Lack of listings, first time buyers push up asking prices
Fiona Anderson
Sun
Sales of homes in Greater Vancouver dropped a whopping 17.3 per cent in April from a year ago and dwindling supplies pushed up prices for some properties by almost 22 per cent.
Listings are way down so prices have to go up, Rick Valouche, president of the Real Estate Board of Greater Vancouver said in an interview. There is less inventory, yet there is still pent-up demand and low mortgage rates continue to make buying affordable.
“[So] when something comes up [for sale] there are multiple offers and the price goes up,” he said. “There’s no bubble, it’s just economic supply and demand [and] there is no supply right now.”
Listings are usually up in spring when sellers think their houses look their best, Valouche said. But the current listing inventory is down 22.3 per cent from April 2005.
“Right now we are getting less and less listings,” Valouche said. “And that’s what’s scaring us.”
Cameron Muir, senior market analyst with Canada Mortgage and Housing Corporation said the supply of homes for sale has been a concern for some time now.
“As a result you see rapidly rising prices as consumers bid up the sales prices on the limited number of homes that are for sale,” Muir said.
“The biggest culprits in the dwindling inventories in the resale market are first time buyers and investors . . . who don’t have homes to trade back into the marketplace,” he said.
April was the second month in the last three months that saw year-over-year declines in sales. In February, house sales fell off 4.1 per cent, the first decline in the hot real estate market since March 2005.
Housing sales in the Greater Vancouver area fell to 3,345 units in April 2006 from 4,043 a year ago. The biggest drop was in apartment sales which fell 18.4 per cent, pushing prices up 21.8 per cent. A typical apartment in Greater Vancouver now costs $309,484.
Sales of detached homes fell 17.7 per cent in April 2006 while prices rose 19.7 per cent bringing the price of a typical house to $620,947. And the price of attached homes — homes that have their own entrance but are not completely detached — were pushed up 16.7 per cent to $380,163 while sales dropped 12.9 per cent.
But there are still deals to be found, Valouche said. For example, the median price of an apartment in Coquitlam suitable for first time buyers was $218,000, while $184,750 would buy an apartment in Maple Ridge.
Meanwhile, home prices in the Fraser Valley rose more than 20 per cent in April compared to a year earlier, while sales fell three per cent. Active listings however were down 18 per cent, the eleventh month in a row active listings fell.
“As far as I can see it’s a supply and demand situation,” David Rishel, president of the Fraser Valley Real Estate Board said in an interview. “There is just no supply or it’s dwindling.”
But looking at the big picture, this was the seventh busiest April since 1979, Rishel said.
“So comparing these numbers to what has been the two best years in real estate history, a three per cent drop [in sales] is nothing,” Rishel said.
The biggest jump in prices was in apartments, which rose 28.1 per cent on average, from $148,401 to $190,093. An average detached house in the Fraser Valley now costs $454,830, up 20.6 per cent, while $283,740 is needed on average to buy a townhouse, up 20 per cent from April 2005.
© The Vancouver Sun 2006