A downtown Vancouver townhouse development that won’t open for occupancy until March 2007 and has yet to open its display centre and sales office has already sold 50 of its 138 units.

Qualex-Landmark vice-president Chris Colbeck spent much of his Christmas Eve at his Melville Street office signing sales agreements with purchasers, all of whom had heard of the project by word of mouth.

“This caught me off guard,” Colbeck said Tuesday. “I only hired one sales manager and one sales assistant to be on-site for people who might be interested early. My full sales team doesn’t start until the end of January.

“We have brown paper up on the windows of our sales centre right now because we’re not opening until February.”

The 30-storey Pomaria, located at the south end of Howe Street at False Creek, will have 26 townhomes ranging from 1,310 to 1,600 square feet at the lower levels of the building, and 112 so-called “skyhomes” ranging from 718 to 1,400 square feet. Units will sell from about $340,000 to more than $1 million.

The Pomaria was designed by Vancouver‘s Rafi Architects Inc.

The frenzy by consumers for this Granville Slopes project flies in the face of recent trends. While housing starts in Vancouver were up last month by 49 per cent from November, 2003, housing sales in the province have fallen each month since August. Canada Mortgage and Housing Corporation regional economist Carol Frketich recently predicted slight growth in 2005 over 2004.

However, the finite number of sites downtown may fuel demand for housing there.

“We’ve got probably one of the last full-block developments in the Granville Slopes area, if not in the whole [downtown] core,” said Colbeck, whose company has developed several projects in Yaletown, the most recent being the Domus, which opened last year.

“This is not Yaletown,” said Colbeck of the new Howe Street development. “We’re not saying we’re Coal Harbour or trying to compete with them. We’ve found a niche area with a strong neighbourhood feel to it.”

Colbeck said housing in downtown Vancouver is still a hot market, so much so that he hasn’t been able to take a proper Christmas holiday.

“Even this morning I was dealing with someone on a contract for the site,” said Colbeck.

© The Vancouver Sun 2004

British Columbians bought and sold more real estate in 2004 than ever before, ringing up an incredible $26 billion in transactions during the year’s first 11 months.

It was a year marked by explosive growth and dramatic bidding wars that pushed up prices to record levels.

Greater Vancouver‘s real estate market next year is predicted to look a bit like that in 2004, but with less of the frenzy and a moderate appreciation in prices.

Carol Frketich, regional economist for the Canada Mortgage and Housing Corporation, predicts that the province as a whole will see 32,400 new housing starts in 2005, which is an improvement on 2004, but only by a small amount.

“The factors that will continue to support real estate [sales] and new housing construction still look very strong,” Frketich said.

“I’m saying the fundamentals are still there for growth, though it will be slower than we’ve seen in the last three years.”

She added that population increases, strong employment growth and corresponding improvement in consumer confidence will help keep demand buoyant, as will low interest rates.

“Growth is going to slow, definitely, depending on how quickly interest rates rise and depending on the impact of a higher Canadian dollar on the economy in B.C.,” Frketich said.

She added that prices and affordability of land will make multiple-unit projects — apartment towers, townhouses and row housing — a bigger share of Greater Vancouver’s market.

“We’re getting a response from the building community and developers to produce products that are more affordable,” Frketich said.

Developers are also responding to the lifestyle demands of people who choose to live in the city and want specific amenities, whether it is environmentally friendly construction or access to convenient transportation.

“People’s preferences change over time,” Frketich said.

“We’re seeing projects going up where they have no parking spaces, or green marketing around them.”

The single-family home — the detached house on its own lot with a yard and bit of a lawn — she added, is still the preferred housing type, but “condominium living has its appeal.”

Frketich said both interprovincial and international immigration contribute to that appeal for condominium living.

Relative wealth has also driven demand for more recreational property in the province, whether it is in the Kootenays or on Vancouver Island.

Frketich said a number of Albertans have found their way to the Comox Valley, north of Nanaimo on Vancouver Island, drawn by golf and easy access via a direct WestJet flight from Calgary to Comox.

“If you talk to people from Alberta, they love that you can golf all year round, and the [fact that the valley is] only an hour flight — direct — is very appealing.”

HOME PRICE IMPROVEMENTS:

The value of residential units sold in B.C. up to the end of November 2004 has passed the dollar volume for all of 2003 thanks to rising prices.

