge to make the project make sense. And I think that’s the gap right now that a lot of developers are feeling: it doesn’t make sense to put this project up because I’m going to lose money, so I’m going to put projects on hold.

Jamie: Three-bedroom units in Pier West, we’re getting under $900 a foot, concrete high-rise. And for anyone, ignore the noise that you might hear that prefab construction is going to be more affordable. The reality is if we’re talking about Burnaby, our city, we’re talking about concrete high-rises. They’re not going to be prefab, they’re not going to get more affordable. They got this expensive because engineering’s increased over the last couple of decades and the regulations increased and the development fees and charges have increased. The reality is when it comes to a concrete tower, locals won’t buy them to move into them anymore. Or at least there’s going to be a long period where that’s not going to happen.

The last time I can really think of when regular, normal working-class people were buying new construction condos with the intent to move into them prominently was when I first got in the business. In 2009, Onni Group discounted a bunch of condos and I sold a dozen of these condos to buyers in January and February at that time. And just aside from that Onni Group liquidation sale back then, they cut prices 25 to 35% to just unload a bunch of product. I had some nurses and working-class people buy. I had some registered nurses in New West buy, and I looked at registered nurse salaries in 2008-2009; it was about $60,000 to $70,000. At the time, they’re buying a 1,000 sq. ft. two-bedroom-plus-den in Victoria Hill. If it was an unfavorable position in the building they might have got it for as cheap as $350,000; if it was a nicer one with a view it might have been $425,000. So let’s call it a $400,000 two-bed-plus-den going to a nurse that’s making $60,000 to $70,000, within a GST rebate qualified price point, so there’s not a big lift on top of that.

Today, that 1,000 sq. ft. corner unit that would have been $400,000 then would be $800,000 now. It would be double. And the nurse’s salary that was $60k-$70k then might be $80k-$90k now. So it’s up $20,000 but the price is double. And I don’t see that improving. I don’t think our wages are going to keep up with the cost of construction if they’re still building them today, until we get more productive as a country. So for a $400,000 condo, people would buy condos when they’re making $60,000 to $70,000. Those same people aren’t making $140,000 to $160,000 to buy an $800,000 condo. They are making $70,000 to $90,000. So the math is getting out of reach.

When I look at it, let’s not put all new developments in the same category. Let’s put the concrete high-rise in one, the wood frame low-rise in the other, and let’s work our way down on density. If a three-bedroom in Pier West is selling for a million dollars today and it takes someone losing $300,000 or $400,000 to get that sale price, there’s no world that I think exists anytime soon where end-users are going to be buying the three-bedrooms or two-bedroom-and-dens in concrete high-rises in Brentwood that we complain they’re not making enough of.

So the reality is, in order to sell that concrete high-rise in the first place, we’re not in a world where they build the high-rise, then they show all the units and then they sell them. They have to pre-sell them. So in order to pre-sell them, the only people that are buying them are speculators and investors. And reality is, the lower the price point, the more the buyers. So in order for those concrete towers to launch, it has to be small footprints to make sense to get going. The reality is the tower will never start if it’s made of three-bedrooms and two-bedroom-and-dens. So the tower will only start if it’s full of 500 sq. ft. units. Locals aren’t buying that. Who needs to buy that? They have to open up to foreigners. I mean there’s no other option in my opinion. The developers are hooped until they have an outlet for the product that they make and the cost of that.

Now I say foreigners because not many years ago foreigners were allowed to buy here, then there was a 20% tax, and then there was an outright ban. But a concrete tower in Brentwood is a finished product that’s gone through a lot of value-add, economic growth for our country. I think there’s a difference between selling a lot to a foreigner because there’s a lot of land and development potential versus selling a finished product like a condo in the sky. And so the reality is, I think the only thing that could possibly save the development market is opening up to more buyers. And even if they do, I don’t think they’re going to flood in right away because we’ve done some things in the past to kind of affect all the foreign buyers that were buying in the past. So, I think for the concrete high-rise, the only way that’s going to come to fruition is if the foreign buyer comes back in, because the only way they’re going to get off the ground is with 500 sq. ft. condos. And the only people buying that… well, locals aren’t going to buy it as much. So, that whole industry is just hooped.

