How is the Metro Vancouver housing market faring as the Spring 2020 season sets in? It has been a tumultuous few years for west coast home buyers and sellers as they have struggled to absorb a plethora of regional real estate taxes and the federal mortgage stress test, all while contending with the highest home prices in the nation.
After these new changes were put in place throughout the tail end of 2017 and start of 2018, the market underwent a notable shift, as both buyers and sellers became skittish about searching for, or listing, homes for sale. That led to considerable market chill, with sales plunging by upwards of 30% year over year until well into 2019, accompanied by softening prices.
In fact, while the narrative for the early 2020 housing market has been that activity is starting to pick back up, Metro Vancouver home prices are still subdued from their early 2018 peak; the Real Estate Board of Greater Vancouver (REBGV) reports that the benchmark home price for the region was $1,020,600 in February, down -4.7% from two years ago despite a 44.9% year-over-year uptick in sales. Cheaper home prices appear to be the norm across the board; the average benchmark detached property can be purchased today for -10.4% less than in 2018 at $1,433,900, while condo apartment prices have remained fairly flat, down -0.8% to $682,800.
But has this lower price environment really given home buyers a substantial break? To find out, Zoocasa calculated the difference in the required down payment a buyer would need to purchase a benchmark-priced detached house or apartment in 18 municipalities across Metro Vancouver in February 2020 vs. the same time frame in 2018, when home prices were approaching their peak.
Benchmark home prices were sourced from REBGV and the Fraser Valley Real Estate Board. Minimum down payment amounts were calculated based on 5% of the purchase price for homes valued at $500,000 and under, 10% for the portions of home prices between $500,001 – $999,999, and 20% for homes priced at $1 million and over.
House Buyers Benefitting from Smaller Down Payments This Year
According to the data, the benchmark price for detached houses for sale in Vancouver declined in every municipality between February 2018 – 2020, requiring a smaller down payment today. The largest declines of over $100,000 were noted in three of the highest-priced areas, as a result of the luxury home market being hard hit by both a 20% municipal foreign buyers’ tax, as well as a provincial speculation tax for homeowners who don’t pay income tax in British Columbia. An additional five municipalities saw required down payments shrink between $15,000 – $50,000, while the remaining 10 declined by under $25,000.
The municipality that has seen the largest decline in required down payments is Surrey, where benchmark house prices have dropped by -1% to $997,900 from $1,009,400 in 2018. However, despite this relatively small change, the price dipping below the $1-million mark means buyers can put considerably less down than the previously required 20%; the minimum down payment in the area is now $74,790, -63% (-$127,090) less than the $201,880 required in 2018.
Next is the upscale neighbourhood of West Vancouver, which has seen house prices plunge -19% in the last two years to $2,544,400, from $3,141,900. That now requires a down payment of $508,880, a difference of -$119,500. Vancouver West rounds out the top three largest declines with an average price of $2,914,000 and a required down payment of $582,800 – down -17% and $117,320, respectively.
Check out the infographic below to see how minimum down payment amounts have changed for benchmark detached houses between February 2018 -2020.
Vancouver Apartment Prices Rise Despite Slump
While overall home prices have dipped over the past two years, buyers are still clamouring over the most affordable entry points to the market – aka Vancouver condos – leading to price increases for units within the upper $300,000 – $500,000 range in municipalities within a commutable distance to the Vancouver core. As a result, the required down payment actually increased in four of the 17 markets studied (Bowen Island was excluded due to lack of apartment inventory). In municipalities where prices did decline, they did so by a smaller extent than in the detached segment; 12 municipalities experienced drops under $25,000 for benchmark apartment down payments, with only one falling between $25,000 to $50,000.
Maple Ridge saw the largest price increase for benchmark apartment units in Metro Vancouver, up 16% to $355,900, and requiring a down payment of $17,795 (+$2,405). That’s followed by Pitt Meadows, with a benchmark price of $494,300 (+9%), and a down payment of $24,715 (+$22,605), and Vancouver East with a price of $579,800 (+3%), and a minimum down payment amount of $32,980 (+$1,450). Benchmark prices also increased in Coquitlam to $539,000 this February (+3%), requiring a down payment of $28,900 (+$1,370).
Check out the infographic below to see how minimum down payment amounts have changed for benchmark apartments between February 2018 -2020.
Benchmark home prices were sourced from the Real Estate Board of Greater Vancouver and the Fraser Valley Real Estate Board. As per Government of Canada regulations, the minimum down payment amount is based on the purchase price and is calculated as follows:
– Purchase price of $500,000 or less: 5% of the purchase price
– Purchase price of $500,000 to $999,999: 5% of the first $500,000 of the purchase price, 10%
for the portion of the purchase price above $500,000
– Purchase price of $1 million or more: 20% of the purchase price
Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download our free iOS app.