House prices in Greater Vancouver are climbing faster than building-site elevators, up by nearly 20 per cent in the past year or the equivalent of $222 a day.

According to the Real Estate Board of Greater Vancouver, the benchmark price for a detached home rose by more than $80,000 in the past 12 months, hitting $495,570 in April. Prices in Greater Vancouver are up 41.5 per cent over three years ago and 48.2 per cent over five years ago, the board said yesterday.

A similar boom is taking place in other parts of B.C.

The Fraser Valley Real Estate Board said the price of an average single-family detached house rose 19.4 per cent in the past 12 months to $341,605 — an increase of $152 a day.

In Greater Victoria, the average price of a single-family home was a record $384,354 last month, up from $312,000 in April 2003 — an increase of $198 a day.

Kamloops and District Real Estate Association president Peter Oswell was so busy showing homes yesterday afternoon he had only seconds to speak to The Province.

“It is really hot up here,” Oswell said. He said sales last month were about 25 per cent higher than in April of last year and were 30 per cent higher in the first four months of 2004 than they were for the same period in 2003. The average price of a detached home in the Kamloops area is now $157,000.

Okanagan Mainline Real Estate Board president Dale Harvey said homes in the Vernon area where he lives are selling for about 20 per cent more this year than they were last year. And, Harvey said, the properties are moving fast.

“If they’re priced competitively, they’re gone overnight,” he said. Harvey said he expects the rush to slow once potential buyers say “enough is enough” when it comes to prices.

“But there’s nothing in the foreseeable future to show that happening,” Harvey said.

Low interest rates, an improving provincial economy, higher employment figures and a gradual increase in average incomes in B.C. are stoking the hot market, said Helmut Pastrick, chief economist of the Credit Union Central of B.C.

Pastrick said prices will likely continue to increase, albeit at a less heady rate, in years to come.

“I think this market easily has another year or two to go,” he said. “These low rates, of course, are able to make it [buying a home] affordable for a lot more people.”

The Credit Union Central is forecasting a 12-per-cent increase in prices in 2005 and smaller increases in following years.

Builders are capitalizing on the booming market.

A separate report yesterday from Canada Mortgage and Housing Corp. said B.C. and New Brunswick are the only provinces that will show an increase in the number of housing starts this year and that B.C. will be the only one to grow next year.

Builders will start 30,000 homes in B.C. this year, up 14.6 per cent, and 30,700 next year, CMHC said.

Peter Simpson, chief operating officer of the Greater Vancouver Home Builders Association, said innovation is the watchword.

“Builders and developers are looking at new housing styles that will keep the market strong,” he said. “Obviously, land is getting more expensive here and the challenge is how to put more housing on that land at less cost.”

Simpson said large homes split into units each with its own entrance, garage and yard as well as backyard “coach houses” reflect consumer desire for something other than condominium living.

“We need to make more sensible use of the land than we have,” Simpson said.

APRIL HOUSE PRICES

MEDIAN SELLING PRICES Detached homes Attached homes Apartments

April 2004 April 2003 % change April 2004 April 2003 % change April 2004 April 2003 % change

Abbotsford $275,642 234,500 17.5% $184,900 $125,000 47.9% $99,000 $84,800 16.7%

Burnaby $465,000 $380,000 22.4% $273,500 $226,000 21.0% $182,000 $150,100 21.3%

Coquitlam $423,000 $344,000 23.0% $229,000 $204,000 12.3% $147,000 $140,000 5.0%

Delta – North $313,200 257,000 21.9% $179,500 $143,000 25.5% $105,000 $58,000 81.0%

Delta – South $420,000 $355,000 18.3% n/a n/a – $186,000 $152,000 22.4%

Langley $329,474 289,500 13.8% $219,303 $184,900 18.6% $139,000 $117,500 18.3%

Maple Ridge/Pitt Meadows $312,900 $284,900 9.8% $188,000 $154,000 22.1% n/a $109,000 –

Mission $250,000 201,000 24.4% $159,000 $138,500 14.8% $105,000 $85,000 23.5%

New Westminster $325,000 $275,000 18.2% n/a n/a – $162,500 $128,500 26.5%

North Vancouver $550,200 $479,500 14.7% $394,500 $295,900 33.3% $213,000 $178,000 19.7%

