March sales numbers show strength in both city and Valley
Ashley Ford
Province
Greater Vancouver’s housing market may have “bubble-like qualities,” but if there is indeed one, it isn’t about to burst any time soon, housing experts say.
In its latest report, Housing Bubble Watch, TD Economics says that Vancouver “is clearly vulnerable to any deterioration in buyer sentiment.”
It says with prices rising at a 22-per-cent annual pace in the first quarter and average home prices reaching close to $500,000, “affordability is deteriorating to the worst level in the country.”
But it also acknowledged vulnerability doesn’t mean any collapse is on the horizon. “The good news is that the economic fundamentals for Vancouver are likely to remain solid over the coming years, limiting any softening in the price environment.”
David Baxter of the Urban Futures Institute of Vancouver bluntly says there is “no bubble” in Vancouver.
“A bubble is something that when you prick it there is nothing in the middle. The housing market here is simply not like that,” he said.
“Yes, in the past there have been price fluctuations, the most prominent being in 1981 when interest rates reached 18 per cent. The result was prices fell,” Baxter says.
That is not the situation today and, unless there is a sudden dramatic rise in interest rates, which nobody foresees, or a recession, again which no one sees, the housing market will be all right, he said.
The best probability, he said, is a plateauing of rates and prices. What will continue to drive the market is incomes and the economy and the latter shows few signs of slowing.
Bob Rennie of Rennie Marketing Systems says: ‘I don’t see any bubble. I look at supply and economic confidence. The fact is we don’t have any oversupply and the fundamentals of a good market are there,” he said.
The latest real-estate numbers — featured on Page A29 — back up Rennie’s assessment. For the 10th month in a row, real-estate sales increased in the Fraser Valley last month with 2,072 properties being sold compared to 1,922 a year ago.
The eight-per-cent increase in sales contrasts with a decrease in the number of listings and a decrease in the overall number of active listings indicating there is still very strong consumer demand.
Active listings closed at 5,037, which is 20 per cent fewer than one year ago.
The strong performance was mirrored in Greater Vancouver, where March sales of detached, attached and apartment properties climbed 2.4 per cent to 4,033 units from 3,938 the same month a year ago.
“By investing in real estate, homebuyers are demonstrating confidence in our economy and confidence in the high reputation of the Vancouver housing market,” says Real Estate Board of Greater Vancouver president Rick Valouche.
© The Vancouver Province 2006