Frank Gerryts : Newsletter on real estate in Vancouver BC

Vancouver for Homes Monthly Newsletter

Welcome to our newsletter on Vancouver’s real estate market. We are here to help you buy or sell real estate in the Greater Vancouver area and through our partners in many areas of B.C.

June 2008

HOUSE PRICES FALLING - TRUE OR FALSE?

There has been a lot written in the press and on internet chat forums too about house prices falling here in BC. As this is such a critical issue for people planning their moves to Canada, I wanted to look at this. Your decision on where, when or even whether to buy may well be influenced by the housing outlook.

The first source I looked at was the Real Estate Board of Greater Vancouver(REBGV). The statistics for May 2008 have just been released. These show that sales have been falling across all housing types (detached, apartments and townhouses). Overall there has been a drop of 30.7% in the number of sales compared to May of 2007. In the same period the number of listings has grown by 20.2%.

The increase in listings and the drop in the number of sales is usually referred to as a return to a balanced market - one where it is neither a sellers nor a buyers market.

Does this translate into a drop in prices?

Not if the REBGV’s statistics are anything to go by. These show their benchmark prices to have risen by 8.4% for detached homes, 8.7% for apartments and 9% for townhouses since May of 2007.

CANADA MORTGAGE AND HOUSING CORPORATION (CMHC)

The CMHC produces reports on the housing market in various areas across Canada. I looked at their reports on Vancouver, Victoria and Kelowna.

CMHC’s report on the housing market in Vancouver reckons that the economy is strong and supports house prices:

“Solid local economic conditions in Metro Vancouver will support demand for housing this year and next. Economic growth of three per cent or better is forecast for the region through 2009, with residential and non-residential construction, as well as wholesale and retail trade driving growth.”

“Strong job growth will continue to support demand for homeownership and rental housing in Metro Vancouver going forward”.

From the same CMHC report, Abbotsford too looks to be in good shape as far as housing goes.

“The average price of a home in the Abbotsford CMA increased by 12 per cent in 2007, with most of the increase taking place during the first half of the year. House prices have risen by just four per cent since the summer of 2007. The number of new listings is expected to increase through 2008 as some homeowners look to cash in on their home equity gains. A growing supply of homes for sale will slow price growth to eight per cent in 2008 and five per cent in 2009”.

So prices are growing in the Valley, but relative to Vancouver prices are lower and we definitely see an increased interest in these areas from our clients.

“The increase in lot supply and lower land prices are contributing factors behind lower average new home prices in the Valley. Lower average prices will be the main motivating factor for home buyers in the Valley”.

VICTORIA

The CMHC sees a similar story in Victoria.

“The number of active Metro Victoria single-family listings in March jumped slightly relative to March of last year. This reflects weaker first quarter sales, and high resale prices attracting sellers interested in cashing in on home equity gains.

Prices continue to climb, rising 12 per cent so far in 2008. Single detached home prices will grow in 2008 and 2009, but at a slower pace than in previous years”.

The housing market in Victoria is based on the economy of the region. About this the CMHC says:

“Despite an easing of economic and employment conditions, these two key drivers will continue to grow Victoria housing demand through 2008 and 2009. Also, a tight labour market with low Unemployment (3.2% in the first quarter of 2008) will keep wages and incomes rising, and people moving to Vancouver Island”.

KELOWNA

A broadly similar story emerges from the CMHC report on Kelowna. “The average annual sale price of a detached unit recorded double-digit increases for the sixth straight year 2007. Expect the pace of price growth to begin slowing in 2008 as the market adjusts to rising supply and reduced demand. The average house price will climb 10 per cent to $560,000 this year and another five per cent to $588,000 in 2009”.

THE OUTLOOK

Overall we are seeing the housing market slowing, with sales decreasing and listings increasing. This “balanced market” will likely have a moderating effect on prices. However strong economic factors, high employment, inward migration and relatively low mortgage rates all act to keep prices moving upward, even if this is at lower rate than we have seen in recent years.

It seems then that prices are not going to fall. Moderating price rises are good news for people looking to move into the area. Having more choice in the homes on the market is good news also. General fears that prices will fall do not seem justified by what we are seeing in the market - and overall a balanced market means a better market.

REAL ESTATE MARKET

MARKET RE-BALANCING?

This section of the newsletter continues the theme from the above article. Yes there is some slowing... and no, prices are not falling.

The Real Estate Board of Greater Vancouver (REBGV) characterized the market as re-balancing. This was because sales in May declined by 30.7% over sales in May of 2007. At the same time new listings increased by 20.2%. This increase in supply begins the swing towards buyers rather than sellers (as I said last month too).