The mid-rise building… I’d like to see more mid-rises. I think that the small-scale multi-unit, transit-oriented development areas could have a positive, but mid-rise wood frames aren’t significantly cheaper to build than concrete. Maybe it’s $100 or $200 a foot less, still expensive, but more likely to be bought by end-users that live here. But I think the small-scale multi-unit zoning that a lot of people are complaining about and few are celebrating is what’s going to more likely go to the local people that need family homes. So, when it comes to new development, fourplexes, triplexes, duplexes, or sixplexes, whatever they get to, those are catered to locals. Families here are going to buy those. That’s new development that’s going to actually get absorbed by people that live here. But the concrete high-rise is not the same category. They’re going to have to undo and unravel some changes that they’ve made in the past. And if the federal government can’t control development charges on a city level, they’re going to have to pull some levers that they can control. And the only main one that stands out to me is, aside from GST and those sort of things, is who can buy them.

Denny: That was a bit of a rant.

Jamie: It was a good rant.

Denny: On that note, a really interesting story that’s come out the last few weeks was one of the larger developers here, Wesgroup, has canceled a project in River District. I think it was five towers they were planning for this area that they have given deposits back and told buyers that they are just not going through with that project. I think you’re going to hear those stories more often. I think there are going to be stories over the next couple of years where developers are going out of business, too. But this is one of those bigger ones where a pretty large development by a big developer has just handed deposits back.

Jamie: I had a client get their deposit back on a development that didn’t go through about a month ago. There was one, and you know, the first thing I said when he bought the place to the sales rep is, “What are the chances of this development happening?” The sales rep was like, “Oh yeah no bro for sure,” you know, like all the confidence, which they have to do, right? But I told the buyer, I was like, “There’s a chance this doesn’t happen.” Like, they have to sell a number of units to get this development off the ground. So, fortunately I had that little bit of foresight to see this coming but yeah, I didn’t expect it to actually happen. I thought that sales rep gave me the confidence the moment he answered my question with confidence.

But yeah, the new development, there is no light in that industry. And if you pay attention to podcasts and listen to the people that are in it, there’s a huge pivot towards them focusing their attention on consulting services, which is nothing compared to the revenue that they’re used to making. They’re letting go of all their staff because they have to. They’re basically going from negative or no revenue when they’re not launching and selling product. And I don’t see… do you see any light for a concrete high-rise?

Denny: It’s going to take a while. And when they get back to it, when people go back to saying, “Okay, $1,200 a foot is the new normal,” what do you think the cost of a new construction condo is going to be when $1,200 a foot is the new norm? It’s going to be much… it’s always going to be ahead. I don’t see how that can be mitigated. So, my thought is locals are more likely to buy resale product. The only way to save the skyline and all these proposals of master-plan communities to go forward is you have to open up the buyer pool. And whether you like it or not, I’m not suggesting opening up foreigners to buy single-family homes and land, but that concrete box in the sky, I think they’re the only ones that will buy them enough to support our development industry and keep all these workers working.

Jamie: Denny, what’s the next highlight?

Denny: Shifting gears onto the selling side, I think it’s important to note a handful of things that are very common in this market right now from a seller’s perspective that maybe you wouldn’t be expecting. So, one being buyer tours are back. I think it’s important that a lot of buyers’ agents are showing little to no flexibility in showing times. So, as a seller right now, if you are listing a home for sale, just be prepared that you are going to get showing requests at all times of the day and all days throughout the week. I’ve never seen… I can’t remember seeing this level of inflexibility on the buyer agent side. Like, you’ll book an open house for Sunday 2:00 to 4:00 and they’ll send you a showing request for Sunday 1:15 p.m. And you reply being like, “I’m really sorry, I’m in another open house from 12:00 to 2:00, but can you send your clients from 2:30 to 4:30?” and you just get, “No. Nope. Make it work. Sunday 1:15.”

