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UDI Report

By | Industry Update, Vancouver Real Estate

A new report issued by the Urban Development Institute has found that released and unsold inventory, i.e. the supply of pre-sale of condo’s in the Metro Vancouver has reached its lowest level since 2010.

The number of move-in ready concrete condominiums  in the second quarter was reported at only 23 units across Metro Vancouver.  It is our view that the continued low levels of inventory over the course the next 12-18 months will further exacerbate the current upward movement in average prices. Pre-sale market will remain robust and the average prices/SF will be breaking new records in the months to come. This further validates our strategy to divert attention from single family market and invest in the multi-family space as we predicted that the lowered affordability metrics and low inventory of condos will create opportunities in the attached market. 3000 Henry is an prime example of one of Abana’s latest acquisitions consistent with this strategy and has already proven to be a stellar acquisition with above industry ROI.

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Land Core Report

By | Abana Mortgages, Industry Update

With the Bank of Canada, raising the overnight rate by 25 basis points, speculations that a second raise in October maybe in the works is rampant amongst analysts. However, despite the above expectation GDP growth, Canada’s economy remains fragile, especially as the uncertainty around the future of NAFTA looms in on the auto sector. The impact of  a 25 BPS raise in the overnight rate , if matched entirely by the banks, are not  on a family with an income level of 100K/year who is looking to purchase a 750K condo, is 98$/month or about  $8,000 reduction in the affordability. While significant, this change is not in our opinion large enough to have a significant negative impact on the market, specially with the robust demand and shortage of available inventory. 

The newest residential Sales from Landcore, correctly points out that the impact of OSFI’s newest proposed changes to Federally Insured mortgages will have far more serious consequences on affordability. If these proposed changes are put into effect, borrowers seeking to purchase the same condo, would have to stress test under the posted bench mark rate that is typically 2% higher than the contract rate. The same couple under these rules would only qualify for a 585K purchase a 22% drop in affordability. Implementation of this rule, will significantly lower the supply of mortgage funds as the monoline lenders will not longer have any feet to stand on when competing with balance sheet lenders and invariably results in less demand as fewer borrower can qualify.

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