Expected pricing collapse for Vancouver has failed to take place, says Bruce D. Strebinger.
VANCOUVER, BC / ACCESSWIRE / February 2, 2022 / For some time, real estate agents and economic experts have been talking about the potential burst of the real estate bubble. Detached homes in Vancouver rose by 13.7% at the beginning of 2021. This has continued to expand into a chasm between common household incomes and average home values. In fact, Bruce D. Strebinger notes, affordability is the worst it's been in 31 years and fall into a distant last place for affordability when compared to other G7 nations.
These high prices have led to increased rent rates. Bruce D. Strebinger explains that for multi-family housing in Vancouver, the average rate has gone up by 2% and sits at over $1,500. Yet, newer rental spaces are bringing in around 21% higher rates because of younger workers looking for their own space in central areas. In 2022, landlords were allowed to raise existing tenant rent by 1.5% for the first time since the pandemic.
Bruce D. Strebinger notes that the hardships caused by the pandemic and rise in costs have many on edge. "It is difficult for so many families right now," he notes. "Yet, landlords have to make a living too. While it might seem ideal to aim for new prospects, turnover can be costly too. And, with the increases, there is a lot of tension right now. Everything is more expensive. Respond to tenants, show you care about upkeep, be understanding if the occasional surprise hardship hits-these are important ways to bridge the gap and build up a solid reputation as a high-quality landlord."
Many of the current sellers, he says, have struggled with the rent and eviction freeze that lasted through part of 2020 into 2021. The grandfathered-in rates often caused a lot of lost revenue as other costs went up. Insurance rates are high, and landlords face difficult decisions to complete renovations on aging buildings with ‘renoviction' legislation in place.
With the recent rise in prices, there has also been a shift of tenants. Vacancy rates have increased from 1.1% to 2.6%, according to the Canada Mortgage and Housing Corporation in the 2020 Rental Market Survey. Bruce D. Strebinger says some of this is due to rising costs in light of jobs lost, but other factors may include the closed border that is cutting off immigrants looking for temporary housing.
"This is an interesting time to get into the market," says Bruce D. Strebinger. "If you buy in now, you risk paying exorbitant prices that you have to reflect in your rent moving forward. But there are people looking to get out and many interested people ready to jump on board. If you already have property, then you want to hold and try to keep tenants happy. A lot of veteran landlords are eager to bail on the current situation. This housing bubble isn't going to last forever. There have been many warnings that it's nearing the end, so I think people interested in making that investment should prepare to act if they see low pricing."
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SOURCE: Bruce D. Strebinger