Blog › December 2011

Greater Vancouver Home Prices Since 2007

The price chart below for Greater Vancouver helped to sum up the home price movement before and after the credit crunch of 2008. The crash in the financial markets resulted in Greater Vancouver's detached home prices dropping 26%, while townhomes and condos dropped 20% and 13% respectively. View homes for sale in Greater Vacouver.

Greater Vancouver housing chart

The housing market rebounced after the crash

Within a year, all the losses in housing prices in Greater Vancouver were regained. Home prices advanced further through 2010 and early part of 2011. The supply of new listings since the beginning of 2011 helped to soak up the demand from home buyers.

By late April, 2011 home buyers frenzy started to subside and the market for townhouses and condos slowed considerably. The build up in inventory started to affect the market and helped the market turn from a seller market in early 2011 to a seller market by August, 2011. View homes for sale in Greater Vacouver.

There were some erosion in home prices resulting in a slight price decline in prices for condos and detached homes. Townhome prices were able to hold on without giving up it's gains in early spring of 2011. From the lows in 2008, home prices still managed to make substantial gains. At the end of November, 2011Condo prices were up 19%, townhouses up 34% and detached houses up 52%.

Projected Home prices for 2011 

Home buyers are watching the market closely. Less new listings coming onto the market and the expiry of many listings help to bring the supply and demand of homes to a more balanced market. However, the supply of new condos and townhomes from new developments could put pressure on these 2 markets.

Detached homes are holding on to it's gain. Most economists are in agreement that 2012 will be moderate with further easing in home prices. However, the decline in prices will be moderate. The ultra low interest rates in Canada will keep the housing market at its current pace.

The spring market will help to shape the market for the rest of 2011. A strong market will help to keep home buyers and sellers busy. If the market fails to ignite home buyers interest, the downside risk for bigger price decline may be expected.

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Metro Vancouver real estate market “balanced” - Conference Board

Greater Vancouver’s resell houses industry has transferred into a “balanced” range where neither client nor home owner have any particular advantage in discussing a purchase, according to a Conference Board of Canada document published Tuesday.

As well, the report’s writer stated that he board’s metro Resale Index – November 2011, there is no longer a risk of a property “bubble” growing in the location.

“The threat of a bubble has largely dissipated,” senior economist Robin Wiebe said of Metro Vancouver. “But, really, there never was one.

“When prices rise, new supply is attracted to the market. And that’s what’s happened.”

According to the index, the normal cost in Vancouver was $774,000 in October, 2% more than September and 15.3% more than October 2010.

As well, the amount of listings stood at 60,600 in October on an annualized seasonally changed base, which was 2.5 % less than September but 14 % more than October 2010.

The amount of sales in October – also on an annualized seasonally changed base – were 30,792, up two % from September and 0.8 % from October 2010.

The Fraser Area was in a healthy industry, with rates up 9.6 % year-over-year to $494,000, but Victoria was considered a buyers’ industry, with rates down 7.1 % year-over-year to $490,000.

Wiebe said there is now adequate supply and reasonable demand in Greater Vancouver meaning that a healthy industry exists.

He said that rapid regular cost growth in May and June, driven largely by sales of expensive houses in exclusive neighbourhoods, is no longer a significant component of Greater Vancouver, with sales of the expensive houses having moved through the system.

“Price growth from year-to-year in the last two months has been pretty good, but at 14.5 per cent it’s a way down.”

He said with price increasing about 20 % year-over-year in May and June, a lot of people list their houses on the market, in hopes for cashing in.

“It changed the market balance a bit. Sales have cooled, listings have gone up. So the market balance has shifted. It’s not surprising.”

Regardless, Wiebe stated, the amount of sales are reasonable by traditional expectations.

Nationally, sales were up in 17 of 28 areas from September to October, and new listings increased in 16 of 28 areas.

A total of 23 of areas were considered balanced, while four were a buyers’ market. List shortages in Thunder Bay resulted as the only sellers’ market.

As well, average home values increased between September to October in 16 areas.

Source: Brian Morton, Vancouver Sun

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Commentary on housing start

Housing start for Greater Vancouver

According to Robyn Adamache, CMHC's senior market analyst,
"immigration drives demand in British Columbia and job growth in Vancouver has kept demand for new homes up".

Townhouse420“I think part of what’s going on is we do have a fairly balanced resale housing marking out there, so there is fairly steady demand,” Adamache said. “Part of what’s driving this is ongoing population growth, or people moving here from other countries. In Vancouver, we get 35,000 or 40,000 people moving here every year.”

Below are the housing data:

  • There were 1,686 housing starts in November in the Vancouver CMA, up from 918 in November 2010.
  • Single-family starts were at 281 for November, down 10 per cent from 2010
  • Multi-family starts, which include semi-detached, townhouses and apartments, were at 1,405 for November, up a whopping 130 per cent from November 2010.

The 2011 year-to-date figures show an overall increase in the Lower Mainland of 23 per cent compared to 2010:

  • There was a 21-per-cent decrease in single-family starts,
  • And a 44-per-cent increase in multi-family starts.

The year-to-date housing starts at 13,295 multi-family is lower thatn the peak housing starts of 16,525 in 2007.

HST effect

The drop in single-family starts could be related to the defeated HST which will only be phased out by March 2013.

Multi-family developments are not affected in the same way as it takes at least 2 years to complete, and most of these homes are below the $525,000 threshold for HST.

The hot areas

Richmond and North Vancouver were hot area for growth in 2011, each showing an 89-per-cent increase in housing starts compared to last year. North Vancouver and Richmond's housing starts at 920 and 2,355 represent a hugh jump in housing starts of 486 and 1,248 units respectively.