So, just as a seller, be prepared that in a lot of scenarios, we like to kind of set up the first couple of weeks with showing windows to make it easier on the seller so they’re not cleaning and getting the house ready to show every day for the first 14 days of a listing. But just be prepared that you’re going to get showing requests all the time.

Jamie: And inflexibility comes with the leverage of who you’ve got. I had an example last Saturday where someone wanted to see a property at 2 p.m. and I couldn’t do it. Like, can morning work? I could do it at 10:00 or 5:00 or the next day at 2:00. I gave them all these options, and just ghosted. But that said, if you’re an agent representing a buyer and you’re inflexible on your time and your buyer has to sell first, that’s not right. You should only be that stubborn on your schedule if you have a hot, ready-to-pull-the-trigger buyer. Don’t make us listing agents run around town for a buyer that can’t transact.

Denny: It’s not even that we don’t want to, it’s just asking for the most unrealistic times. Like weekends, realtors know weekends between 12:00 and 5:00 are when realtors are at open houses. And so asking for showings that are away from the open house time for that property at 12:30 on a Saturday or Sunday is very difficult to make work.

Jamie: If all the Vancouver agents listening are relating to us and all the Fraser Valley agents listening are just like, “put on a lockbox.”

Denny: I actually talked to a Fraser Valley agent a couple days ago that’s a friend and he said—he was probably exaggerating—but he said he hasn’t done one private showing this calendar year and he sells a lot of business. He sells a lot of real estate, but he’s like they lockbox everything out there. Every showing.

Jamie: Yeah, it’s funny how that works. Just for those listeners, the further out into the valley you go, the more likely you’re accessing a property from a lockbox. What other headlines? Denny, you were mentioning to me a new term in a contract. I think we skipped over this for developers. Okay, we’re going to go back to developers and I’m supposed to be surprised about the term. So, let’s hear it. And I don’t know what I’m going to hear.

Denny: Okay, so it’s no surprise that developers are offering larger incentives. There are ways to negotiate prices that help them post a sale that is at list price or close to list price with big decorating allowances that come off on your statement of adjustments on the completion date. So yes, your contract says $899,000 but in reality, you’re paying $810,000 because you got a $90,000 decorating allowance, which is not uncommon right now. A new term that I heard… one of the realtors in Greater Vancouver who does a lot of pre-sale marketing did a video yesterday and this is a new thing that developers are offering, so something to be aware of or look for in pre-sale contracts. It really is just a marketing scheme; it’s almost identical to a decorating allowance. It’s an amount of money that you would be guaranteed essentially at the end of the project or on the completion date, but they call it a “reverse assignment fee.”

Jamie: Have you heard of this? No. So, this is incredible.

Denny: Developers often in a pre-sale contract, there will be terms around assignments, whether or not you can assign a contract, whether or not you need developer approval. If there are assignments allowed, usually there is an assignment fee that the developer charges. I’ve seen anywhere from 1% to 3% probably in busy markets of your assigned price. There often is also an admin fee that the developer will charge to do all the paperwork that is, I don’t know, $500 to $2,500.

What a reverse assignment is, is if you want to assign the contract and cannot assign the contract, the developer will guarantee you a return. So the example that he used was, okay, let’s say you buy a one-bedroom condo for $599,000 and in 2.5 years from now when the building’s built, you try to assign it at some point. If you are unable to assign, the developer will give you a $25,000 what they call “lift,” which is essentially just a decorating allowance—a $25,000 decorating allowance off your price—to, in his words, guarantee you as an investor a return. It’s the exact same thing as a decorating allowance. It’s just a fun new term that maybe provides a little bit more security for someone who is thinking about a pre-sale investment to, in their words, guarantee a little bit of a lift. But how long do you think we’re going to… do you think it’s going to become a new norm?

Jamie: No, I think it is just, for lack of a better term, BS.

Denny: Yeah. Okay. So, moving on from new development, do you have any other headlines or topics of the moment to go over?

