Bruce Constantineau
Sun
Lower Mainland housing prices and sales volumes soared to near-record levels in October as recent mortgage-rate increases failed to dampen buyer activity, the Fraser Valley and Greater Vancouver real estate boards reported Wednesday.
Greater Vancouver Multiple Listing Service sales rose to 3,099 last month, up 13.4 per cent over October last year, while Fraser Valley sales totalled 1,778 — a whopping 48-per-cent increase over the same month in 2004 and the strongest October in 13 years.
“All the key economic fundamentals that drive the market are solid now, and there are no signs of them abating,” Real Estate Board of Greater Vancouver president Georges Pahud said in an interview.
Both real estate boards report that the total number of MLS listings has fallen slightly for the year so far, which can put upward pressure on prices because buyers have fewer options.
“It’s hard to figure out why we have fewer listings now,” Pahud said. “It could be that we have so many first-time buyers coming in that the inventory is not being replaced.”
Fraser Valley board vice-president Dave Rishel said prices appear to be stabilizing even though the number of active listings throughout the Fraser Valley has fallen by 23 per cent in the past year.
“Typically that would create a strong seller’s market, but we haven’t seen big price increases lately,” he said in an interview. “They look to be stabilizing because they’re not going up quite as much as they have in the past year.”
The average selling price of a single-family home in the Fraser Valley last month was $406,700, up 13 per cent from October of 2004. Fraser Valley townhouse prices have increased by 9.2 per cent in the past year to $249,900, while apartment prices have shot up by 25.8 per cent to $184,200.
In Greater Vancouver, the benchmark price of a detached home has risen by 17.1 per cent in the past year to $564,100, while the benchmark price of a townhouse has increased by 12.7 per cent to $348,000. The price of apartment units has increased by 20.6 per cent in the past year to $280,900.
Most mortgages rates have increased by about a quarter of a percentage point in the past month or two, but Pahud said the increases have apparently not affected the market.
“It would take a sudden increase of something like two percentage points to really affect the market in a negative way, and no one expects that to happen,” he said.
Pahud said he sees no signs of overbuilding in the market, which could cause an oversupply situation and falling prices.
“There’s a lot of [condo] product coming onstream in New Westminster and Richmond, but I’m not sure it is too much,” he said. “Some officials in those cities say they need even more.”
Pahud also insisted the Greater Vancouver housing market is not a bubble waiting to burst.
“For a bubble to exist, there would have to be a huge amount of speculation going on, and that’s not the case in our market now,” he said. “Yes, there is some flipping going on now, but it has been estimated that less than 15 per cent of condominiums are resold within a year of purchase. Back in 1981, there was something like 35 to 37 per cent of condos being flipped.”
Rishel said the housing market is buoyant because consumer confidence in the economy remains strong and interest rates are still near historic lows, noting that recent mortgage-rate increases have had little impact on market activity.
He said that after attending a real estate conference in San Francisco this week, he’s convinced that Vancouver prices are still a bargain when compared with other major international centres such as San Francisco and Los Angeles.
“We’re more and more a global economy, and people are waking up to the fact that Vancouver is at, or near, the very top of places in the world to live,” Rishel said.
NOW
– Greater Vancouver October sales up 10.1%
– Detached benchmark price: $564,061
– Price appreciation: +0.8% in October, +17.1% yr/yr
© The Vancouver Sun 2005
