REAL ESTATE I Strong employment and low interest rates are among factors fueling the boom
Fiona Anderson
Sun
Home prices in Greater Vancouver continued to post records in April, with the cost of an average home climbing to $412,830, said statistics released by the Canadian Real Estate Association (CREA) Friday.
The average price for a home in the area, which includes apartments and attached and detached houses, increased 9.3 per cent from last April. The $412,830 price-tag is 20-per-cent higher than an average home in second-place Toronto, where the cost was $342,000.
Lower interest rates are pushing people to buy more expensive homes, said Gregory Klump, chief economist with CREA.
“What’s happening is the higher end of the market is showing remarkable strength,” Klump said in an interview.
“And with recent price increases in the lower end of the market, there is a growing shortage of listings of lower-priced homes.”
In Vancouver, the lower end of the market refers to homes under $300,000, which, according to the Real Estate Board of Greater Vancouver, is the average price of a local apartment. A detached house costs, on average, $555,000.
Georges Pahud, president of the Real Estate Board of Greater Vancouver, said these numbers are nothing new.
“Employment is strong, confidence in the economy is high, interest rates continue to be low so prices are going to reflect that,” Pahud said. “And there is a fair amount of pent-up demand.”
Local realtor Bruce Ward says the market is very hot. Last week he wrote an offer of $750,000 on a house listed at $729,000 at Main and 16th and his clients were still outbid by one of the other seven offers. To get a house now, Ward says, the offers have to be “clean” — not subject to financing or inspection.
“We’ve been in a hot market for so many months there are people in the business now that are selling that don’t even know what a normal market is,” said Ward, who has been a realtor for 17 years but has bought and sold houses for more than 35.
With the Olympics coming to Vancouver he sees an even hotter market ahead.
Realtor Jay Peterson says the Commercial Drive area is “really crazy.”
“There are a lot of houses that are going $60,000, $70,000, $80,000 over the asking price in the Commercial Drive area because that’s where everyone wants to live,” Peterson said.
Klump expects interest rates to creep up, slowing market activity but not lowering prices.
“We expect price increases to continue throughout this year and it is the effect of these higher prices that will dampen activity later in the year,” Klump said.
As prices went up, the actual number of units sold fell one per cent in April to 4,174. But the value of those sales increased by 8.3 per cent from last year to $1.7 million as a result of the higher average prices.
The number of new listings went up 1.2 per cent to almost 6,000.
For those willing to relocate, homes can still be bought for less than $125,000 in four cities in Canada: Mauricie (Trois-Rivieres) and Saguenay-Lac Saint-Jean in Quebec, Saint John, New Brunswick, and Thunder Bay, Ontario.
© The Vancouver Sun 2005