Jamie: I think we should kind of acknowledge rental rates and what I want to get into is the lack of incentive to be a landlord. And I think one common trend I’ve seen in the last 12 months is one, less people willing to be a landlord, but also the current landlords not wanting to be a landlord again or once a tenant moves out, they just want to get rid of the property. And in a tough market, it’s tough because there are a lot of people in the city that are in this decision of whether they rent the place out or not, especially if they bought new construction. And once you put a property into a tenant’s hands, you really have no power to get them out. They’re really there unless you move back into the property. When I first got in the business 10 or 15 years ago, it was easier to get a tenant out if you wanted to improve a place to sell.

And the tenancy rights have just continued to strengthen over the years which consequentially has just made it less incentivizing to be a landlord and it’s reducing the supply of tenanted properties. I think tenants are better off with… well I guess there’s a mixture of opinions here but if we want more regular people to be landlords, there’s going to have to be some sort of change. And I don’t see that. Years ago it used to be the dream to buy rental properties and just build up that portfolio, but it doesn’t seem to be the dream anymore, or it’s definitely going downhill.

Denny: I think everything that’s happened in the last few years has de-incentivized people to want to be a landlord. And it’s kind of the perfect storm right now pushing people away from wanting to be that individual landlord that has one or two rental properties. Even just in the last year or so, the demand for rentals is down quite a bit with less immigration, less people moving to the city. There are just fewer people that are looking for that one-bedroom condo to rent close to a SkyTrain. There’s still demand for it, it’s just at different price points than it was a couple of years ago. And at the newer price points that are maybe 10-15%, in some cases 20% off market rent from a couple of years ago, the numbers don’t make sense or there’s not enough upside potential and optimism in owning a condo to push people to that instead of buying Bitcoin or investing in ETFs or stocks or other things.

Jamie: You have limited rental increases, which I understand protect the renter, but in the last few years, they don’t really keep up with costs or inflation. They increased the notice period from two months to three. If you’re trying to sell a tenanted property in this market, good luck. You know, you need a buyer that’s willing to close four or five months from now, and you also need a tenant that’s going to show it in decent condition. The hit that sellers are calculating in their head is, “Well, once I put a tenant here, I don’t know when I’m going to get it back and what condition it’s going to be in, and it’s not going to cover all my expenses anyway.” So, I feel that if things remain the same, it’s slowly going to evolve. Right now we have a lot of end-user buildings that have a percentage of rentals in them; I think that rental percentage is going to go lower and lower and more tenants are going to be in purpose-built rentals. There’s going to be purpose-built rental buildings and end-user buildings. There are some new developments that do a good job of blending rentals into the stratified freehold, but also, we just talked about them all being little 500 sq. ft. boxes to get off the ground.

So if we want more rental supply from regular homeowners, something has to change there. And I don’t see that happening because anything that changes is going to go against tenancy rights, which is going to look politically terrible. But ultimately it probably will benefit, because a lot of changes could be more beneficial than harmful. You could open up the annual increase to 5% or higher numbers. You could make it a little bit less strict to evict a tenant if you’re trying to improve a property to sell. I know renovations were troublesome before because some people would abuse that, but you make a rule where an eviction becomes impossible to do. A small percentage of people were abusing it before, and you’re losing a much bigger percentage of potential rentals by making it tough for people to evict a tenant. At the end of the day in this city, a lot of people don’t rent because they’re worried that they can’t get the tenant out and the tenant’s going to run down the property and then they’re going to sell the property for less. And all those things are true. So, it’s an impossible problem to solve if you want to have good political standing and have a good reputation. But it’s going to take someone to go against public opinion and make some changes to get people to be landlords again or incentivize people to be landlords again.