Jan. to Nov. 2004

British Columbia

$26.13 billion dollars

90,456 units

Greater Vancouver

$13.35 billion dollars

37,760 units

Fraser Valley

$4.76 billion dollars

16,218 units

2003

British Columbia

$24.21 billion dollars

93,211 units

Greater Vancouver

$12.85 billion dollars

39,022 units

Fraser Valley

$4.47 billion dollars

17,199 units

2002

British Columbia

$19.75 billion dollars

82,725 units

Greater Vancouver

$10.52 billion dollars

34,909 units

Fraser Valley

$3.68 billion dollars

15,217 units

Source: MLS, Vancouver Sun

© The Vancouver Sun 2004

The first sale day for Yaletown Park, on Feb. 28, perhaps best illustrated just how frenzied 2004’s condominium market was, a frenzy that likely will not be repeated in 2005.

Some buyers camped out overnight and the lineup grew around the block in front of the development’s Georgia and Granville showroom.

In a single day, 494 yet-to-be-built units were snapped up.

Condo pre-sales have long been an accepted and increasingly necessary part of project financing, said Tsur Somerville, director of the Centre Urban Economics and Real Estate at the University of B.C.‘s Sauder School of Business

However, he added, the lineups and almost instant sell-outs were particular to 2004’s fit of excitement.

Somerville said the market recovery, fuelled by low interest rates and an improving economy, had begun before 2004, but was perhaps sparked by a bout of optimism following Vancouver‘s selection to host the 2010 Winter Olympics.

However, with four months worth of declining year-over-year sales to close out 2004, Somerville thinks the over-heated action won’t be sustained in 2005.

“The froth is off the market,” he said.

And with a flattening of prices in the downtown sector, he added that potential buyers “aren’t going to be feeling like ‘I have to buy, or tomorrow it will be double the price.’ “

And Somerville thinks downtown — the hottest spot in 2004’s market — is also the location most likely to suffer a downturn in 2005.

“It’s the market that most people are concerned about in terms of possible market weakness,” he said.

“The reason is [that] so many units there were purchased by investors. So you have the combination of rising interest rates and weakened rental market that puts a lot of pressure on those investors.”

Greater Vancouver‘s rental vacancy rate, tracked at 1.3 per cent by late 2004 by the Canada Mortgage and Housing Corporation, is predicted to rise as uncounted, unfinished investor-owned condominiums bought in 2004 reach completion and hit the market.

And Somerville noted that the rising Canadian dollar — which gained steadily on the U.S. currency in 2004 — will likely slow the flow of American investment buyers.

The recovery of stock markets, he added, will also draw investment money away from downtown real estate.

“The people who have those units perhaps [will be] under more pressure to sell,” Somerville said.

Whatever transpires in 2005, however, will not resemble anything like a correction because the fundamentals that drive demand, such as population in-migration, are expected to remain strong, said Carol Frketich, regional economist for CMHC.

“We’re looking at more of a plateau in multiples she said.

She predicts that overall, 2005 will see just over two-per-cent growth in multiple housing starts, which is nothing like the 21-per-cent growth seen in 2004.

Frketich looks at new arrivals, some from interprovincial migration but most — some 30,000 people per year — via offshore immigration, as primary drivers of new demand.

New arrivals, she said, tend to start out renting, which should take up some of the slack in the rental market.

But they will also drive future permanent-housing demand as they become established and, Frketich said, condominiums will become a greater part of their permanent housing choices because condos will be the more affordable products in Vancouver‘s top-dollar market.

Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said there is no reason to celebrate the average price for a single detached house in the region topping $300,000.

He said rising construction costs, municipal development-cost-charges and, above all, land costs increasingly make the single-family home on its own lot with a little yard a dream for many buyers.

“Even before we put a shovel in the ground, in some cases the land costs are higher than the complete house prices in other jurisdictions,” Simpson added.

The building industry, he added, is doing what it can to respond. He expects demand will still be high, but costs will push it out to the suburbs.

Simpson said builders are bringing with them newer styles of housing as much as possible to give buyers at least the feel of a single-family home in townhouse-style developments, “manor homes” that combine several separate units at ground level.