The vast majority of those housing starts are multi-family developments. According to Adamache, "Richmond is a big recipient of people moving here from other countries, so that could be driving the demand.”

She added that "the significant slowdown in housing starts in 2009, will keep the supply of new condos at a moderate level in the near future, preventing the market from flooded with new supply".

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November housing starts fall

Below is a press release by Canadain Press dated Dec, 09, 2011.

A slowdown in apartment and condo construction in November resulted in the biggest one-month drop in Canadian home construction since early 2009, a report found Thursday, just as the Bank of Canada warned of a "heightened risk of a correction" in the multiple-dwelling segment of the market.

The Canada Mortgage and Housing Corp., a Crown corporation, reported the seasonally adjusted annual rate of housing starts dropped 13 per cent to 181,100 units in November, down from 208,800 in October.

It was a much larger decrease than economists expected, entirely driven by a 23 per cent drop in the multiple-unit sector, while the more stable single-family market rose 3.5 per cent.

The CMHC report was released the same day the Bank of Canada warned that the country's robust housing market -- and over-leveraged mortgage holders -- could be in for a shock if the global economy goes south.

Read the full report.

Economists and other observers have been watching for signs of a housing bust in Canada, but there has been little evidence of a bubble, apart from the multiple-dwelling segment and the general Vancouver market.

Home sales in Greater Vancouver had been on gradual declince the past 6 years. The condo market is more vulnerable to steeper sales and price decline if home buyers continue to hold off their buying for now.


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Canada's housing starts slow in November

New home building across Canada dropped by a sharp 13 per cent in November as the volatile sector that represents condos and apartments showed declines, but there was still no sign the red-hot Canadian housing market is poised for a tumble, analysts said.

New condos RichmondThe Canada Mortgage and Housing Corporation reported Thursday the seasonally adjusted annual rate of housing starts was 181,100 units in November, down from 208,800 in October.

It was a much larger decrease than economists had expected, as construction of multiple units fell after months of increases driven by a booming condo market in large cities like Toronto, and Vancouver.

Read the full report here...

Greater Vancouver home Sales for 2012

Since 2005, homes sales on average dropped about 3.5% every year. With the continuation of this same rate of decline, 2012 could end up with a home sales figure around 328,500 units. Market sentiment may turn for the worst if events in Europe caused a major set-back in the Greater Vancouver housing market.

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CMHC 2012 Home Sales Forecast

CMHC: Expect more of the same in 2012

BC has experienced balanced housing market conditions for over a year, and can expect to see more of the same in 2012, according to CMHC’s BC regional economist Carol Frketich and senior market analyst Robyn Adamache. Frketich and Adamache spoke at the CMHC Housing Outlook Conference in Vancouver, November 16.

One of the interesting things right now, Frketich said, is that we’ve continued to see price increases despite the fact we’re in a balanced market. In terms of market shifts, however, there’s usually a five to seven month lag time before prices change.

According to CMHC, BC home sales are forecast to hit 77,200 in 2011 and 81,900 in 2012, with BC housing starts expected to be 28,500 next year. In our Board area, sales are expected to increase by nine percent from a forecast of 33,000 sales in 2011 to 36,000 sales in 2012. CMHC also expects housing prices to increase next year at the rate of inflation.

Read the report here.

Or, will the market turns out worst than the forecast.

The graph below for Greater Vancouver shows a declining housing market since 2005:

Greater Vancouver Home SalesHome prices probably already reach the top and it could be under pressure to go down as current supply of homes are in excess of buyers. View homes for sale in Greater Vancouver, Fraser Valley and Chilliwack.

Since 2005, homes sales on average dropped about 3.5% every year. With the continuation of this same rate of decline, 2012 could end up with a home sales figure around 328,500 units. Market sentiment may turn for the worst resulting in a larger drop in home sales for 2012.

Ultra low interest rate will help to cushion the soft market, but if buyers are holding off to wait and see how the market will turn out in spring, the high expectation for a spring revival in the housing market could be tampered.

The picture will be clearer around the midle of next year to find out if the market can be maintained at last years level, or continue the decline as shown on the graph above.

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Surrey Is The Hottest Investment Market

Surrey is the hottest housing investment market in British Columbia

According to a Real Estate Investment Network, Surrey is the hottest market for housing investment in British Columbia, followed by Maple Ridge/Pitt Meadows in second postition and  Kamloops holding the third spot. Read the full report here.

The report looked at the prospects invetment opportunities across the province of British Columbia and identified the towns and cities projected to outperform in the nedt 10 years. Some of the key factors used in the study included:

The rate of population growth compared to the provincial average

  • New infrastructures being built to handle population growth.
  • Current and new employment opportunities in the area.
  • Potiticall stability and leadership in ceating growth in teh area.
  • Local leadership to take advantage of the economic and real estate growth.
  • Planned transportation improvements and other infra structures projects to support growth.

The towns that were ranked trom top to bottom 11 spots are:

  1. Surrey
  2. Maple Ridge and Pitt Meadows
  3. Kamloops
  4. Abbotsford
  5. Fort St. John
  6. Dawson Creek
  7. Kelowna
  8. Comox Valley
  9. Penticton
  10. Prince George
  11. Vancouver

Affordability and proximity would be the likely reasons for investors from Greater Vancouver and Faser Valley buying investment properties in Surrey, Maple Ridge/Pitt Meadows and Abbortford.

If you are looking for homes suitable for investment in these areas, you can check out the homes for sale using the links here for Surrey, Meadowridge and Abbotsford.

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