“With more property listings and a decline in the number of sales, prices are not increasing as
rapidly, now down to single digits overall, which is good news from an affordability standpoint,” said REBGV president, Dave Watt. “The housing market is at a balanced state, sellers have more competition and buyers have more selection to choose from.”

METRO VANCOUVER BENCHMARK

The Vancouver Real Estate Board publishes a benchmark that tracks the price of a benchmark property across the region. There are three categories:

Detached
These are houses, sometimes called single family homes
Attached
This refers to townhouses and half duplexes.
Apartments
This means apartments within high or low rise buildings.

I have set out the benchmark prices across the region, with the annual percentage price rises in brackets and 5 year percentage rise in square brackets.

In detached homes Port Moody and Squamish both did remarkably well, with percentage rises above 20% compared to 8.4% for Greater Vancouver as a whole. In attached homes, the bright spot was South Delta with a rise of 16.8% compared to 9% for the region. Apartments saw Port Coquitlam with a gain of 13.1% out-performing the region’s 8.7%. Only West Vancouver showed a drop ( -3.8%). Notably this is the only drop across the region - and given the very few apartments in West Vancouver one should not draw any conclusions from this.

DETACHED BENCHMARK PRICES

Greater Vancouver $771,250 (8.4%), [3yr: 47.3%]
Burnaby $773,499 (10.7%), [3yr: 49.1%]
Coquitlam $669,170 (5%), [3yr: 45.3%]
South Delta $671,311 (9%), [3yr: 39%]
Maple Ridge $459,724 (5.3%), [3yr: 35.2%]
New Westminster $606,425 (9.4%), [3yr: 48%]
North Vancouver $925,366 (9%), [3yr: 43.2%]
Pitt Meadows $494,903 (5.9%), [3yr: 33.4%]
Port Coquitlam $541,684 (4.3%), [3yr: 40.5%]
Port Moody $765,852 (27.5%), [3yr: 64.2%]
Richmond $798,580 (14.4%), [3yr: 57.5%]
Squamish $588,715 (20.1%), [3yr: 37.5%]
Sunshine Coast $432,402 (5.5%), [3yr: 37.2%]
Vancouver East $695,368 (7.6%), [3yr: 48.3%]
Vancouver West $1,414,230 (6.4%), [3yr: 57.5%]
West Vancouver $1,499,711 (6.7%), [3yr: 46.5%]

ATTACHED BENCHMARK PRICES

Attached Greater Vancouver $478,931 (9%), [3yr: 47.1%]
Burnaby $459,647 (8.7%), [3yr: 43.9%]
Coquitlam $430,491 (9.6%), [3yr: 43.2%]
South Delta $471,130 (16.8%), [3yr: 58.8%]
Maple Ridge & Pitt Meadows $319,341 (3.8%), [3yr: 42.4%]
North Vancouver $601,909 (7.2%), [3yr: 39%]
Port Coquitlam $395,036 (6.3%), [3yr: 37.5%]
Port Moody $420,830 (9.9%), [3yr: 52.1%]
Richmond $470,369 (10.8%), [3yr: 49.1%]
Vancouver East $525,972 (11.4%), [3yr: 55.5%]
Vancouver West $743,039 (10.1%), [3yr: 56.1%]

APARTMENT BENCHMARK PRICES

Apartment Greater Vancouver $389,668 (8.7%), [3yr: 50.8%]
Burnaby $349,355 (10.8%), [3yr: 49.4%]
Coquitlam $298,232 (7.2%), [3yr: 53.4%]
South Delta $360,191 (11.2%), [3yr: 51.5%]
Maple Ridge & Pitt Meadows $263,342 (1.1%), [3yr: 58.8%]
New Westminster $304,186 (7.9%), [3yr: 61.5%]
North Vancouver $402,467 (8.7%), [3yr: 48.2%]
Port Coquitlam $266,135 (13.1%), [3yr: 56.3%]
Port Moody $304,504 (3.4%), [3yr: 45%]
Richmond $325,237 (11.2%), [3yr: 50.9%]
Vancouver East $334,283 (11.5%), [3yr: 63.9%]
Vancouver West $491,465 (7.8%), [3yr: 46.5%]
West Vancouver $635,900 (-3.8%), [3yr: 38.2%]

TIME TO BUY OR SELL

If you are looking to buy or sell property then we can help you. We work for you either as a buyer’s agent, to help you find your next property, or as a listing agent. If we cannot help you personally we have excellent partners in most areas within B.C. We and our partners are licensed realtors with the experience and knowledge to help you make your next move a success. Call us to find out how we can help you now.

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