REAL ESTATE I An average two-storey home rose nearly 12 per cent in value in 2004
Michael Kane and Eric Beauchesne
Sun
Greater Vancouver led price gains in 2004 in a national real estate market that showed unexpected strength in the fourth quarter, a major real estate firm reported Friday.
The region ended 2004 with the average two-storey home up 11.9 per cent from a year earlier to $524,833.
Royal LePage expressed surprise at the strength of what it said was still a seller’s market across the country as the year drew to a close, but predicted a cooler and more balanced market this year.
Prices, which rose by about six per cent on average across the country over the past year, should increase at about half that pace this year, said Phil Soper, head of Royal LePage Real Estate Services.
Calgary and Edmonton are expected to see the steepest gains, thanks to Alberta‘s hot oil-rich economy, while Vancouver and Ottawa are expected to be somewhat greater than the national average.
The steepest price increases of 2004 were in Vancouver, then Victoria and Winnipeg, all of which posted double-digit gains from a year earlier.
In West Vancouver, the price of a standard two-storey home rose by 20 per cent year-over-year to an average of $720,000 as of Dec. 31.
Victoria condominium prices increased by about 13 per cent to an average of $170,000 and Winnipeg bungalows rose 10 per cent to an average of $177,679.
While more inventory will mean a more balanced market in 2005, strong consumer confidence and good job opportunities will continue to support Vancouver area prices, Bill Binnie, broker-owner of Royal LePage North Shore, said Friday.
He noted that interest rates remain near historic lows and suggested it would take at least a two-percentage-point increase in rates to dampen mortgage borrowing. The Bank of Canada recently put rate increases on hold in an attempt to slow the surging dollar.
Binnie, who has offices in Vancouver and North Vancouver, said interest in the downtown condo market remains strong, despite expectations that rising vacancy rates in the rental market will lead to more investors offering their units for sale and softer prices.
While the end of the year traditionally signals a slowdown of housing market activity, Royal LePage said the major markets demonstrated surprising strength in the fourth quarter.
Soper said the number of homes on the market was increasing across the country but the momentum of the market that built up over the past several years continued to keep prices at record-breaking levels in many cities.
While most markets remained in the seller’s favour, more equal conditions are expected to prevail in 2005 with smaller but more sustainable price gains that are typical of a balanced housing market.
This means that the time it takes to sell a home will increase this year as sellers adjust to the smaller increases, Soper said. “There will be a little bit of a disconnect between sellers’ expectations and buyers’ expectations.”
While the housing market’s strength and duration has surprised many, Soper noted that both private and public sector analysts say there is no housing bubble, unlike housing booms in the 1980s which were marked by rampant speculation.
“The market is so different from the market of the 1980s that the general consensus, and not just those of us in the industry, but from government economists and financial institutions, is that there are few parallels and we are not in a bubble situation.”