Real estate news from Vancouver

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.

April 2008

HOUSING BUBBLE?

This week as I was looking for something to write about I found an article in the Globe and Mail that looked at the Canadian housing market from a global perspective. I am quoting extensively from this article because it is a question that is important to anyone in the market here in BC - or hoping to get into it.

The article is based on a study by the International Monetary Fund’s World Economic Outlook. In this study it noted that Canada is less vulnerable to a large drop in house prices than any other major advanced economy except Austria.

“I’d be much more worried if I was from Barcelona than if I was from Toronto right now,” said Roberto Cardarelli, senior economist at the IMF. “The dynamics of house prices in Canada are in line with what we would expect based on the fundamentals of the economy.”

The study was based on growth in house prices as a function of macro-economic issues including income growth and interest rates. For each country in the study, house price growth was modelled as a function of the following: an affordability ratio, growth in disposable income per capita, short and long-term interest rates, credit growth, changes in equity prices and changes in the working age population. The study used data from 1997 to 2007.

Canada is in better shape than many other countries and home prices here aren’t expected to drop this year, said Benjamin Tal, senior economist at CIBC World Markets Inc. But that doesn’t mean home owners should expect, or want, to see the big gains of past years, Mr. Tal said.

“If we see continued double-digit price growth in Canada over the next two or three years then we would enter bubble territory, but this is unlikely,” Mr. Tal said. “I believe this spring, for the first time in seven years, there will not be a sellers’ market in Canada.” [Confirmed by statistics from REBGV below]

Ireland, the Netherlands and the United Kingdom fared the worst in the IMF study, with house prices at the end of 2007 sitting about 30 per cent higher than what economic fundamentals would suggest. House prices have already started to fall in Ireland and the U.K., and other vulnerable countries identified by the study include France, Spain and Norway.

The fall in interest rates in Canada is part of the reason that our home prices haven’t shot past the country’s economic fundamentals. Canada was also in the bottom five countries in the study in terms of real house price growth over the past 10 years, according to the IMF study.

Fewer speculators and more conservative lending practices have helped protect Canada from a big housing market downturn like that in the U.S. and some European markets, said Sherry Cooper, chief economist at BMO Nesbitt Burns Inc.

“There’s been a real market for flipping homes [in those countries]. We just haven’t seen that develop at all in Toronto or even out West, where we have seen big increases in house prices,” Ms. Cooper said.

In 2004, the U.S. was in the same state of "equilibrium" Canada is now in, but blew it when banks started providing exotic mortgages, creating an artificial demand for houses, Mr. Tal said.

*****

What $750,000 will get you

In Toronto
4-bedroom detached home on a 51- by 93-foot lot
In Vancouver
A view condo in the west side or
Brand new duplex in North Vancouver
In Dublin
4 bedroom semi-detached home in Clonsilla
In London
A three-bedroom 1930s property in Neasden, England.
In Barcelona
An apartment

REAL ESTATE MARKET

MARKET CONTINUES TO IMPROVE FOR BUYERS

The statistics issued by the Real Estate Board of Greater Vancouver (REBGV) show a decline in sales both as against March 2007 (16.3%) and March 2006 (25.7%). Numbers of new listings have increased in the same time, with a 4% increase over March 2007.

“The market is continuing to balance, with sales and listings beginning to re-align with our 10-year averages,” says REBGV president, Dave Watt. “The selection of inventory hitting the market is wider than we have seen in the past few years, which gives prospective buyers more choices.”

From our own experience, buyers are still plentiful, and are still having difficulty finding properties to suit. Properties which have been renovated and “show well”, are selling quickly. Ones which require work (“handyman specials”) can hang around for some time.

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, over the last 5 years we have seen prices rise by as much as 126%, with the region’s overall rise being close to 95%. Notable amongst the annual price rises was Squamish with 25% - double Greater Vancouver’s annual price rise of 12%. However Squamish has not shown such a strong growth over the last 5 years, suggesting that it’s growth has been more recent. Not surprising given that the highway improvements and 2010 Olympics are all helping Squamish.

In townhouses, North Vancouver has been the bright spot (14.9%). Vancouver East and West have done well over the long term (113.1% over 5 years). For apartments, Port Coquitlam has done best in the long term (a massive 143.3% over 5 years), but Vancouver East continues to do well in the last year (14.9%).

DETACHED BENCHMARK PRICES

Greater Vancouver $764,616 (12.1%), [5yr: 94.8%]
Burnaby $761,085 (12.6%), [5yr: 92.8%]
Coquitlam $664,219 (10.1%), [5yr: 96%]
South Delta $671,811 (14%), [5yr: 85%]
Maple Ridge $458,666 (8%), [5yr: 71.2%]
New Westminster $621,253 (19.1%), [5yr: 126.5%]
North Vancouver $928,636 (14%), [5yr: 87.6%]
Pitt Meadows $490,749 (6.8%), [5yr: 71.5%]
Port Coquitlam $528,960 (7.8%), [5yr: 77.3%]
Port Moody $720,095 (10.7%), [5yr: 74.8%]
Richmond $758,915 (12.8%), [5yr: 89.7%]
Squamish $579,496 (25.5%), [5yr: 47.7%]
Sunshine Coast $435,595 (8.2%), [5yr: 109.4%]
Vancouver East $688,888 (10.6%), [5yr: 100%]
Vancouver West $1448,310 (16.9%), [5yr: 119.2%]
West Vancouver $1484,877 (10.7%), [5yr: 98.8%]

ATTACHED BENCHMARK PRICES

Greater Vancouver $473,543 (10.6%), [5yr: 96.5%]
Burnaby $459,610 (10%), [5yr: 102.4%]
Coquitlam $438,757 (9.7%), [5yr: 95.9%]
South Delta $438,324 (10.4%), [5yr: 100.1%]
Maple Ridge & Pitt Meadows $317,119 (7.8%), [5yr: 92.8%]
North Vancouver $622,096 (14.9%), [5yr: 106%]
Port Coquitlam $381,971 (3.9%), [5yr: 72%]
Port Moody $412,870 (10.8%), [5yr: 89.2%]
Richmond $461,832 (12.7%), [5yr: 82.7%]
Vancouver East $524,024 (13.7%), [5yr: 113.1%]
Vancouver West $711,645 (9.4%), [5yr: 113.1%]

APARTMENT BENCHMARK PRICES

Greater Vancouver $389,609 (11.5%), [5yr: 112.1%]
Burnaby $344,105 (11.2%), [5yr: 118.1%]
Coquitlam $300,948 (12.7%), [5yr: 114.4%]
South Delta $360,974 (11.6%), [5yr: 95.6%]
Maple Ridge & Pitt Meadows $259,819 (5.3%), [5yr: 112.2%]
New Westminster $302,132 (10%), [5yr: 118.2%]
North Vancouver $401,764 (10.9%), [5yr: 119.6%]
Port Coquitlam $259,645 (11.8%), [5yr: 143.3%]
Port Moody $304,326 (4.6%), [5yr: 113.2%]
Richmond $322,190 (12.7%), [5yr: 121.7%]
Vancouver East $335,150 (14.9%), [5yr: 126.4%]
Vancouver West $496,214 (11.5%), [5yr: 105%]
West Vancouver $627,058 (4%), [5yr: 82.1%]

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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