Denny: And you know, maybe nothing happens and the market saves the day and people speculate on real estate 5 or 10 years from now, but right now it doesn’t look good and I don’t see it improving. I’m a little worried with the sentiment currently around owning a rental property for five, six, seven years from now and just how much lower the rental supply is going to be and what that does to rental rates. This is not a forward-thinking mindset to make it super difficult to want to buy an investment property. Increase taxes to buy an investment property, your mortgages on investment properties are higher, you’re not going to get the same rate as an owner-occupied property, trying to get a tenant out is almost impossible, the rent increases don’t keep up with inflation. Like all these things that Jamie mentioned are not making people want to buy investment properties, which in 5 years from now, I just see the supply being so low that rental rates are going to be very different than they are today. Which is making the problem worse for affordability in Greater Vancouver, not better.

Jamie: Yeah. Today there is not a shortage. I hate to say it, but properties are as affordable as they’ve ever been at this moment, in terms of they can’t build… like they’re selling for less than the replacement value. They’re not going to get more affordable than they are right now with costs going up. I don’t see anything getting more affordable than it is right now. People are sitting on a loss. There’s not… renters have more leverage. There’s a lot of product available. Call it, let’s say a one-bedroom is $2,500, but the renters are at $2,200 or $2,100. There’s just a small gap between where the majority of people are willing to pay for rent versus what purpose-built rental investment buildings are trying to get.

Denny: I would say that the overarching thing is that it’s bleak and it’s not going to improve anytime soon.

Jamie: Yeah. I think that’s the summary right there.

Denny: We just know that this is an issue and is probably going to cause greater issues in the future. I think a lot of the policy around investment properties or rentals and the restrictions on rentals is a very, very short-term mindset. And I think that will continually make the problem worse, but in multiple years from now.

Jamie: Less interference, giving… like just make fewer rules so that more people want to be landlords, but I don’t see that happening.

Denny: There’s so many arguments against it and I don’t want to get into a debate over that. Any other news? Any other headlines?

Jamie: There are a couple of other things I just wanted to mention on the seller’s side right now in markets like this. One, being prepared to renegotiate after home inspections, regardless of whether the inspection goes well or not. Buyers right now feel that they have all the leverage and no matter what happens in the original negotiation or what you as a seller say to the buyer… You know, a lot of negotiations right now, the seller is going back and saying, “Okay, we’ll accept this, but don’t you dare ask us for anything after home inspection. This is the absolute lowest we’ll go.” And just be prepared that they’re likely going to ask you for something after home inspection, and not getting defensive or offended when the things that they ask for are outrageously ridiculous.

Like there was one in a condo recently that asked for $2,500 off and listed three things. I put all those three items into a cart on HomeDepot.ca and sent him a screenshot. The total amount of the three items that he wanted was $73 and they wanted $2,500 off. So, I sent this to him. And then the conversation often with the seller is just like, “You know, we’ve been on market a couple of months. We got a buyer that is paying us a pretty reasonable price. Are you willing to concede in any way to make them feel good about moving forward?” Because there are a lot of collapsed deals right now. We had two, two days ago. There are a lot of buyers that are getting to accepted offers, getting cold feet for whatever reason, seeing something that lists the following week that they like better or is priced better, and they’re collapsing contracts and moving on.

But the conversation with the seller often is, “What will make us feel good to move forward?” And is that, in this specific scenario where they ask for $2,500 off, we give them $200 off? And that was enough for the buyer to remove subjects. A $200 discount. So, it had a weird sale price that ended with 800.

Denny: I’m experiencing renegotiations often unless it’s, you know, you get that full price right away and they know they got a good product and they don’t want to give it up. Or you’re expecting to renegotiate. So, from a listing side, whatever you get accepted, prep your sellers. You’re 100% right. Prep your sellers that the buyers are going to try to renegotiate after inspection. And I’m kind of mainly speaking here from the tone of a single-family home that has typical single-family home issues, not necessarily like a new condo, per se. A new condo probably isn’t getting renegotiated as much as single-family homes, but I’d say my guess, taking a wild stab at it, is 80% of accepted offers are probably getting renegotiated on a single-family home.

