The signs are subtle so far, but they may represent the first downdraft in Metro Vancouver’s multi-family apartment building market after years of record-snapping demand and prices. And yet, multi-family investment insiders remain confident of future performance.
The warning signals include a rush of new purpose-built rental buildings, an increase in rentals due to a housing sales slump that has shoved more rentals on the market and extremely skinny capitalization rates. And, of course, upcoming changes to the B.C. Residential Tenancy Act that many believe will tilt regulations in favour of tenants.
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If a correction is coming, however, it has yet to show up in sales and prices of apartment buildings that have continued a sizzling pace this year.
During the first half of 2018, 89 apartment buildings sold in Metro Vancouver for a total dollar volume of $1.4 billion. This is up from the same period in 2017 when 87 buildings sold for a total volume of $1.3 billion. The most dramatic change is in the price per suite: this year it is an average of $494,723 per door, up 21 per cent from the first half of last year, according to the Goodman Report 2018 Mid-Year Review, published by David Goodman and Mark Goodman of HQ Commercial.