Derrick Penner
Sun
The cooling trend predicted for the Lower Mainland’s real estate market does not seem to be materializing as prices continue to climb, although sales in April tailed off compared with the red hot market in the same month of 2004, figures from regional real estate boards show.
The Real Estate Board of Greater Vancouver recorded 4,043 Multiple Listing Service sales in April, down 1.5 per cent from the 4,103 sales realtors saw in the same month of 2004.
Median prices, however, were up. A detached home in east Vancouver hit $465,000 in April, a 12 -per-cent increase from a year ago.
Meanwhile, a west side Vancouver apartment reached $320,000, up 16.4 per cent from April, 2004.
The Fraser Valley Real Estate Board saw 1,937 sales in April, down four per cent from the 2,016 MLS sales recorded in 2004.
The median price for a detached home, however, reached $377,088, a 10.4 per-cent increase from a year ago.
“The market itself is a little bit stronger this spring than we had anticipated,” Cameron Muir, senior market analyst with Canada Mortgage and Housing Corp. said. “The reason for that is that the provincial economic recovery has occurred much faster than most analysts predicted.”
Muir said continued low interest rates, strong employment growth and rising wages “all bodes well for the housing market this spring.”
He added that affordability remains an issue for Lower Mainland buyers, but the low mortgage rates and job growth that has occurred over the last year have helped offset increasing costs.
Jake Siemens, president of the Fraser Valley Real Estate Board, said the predictions that Lower Mainland real estate sales would cool off were made when analysts predicted that mortgage interest rates might climb by 1 1/2 per cent to two per cent during 2005, which now appears unlikely.
“Consumer confidence that interest rates are going to stay affordable has been a big driving factor,” he said.
Siemens said the Fraser Valley‘s housing inventories have improved, so realtors are seeing fewer instances of bidding wars and sales over list price.
However, listings still haven’t entirely caught up with demand, so prices are being pushed up, though the increases are not as large as those experienced in 2004.
Georges Pahud, president of the Real Estate Board of Greater Vancouver, said the bidding contests and sales over list prices tend to occur where properties are “well listed,” or priced close to the property’s market value.
“We have heard a couple of situations where properties are under-listed, probably by design in order to create a high level of activity,” he added.
And while affordability is a concern, Pahud said “it’s not a huge concern.”
He said some 60 per cent of sales in 2004 were at prices below average market prices, and first-time buyers are still finding properties in markets such as Richmond, so “affordability is still here.”
Pahud said the market fundamentals — interest rates, employment growth, consumer confidence — are still strong, so he’s not surprised at the level of activity being seen.
“[Those factors] are what’s really driving things, Pahud said. “People want to own real estate.”
© The Vancouver Sun 2005