Port Coquitlam $355,000 $279,000 27.2% $240,000 $232,000 3.4% $138,500 $109,000 27.1%

Port Moody/Belcarra $430,000 $445,000 -3.4% $189,000 $183,000 3.3% n/a n/a –

Richmond $428,000 $358,000 19.6% $287,000 $235,000 22.1% $185,000 $142,800 29.6%

Squamish $310,000 $299,100 3.6% n/a n/a – n/a n/a –

Sunshine Coast $265,000 $220,000 20.5% n/a n/a – n/a n/a –

Surrey $333,000 264,400 25.9% $216,169 $186,000 16.2% $119,000 $127,000 -6.3%

Vancouver East $415,000 $351,000 18.2% $285,000 $275,800 3.3% $168,000 $149,000 12.8%

Vancouver West $790,000 $680,000 16.2% $450,000 $389,000 15.7% $275,000 $225,000 22.2%

West Vancouver/Howe Sound $871,650 $750,000 16.2% n/a n/a – n/a n/a –

White Rock $450,000 380,000 18.4% $320,000 $239,000 33.9% $209,500 $166,000 26.2%

Sources: Real Estate Board of Greater Vancouver, Fraser Valley Real Estate Board

© The Vancouver Province 2004

Realtor Stacy Cheng in the 65-unit Heatherstone on West 16th where only 25 suites remain and prices start at $155,000. CREDIT: Mark Van Manen, Vancouver Sun

Greater Vancouver‘s sizzling residential property market continued unabated in April, with average housing prices hitting all-time highs, while year-over-year sales rose 33 per cent.

Condominiums were again the hottest ticket, especially on Vancouver‘s west side — including the popular downtown core — where sales soared 91 per cent to 816 units sold, up from 428 units a year earlier.

For the whole region, condo transactions last month climbed 53 per cent to 1,776 sales, compared to 1,161 units.

Over all, Multiple Listing Service figures released Tuesday show a total of 4,106 detached houses, townhomes and condos changed hands in April, up from 3,095 sales a year ago. Meanwhile, the shrinking inventory grew even tighter, as the number of active listings fell by 52 units to 9,279.

“We are seeing significant activity in the ‘move-up’ market,” said Andrew Peck, president of the Real Estate Board of Greater Vancouver. “As first-time buyers purchase condos from the available stock, those sellers are moving into larger properties, and often to single-family homes.”

The average MLS detached price in Greater Vancouver reached a record $532,500 last month, up 21.4 per cent over $438,600 in April 2003.

Townhomes sold at an average of $306,800, a 20-per-cent appreciation over $255,100, while condos increased 25 per cent to an average of $254,600 from $203,700.

On the city’s west side and downtown core, the average condo price hit $329,300, up 19 per cent from $276,900 the previous April.

“The condo market is very active,” said realtor Stacy Cheng, of Re/Max Real Estate Services. “The fastest sellers are starter suites, like one- and two-bedroom units, especially those located in areas within easy walking distance of restaurants, shops and parks.”

Among Cheng’s current listings is the remaining 25 suites of a 65-unit condo complex, called Heatherstone, at Heather and West 16th, where prices start at $155,000 for a studio, $195,000 for a one-bedroom, and $235,000 for a two-bedroom.

Cheng’s April transactions included the resale of a one-bedroom and den condo unit at 1367 Alberni. The 16th-floor, 590-square-foot home fetched $245,000 for the vendor, 35 per cent more than the $181,000 purchase price two years ago.

Nearby, at Melville and Bute, it took realtor Grace Kwok less than four weeks, starting April 8, to sell 180 of 232 upscale units at Amacon’s new residential project, where prices range from $265,000 for a one bedroom and den, to $5.4 million for the 5,800-square-foot penthouse.

Called the Melville, the 43-storey tower is being advertised as the tallest residential building in Vancouver, with amenities including a rooftop swimming pool for common use.

“Most of our purchasers plan to move in,” said Kwok, co-owner of Anson Realty. “Only 20 per cent of them are investors. Everybody wants to live in the Coal Harbour area.”

In the six Fraser Valley communities, MLS sales in April totalled 2,016 units, up 23 per cent from 1,640 homes the previous year.