Jamie: It’s honestly lots. And it’s just the sentiment from buyers right now. And even on the buy-side, I’ve had a few recently where they do a home inspection and things come up that we knew. We’re buying a house from the 1950s. As we’re walking through the home, we’re pointing out, “These are all the original single-pane windows, that roof is 20 years old, you’re going to have to replace that roof in a few years.” These are all the items that come up in the home inspection, and the question from the buyer is, “How can we renegotiate?” It’s not like, “Oh, I’m really surprised by this.” It’s just like, “How do we get money off now?” Like, that’s just the expectation almost.

Denny: And we’re just in a weird market. And granted, buyers are doing that because they feel so nervous that they’re going against the grain and buying, spending a million and a half in a time that’s scary. And there’s the ugly side of greed and people’s human nature, too. But at the end of the day, they’re taking a risk, right? So, you can’t blame someone for trying. But I think when it comes to the art of renegotiating, if you’re representing the buyer’s side, one, it’s really important to kind of prep them in advance of that home inspection to say, “Hey, look, this is a ’90s build home. You’re going to run into these sorts of things. Poly-B is of that era. Expect to see that. Expect to see regular wear and tear.” So when a buyer receives that inspection report, they don’t look at all these items as things to renegotiate.

The reality is if you send everything off to the listing agent, a savvy listing agent is going to be like, “Okay, this is just normal wear and tear the way you’ve worded it.” So what I try to do is I just say, “Look, you have 20 items on this list. 15 of them are because it’s a house of this era. That’s normal wear and tear. And then these five are genuine surprises.” You highlight, “Okay, this surprise, we wouldn’t have known that this was here. We wouldn’t have known the microwave was not vented. We didn’t know there was moisture content behind the tile in the shower.” There are some genuine surprises. If you’re trying to renegotiate, put forward the most important surprises first. Don’t put down, “Oh, there’s 5 years left on the roof.” We all know that there’s a crack in the stucco right in front of the front door or whatever it is. The windows are old, yes, we know the windows are old. There’s obvious visual stuff that if you try to renegotiate and say the roof’s halfway through its life or the windows are old, you’re not getting anywhere with a listing agent because he knows it’s a ridiculous item to ask for. So, really try to focus on the genuine surprises that are not necessarily normal.

Jamie: And oftentimes, if you’re representing a buyer, your job is to try to get the best deal. And if 80% of single-family home deals are getting renegotiated, which is my guess, just be reasonable. Don’t expect to get… don’t expect people to come off a $1.5 million home that you’ve spent 3 days negotiating down to $1.4 million… don’t expect them to come off $20 grand overnight because the hot water tank is old. It’s not going to be a $20 grand figure. Maybe it’s $5,000 to $10,000. Every situation’s different. In your case, it’s $200. Incredible. But I think the main thing is to highlight the items that are genuine surprises that are debatable. Like, don’t highlight obvious visual things that anyone would see in a normal showing.

Denny: That’s actually… you mentioned hot water tanks and that’s something that I feel has come up more this year than ever before is trying to renegotiate for an appliance that’s currently working. Like people will be like, “Oh, we got to replace the hot water tank. It’s 8 years old. They only last 10 years.” And my question back to buyers’ agents often is like, “Is there anything wrong with it? Is it leaking? No? Okay. Well, then why aren’t you asking for a new fridge? The fridge is 8 years old. Why aren’t you asking for a new stove? The stove is 8 years old.” These are appliances that are not brand new. You’re buying a 1950s home; they’re not supposed to be brand new. Nobody told you they were brand new and they’re currently functioning. So, just on the buy-side, being selective and reasonable rather than just asking for dozens of things just to ask for something. It honestly usually works out to hurt you if you ask for too many things and too big a number because you piss off a seller and then you’ll get a reply back being like, “We’ll give you $200 and that’s it,” versus if you ask for a very reasonable amount, it often will work out better for you.

Jamie: Totally. It’s the number… what are their chances of saying yes to this number?

Denny: We can probably wrap up. We’ve covered mortgage rates, a ton of stats, some tenancy stuff, some hardship for new developers, some renegotiating. Jamie, I think this is a good market update. Let’s leave it. On to the next.

Jamie: On to the next.

(Episode Ends)