Cozy character comes with a price
Derrick Penner
Sun
CREDIT: Glenn Baglo, Vancouver Sun This 93-year-old ‘character bungalow’ at 1807 East Seventh Ave. in Vancouver is priced at $499,000.
The average price for a Vancouver bungalow hit almost $500,000 in the third quarter of 2005, showing one of the stronger gains in value across B.C., Royal LePage Real Estate said Monday.
Royal LePage’s third-quarter housing price survey shows that the price of the average Vancouver bungalow rose 8.8 per cent, year over year, to reach $499,667.
Average, according to Multiple Listing Service listings, translates to the cosy, 1,615 square-foot “character bungalow” at 1807 East Seventh Ave., priced at $499,000. The 93-year-old house near Commercial Drive boasts three bedrooms, two bathrooms and a remodelled kitchen, as well as a full basement and “mortgage helper.”
Bill Binnie, president of Royal LePage North Shore, said that with population growth, mortgage rates at historic lows, wages rising, and a low inventory of listings, “the market shouldn’t be surprising us.”
“It just makes basic sense that if you’ve got a city that’s growing, you’re going to have more sales,” Binnie said. “And we are a city that is growing in population.”
He added that new buyers coming to Vancouver are picking from a limited supply. While listings have increased “marginally” compared with last year, Binnie said that in past years, the market has had two times the number of homes there are today.
The Royal LePage report said that Victoria led the country in price appreciation for the third quarter in a row, with the average price for a bungalow spiking up 18.4 per cent to $348,000. A standard two-storey house in the city rose even faster, showing a 20.3-per-cent price gain at $391,000.
Vancouver, however, remained the most expensive. Regionally, the average bungalow on the city’s west side hit $775,000, topping even West Vancouver, which saw the average bungalow go up 6.9 per cent to $695,000.
The average condominium price in Vancouver went up 14.1 per cent, year over year, to reach $254,333, the report said.
Affordability is “not a huge question,” according to Binnie, particularly in Vancouver, because it is a comparatively expensive part of Greater Vancouver where homeowners typically are buying and selling using equity that they’ve built up in properties they already own.
For a professional couple who bought a $300,000 home 15 years ago, have almost paid down their mortgage, and seen $300,000 to $400,000 in appreciation in its value, Binnie said, “a $1-million home is not out of reach.”
The condominium market, he added, is a “price-point market [where] a lot of first-time buyers are finding their entry point into the market.”
Victoria led the nation in price appreciation for the third quarter in a row with the average price for a bungalow shooting up 18.4 per cent to $348,000, the Royal LePage report said.
Judy Gage, president of Royal LePage Coast Capital Realty in Victoria, said most buyers in the city are Victoria residents who are “moving up, moving down, moving laterally,” but a large number of newcomers from Alberta and the U.S., particularly the south, are also moving in.
For people moving in, she added, “prices compare favourably . . . with oceanfront cities elsewhere.”
Prices in Greater Vancouver and Victoria are rising faster than the income growth of buyers, said Carol Frketich, regional economist for Canada Mortgage and Housing Corp., but the separation is “not as out- of-line as it has been in the past.”
Frketich added that between 2000 and 2004, the growth in housing prices outpaced income growth by about two percentage points.
However, during the early 1990s, that margin was eight percentage points.
Frketich noted that price increases over 2005 have been slower than during the previous two years, indicating a possible slowing of the rise, “which would be healthy.”
She added that the fundamentals to support growth in the housing market — population growth, income growth and low interest rates — are still present, and could drive demand into 2007.
However, Frketich expects that new listings will increase in the coming months, which, combined with the completion of many new construction projects, should help ease current restrictions in supply that are putting pressure on prices.
Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said the current situation of rising prices is still “a good news, bad news story,” depending on whether market participants own property or are trying to make their first purchase.
“If you’re in the market looking for a house, and it’s your first time in the market, it is frightening,” Simpson said. “And [buyers] have told us that. But if you’re already in the market and own a house, you’re celebrating.”
Nationally, the average price of a standard bungalow experienced the highest appreciation in the third quarter of the year, rising by 7.4 per cent from a year earlier to $265,405, followed by a standard condominium, which increased 6.8 per cent to $185,195, Royal LePage Real Estate Services said.
Most of the major price increases were in western Canada where high oil and gas prices have resulted in a booming economy and where the relative number of homes for sale was lowest, it said.