Prices of homes keep edging up

Friday, October 9th, 2009

Vancouver close to 2008 highs


The average price of homes in Vancouver has climbed 14 per cent so far this year, a new Royal LePage survey says.

Average house prices in the region have almost recovered to the highs seen in 2008, the real-estate group said Thursday. “We’re playing catch-up for the previous slow period,” Royal LePage Westside president Chris Simmons said.

“The average selling price in the third quarter is almost where it was last year. We’re seeing a correction caused by pent-up demand.”

At $904,750, the price of a standard two-storey home in the area in the third quarter was 2.3 per cent lower than a year earlier, the company said.

Nationally, Canadian home prices are continuing to recover from the economic downturn, but that doesn’t mean the market is heading for a boom, Royal LePage said.

Although the economy is climbing out of recession, Royal LePage said the “increase in sales activity and firming of house prices are the product of a normal market correction and not the beginning of another aggressive expansionary cycle.”

What’s providing the “illusion” of a boom is the return to the normal sales cycle, which was disrupted by the recession, and a tight supply of homes for sale. “There is the illusion of a boom in the market, but in fact what we are experiencing is the end of a normal, short-term correction,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.

“Once housing supply returns to normal levels, we believe the economy will support low pricing growth into 2010,” Soper said.

The recession seems to have helped the housing market as much as it hindered it in the early stages, as it created a pent-up demand that started driving the recovery once housing prices and interest rates fell, according to the report.

Affordability initially attracted first-time buyers in the spring, then “move-up” buyers, and finally in the third quarter those seeking high-end properties re-entered the market, it said.

“With the widespread availability of affordable mortgage financing, and only modest increases in home prices, affordability is better now than it has been in a number of years,” said Soper.

The average price of a two-storey home in the third quarter was up just 0.1 per cent from the same quarter last year, at $409,335, while the average price of a detached bungalow rose 0.06 per cent to $341,146, and condominiums were 0.09 per cent higher, at $243,748.

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