A strengthening economy in B.C. and across Canada continues to support the province’s super-heated housing market, new data released yesterday show.

The B.C. Real Estate Association report said that 10,048 homes sold on the Multiple Listing Service last month for a total value of $2.91 billion. While just shy of the $3 billion-per-month pace recorded in April and March, the new number represented a 36.5-per-cent increase in dollar volume and a 17.6- per-cent rise in unit sales compared to May, 2003.

“We’ve never seen three consecutive months with more than 10,000 people buying homes in B.C.,” said Gordon Maroney, president of the BCREA.

Current historically-low interest rates are one of the drivers behind the robust sales, but Maroney said in an interview that the economy also plays a major factor.

“On top of low interest rates, the economy here and across the country is showing signs of improvement,” he explained. “People just don’t buy homes based just on interest rates, they also buy based on their view of how secure their employment and income is. So housing sales is a really good indicator that the economy is moving forward.”

On a year-to-date basis the report said that MLS sales, which are primarily resales, reached 43,492 units with a value totalling $12.5 billion.

This represents a 20.5- per-cent increase in units sales and a 38.04-per-cent jump in dollar volume over the first five months of 2003. And only two of B.C.’s 12 real-estate boards showed a decrease in units sales.

“Consumer demand for housing continues to be high and, even though mortgage rates have risen slightly, they are still very affordable. These factors will keep the market strong throughout the summer,” Maroney added.

But he admitted that this torrid pace isn’t sustainable. “I suspect that when interest rates increase — and that will happen over time — it’ll have a moderating impact on unit sales,” he said.

“But, if interest rates rise on a gradual basis, I don’t think they’ll have any significant impact on price levels.” As the BCREA was releasing its figures yesterday, Bank of Canada governor David Dodge was telling an Ottawa audience that interest rates in Canada and elsewhere will be rising to more normal levels over the next year or so.

However, Maroney said the current housing market’s historically-high prices shouldn’t deter young people from buying their first home.

“There’s no question that real-estate values don’t always go up and that prices do move in cycles,” he said. “But, if young people are buying a property to live in it for a number of years, I don’t think they should concern themselves with today’s price levels. They shouldn’t be concerned with the shorter term pricing peaks and valleys and pay more attention to the longer-term upward trend.”

The current hot housing market is also having direct economic spinoff impacts from buyers also spending on furniture, appliances, legal, financial and other services, the BCREA report said.

A study prepared last year for the Canadian Real Estate Association found that the average house transaction triggered an estimated $19,800 in added spending.

This means that B.C.’s total sales last year of 93,000 homes generated an estimated $1.8 billion in added spending.

© The Vancouver Province 2004