The average detached price in the valley climbed to $341,600, an increase of 19.4 per cent over $286,200. Townhouses averaged $223,400, up 25 per cent from $179,000, while condos averaged $140,300, up 16.7 per cent from $120,200.

Industry representatives say in spite of recent small fluctuations in interest rates, consumers continue to view real estate as a stable place to put their money.

“There would have to be some significant shock to interest rates over a very short period of time for the housing market to be affected, and we’re certainly not seeing that,” said Rob Regan-Pollock, senior mortgage consultant with Invus Financial.

“The real estate market is still on a red-hot pace.”

Regan-Pollock noted that although long-term fixed rates have climbed half a percentage point over the past month, variable rates remain at record lows near three per cent.

On Tuesday, Invus was offering fixed three-year mortgages as low as 4.2 per cent, while five-year money was available at 4.75 per cent.

In other developments, Canada Mortgage and Housing Corp. projects national housing starts will total 208,500 units in 2004, down slightly from 218,400 actual starts last year.

However, British Columbia is expected to have the country’s highest percentage growth in new construction this year, as a strong economic forecast, fuelled by new employment and income growth, creates high levels of consumer confidence.

Cameron Muir, CMHC’s senior Vancouver market analyst, said B.C. starts are expected to reach 30,000 units in 2004, up 14.6 per cent from 26,174 actual starts in 2003, and climb a further 2.3 per cent to 30,700 units in 2005.

© The Vancouver Sun 2004

More British Columbians than ever are buying their piece of real- estate heaven in Lotusland — this, despite the fact B.C. has the most expensive housing in the country.

The major reason for the “happy” situation is, of course, historically low interest-rate levels coupled with a relaxation of purchasing rules that permit buyers to purchase a home with virtually no money down.

Given the robust market, you’d think the problem of affordability is gone for good.

Not so. In fact, it’s about to leap back into the faces of buyers and housing developers.

There’s a virtual certainty interest rates in Canada have bottomed out and will increase — most likely in this year’s fourth quarter.

Initially, rate increases are not expected to cool off searing real- estate markets. But they will eventually bite, and thousands of potential buyers could disappear from the market.

At that point the affordability problem will return with a vengeance.

This should concern Victoria because the government and B.C.’s economy are both major beneficiaries of the housing boom and can ill afford to see the residential-building industry suffer.

House prices are largely market driven, but are too often viewed as a simple case of supply and demand. As the construction industry and others involved in the sector constantly point out, provincial and municipal governments play a key role in housing affordability.

They set taxation policies and rules that land firmly on the bottom line for every homebuyer. Just to mention a few — there’s the Property Transfer Tax, the ceiling on homeowner grants as well as property assessment and development-cost charges.

Combined, they add many thousands of dollars on to the cost of a home and thus increase the burden of affordability.

The B.C. Real Estate Association is one of many groups imploring the government to help with housing affordability.

It says reducing the Property Transfer Tax would be a good starting point.

Abolishing the Property Transfer Tax on property sales under $200,000 and for first-time buyers would have a beneficial impact on affordability, it argues.

Eliminating the ceiling on the homeowner grant program would also help. It was recently boosted to $585,000 from $525,000 and covers 95 per cent of homeowners across B.C. So why not just get rid of it?

These are sensible suggestions and they shouldn’t be ignored.

But we fear that despite its pledge to support private enterprise, the current Liberals are just as tax -happy as previous B.C. governments.

Home-buyers wish it were otherwise.

© The Vancouver Province 2004

Vanessa Thorleifson, 25, and Peter Mura, 29, are first-time home buyers who have bought in Port Moody. CREDIT: Mark Van Manen, Vancouver Sun   Roberta Hague, vice-president of personal loans at Scotiabank and co-author of The Truth About Mortgages. CREDIT: Glenn Baglo, Vancouver Sun

It’s crunch time for home buyers. Interest rates are expected to rise within the coming year and could put a damper on the red hot real estate market.

If you’ve bought recently, welcome to the real world where property prices don’t go up in a straight line all of the time. Sometimes they’re flat and sometimes they fall.

But the potential for a cooler market is not a signal for prospective buyers to sit back and wait for bargains, cautions mortgage specialist Roberta Hague.

Nor should it discourage those who have already bought and built up some equity — the difference between what they owe and what they own — from talking to their lender about restructuring their borrowing to pay the lowest possible amount.

Excited chatter about a real estate bubble waiting to burst needs to be kept in perspective. Trying to time the market in real estate can be as risky as trying to determine the best time to buy or sell stocks and bonds. You can get lucky and you can get burned.

Today’s housing market shows little of the speculative frenzy that preceded real estate crashes in the early ’80s in Vancouver and the late ’80s in Toronto.

In Vancouver, supply is barely keeping up with demand and the outlook for the economy and provincial in-migration is positive.

Prices may gradually ease as rates rise but any gain from lower sticker prices will likely be offset by higher borrowing costs.

Affordability today may be as good as it gets when you consider that it costs no more to carry a $200,000 mortgage at five per cent than it did to make the monthly payments on $100,000 at 14 per cent in 1990.

That gem comes from The Truth About Mortgages, a book about borrowing power by Roberta Hague and Alberta Cefis, both Scotiabank loan executives.

“We expect to see a slowing of the growth in real estate values but we don’t expect to see them coming way off,” Hague said in an interview in Vancouver.

“We don’t see a burst because while real estate values have had a good run in the last few years, over the long term it is a relatively steady increase. Any investment that grows at an average of under 10 per cent annually isn’t extraordinary and can be sustained over a longer term.”

Instead of trying to guess when home prices will stabilize, Hague suggests buyers determine what they need and want in a home, and then develop a borrowing strategy that suits them personally.

“We tend to hear advice about borrowing that takes an overly simplistic, one-size-fits-all approach. … People need to look at their personal goals, their aspirations and their behaviours, and then use their borrowing power effectively.”

Borrowing power is something that Vanessa Thorleifson, 25, and her partner Peter Mura, 29, have exercised to buy their $225,000 two-bedroom condo due for completion in March, 2005.

The Port Moody couple borrowed the 10-per-cent down payment from their RRSPs and parents, and have driven away the rising-rate blues by negotiating a mortgage at 4.45 per cent for five years.

While closing costs are the next big hurdle, they are confident they can manage and are thrilled to be buying a home of their own just one block from where they are renting.

“We love the neighbourhood, the waterfront, and all the great hikes and trails and beautiful scenery just down the street,” Thorleifson said. “And it is only about 30 minutes from downtown.”

The couple has insurance to cover the unexpected and are counting on higher incomes to cover any higher interest costs when their mortgage comes up for renewal in 2010. Thorleifson is a server at Steamworks pub in Vancouver and studying to pursue a career in radiography, while Mura is an aircraft maintenance engineer.

Real estate and personal debt are hot topics today with good reason. Canadians are carrying personal debt of more than $800 million. Mortgages account for two-thirds of that, with the other third in personal lines of credit, loans and credit cards.

Fuelled by historically low interest rates and rising home values, borrowing has increased by more than 20 per cent in the past two years.

But not all borrowers are getting the best bang for their buck. A recent CIBC survey shows one in four homeowners is paying more than necessary each month because they haven’t reviewed their mortgages over the past two years.

Last week Royal Bank released polling that shows two out of three homeowners are uncomfortable borrowing against the growing equity in their home, even though home-secured loans generally offer the lowest rates.

“A home is most definitely an investment you live in,” said Nancy Mitchell, mortgages manager for Royal Bank.

“As your home continues to increase in value it often makes sense to tap into that equity for things like maxing RRSP contributions, investments or even funding a child’s education through RESPs, especially when rates are as low as they are now. Think of it as putting your house to work for you.”

Hague points out the homeowners can save money by paying off higher-interest debts, such as a credit card or a car loan, before reducing their mortgage.

“Paying off your mortgage is good but it may not be the smartest thing to do if at the same time it is at a very low interest rate and you are carrying a lot of money on a high-rate credit card.”

At the same time she cautions against taking on too much debt, noting that half of Canadians would have difficulty in paying down debt if someone in their household became unemployed.

The Royal’s polling shows that residents of British Columbia are the most likely to have borrowed against the equity on their home at 28 per cent while homeowners in Atlantic Canada are the least likely at 15 per cent.

The poll of 2,000 Canadians by Ipsos-Reid is considered accurate to within plus or minus 2.2 percentage points, 19 times out of 20.

© The Vancouver Sun 2004