“As an industry, we’re trying to find ways to carve up that available land and make it more affordable, and at the same time give people what they want,” Simpson said.

GREATER VANCOUVER‘S TOP 10 MOST EXPENSIVE SALES, 2004:

#1. 3330 Radcliffe Ave.

West Vancouver

$17,000,000

#2. 5365 Seaside Pl.

West Vancouver

$8,500,000

#3. 1461 Minto Cres.

Vancouver

$4,880,000

#4. 1388 Balfour Ave.

Vancouver

$4,280,000

#5. 2934 Rosebery Ave.

West Vancouver

$4,100,000

#6. 13660 Marine Dr.

White Rock

$4,100,000

#7. 848 Eyremount Dr.

West Vancouver

$4,080,000

#8. 2189 123 St.

South Surrey

$3,900,000

#9. 4378 Ross Cres.

West Vancouver

$3,860,000

#10. 2940 Palmerston Ave.

West Vancouver

$3,850,000

Greater Vancouver‘s real estate market topped the nation in price both on average and in absolute terms in 2004.

The average selling price for a Vancouver home hit $383,000 in November, the Canadian Real Estate Association found, and while that is expensive, it pales compared with the $17 million an anonymous buyer paid for a West Vancouver waterfront mansion on Radcliffe Avenue. That buyer promptly re-listed the property for a cool $19.8 million.

And in Greater Vancouver, the luxury home market proved a strong draw with sales of million-dollar properties up substantially all around the region.

The realty firm RE/MAX, in a market-trends report, noted that sales in the upper-end market on Vancouver’s west side between January and July hit 237 — a 60-per-cent increase over the same period last year — with most priced in the $1-million to $2-million range.

In West Vancouver, $222 million-dollar-plus properties changed hands — a 96.5-per-cent increase.

The South Surrey, White Rock and Delta area saw its share of expensive transactions. Upper-end in the suburbs translates to $800,000 or more, but the region still saw five homes in the $1-million-plus range sell.

Source: Derrick Penner

© The Vancouver Sun 2004

Home prices in Canada shattered all previous records last month as sales hit an all-time high for November.

The average selling price of a home was a record $232,935, 6.8 per cent higher than a year earlier, the real estate industry’s national listing service reported Thursday.

The average price surpassed all previous monthly records in Alberta, Ontario, Quebec, and Newfoundland, and set new records for the month of November in all other provinces, the Multiple Listing Service report noted.

The news that the housing market remains hot came as Statistics Canada reported that the overall economy was not, with no growth in October for the second straight month.

As such, it’s not surprising that a survey, also released Thursday, found that Canadians rank a home as the best investment to make in the new year.

“Investing in their own homes, either through renovations or paying down the mortgage, remains the most popular place for Canadians to put their money,” insurance giant Manulife said in releasing the results of its fifth annual investor sentiment survey.

Sixty-five per cent of those surveyed said now is a good or very good time to invest in their own residence, while only 15 per cent disagreed, leaving a reading of 50 on the Manulife Investor Sentiment Index.

Real estate other than their own homes was the next most popular investment with a reading of 28, followed by balanced mutual funds with a reading of 17, fixed income investments at eight, and cash at one.

In contrast, 34 per cent felt now was a bad or very bad time to invest in stocks, edging out the 33 per cent who felt it was a good or very good time.

The results of the survey this month of 1,000 adult Canadians for Manulife by Maritz Research is considered accurate within three percentage points 19 times out of 20.

© The Vancouver Sun 2004

Vancouver‘s apartment vacancy rate plunged to a mere 0.6 per cent in 2004, a steep decline that runs contrary to a national trend.

Vancouver‘s tightened vacancy rate was echoed in other places in the Lower Mainland, with the overall apartment vacancy rate falling to 1.3 per cent compared with two per cent a year ago.

The average rent on a one-bedroom suite in Vancouver rose to $823 per month from $805, and rents across the city averaged $863 per month, up 2.1 per cent from a year ago.

The vacancy rate, measured by Canada Mortgage and Housing in an annual survey conducted every October, counts only vacancies in apartment buildings and townhouses built strictly to be rented.

The survey does not include privately rented accommodations such as houses, basement suites and strata-title condominiums.

“I don’t know if it is that sharp of a drop,” Cameron Muir, senior market analyst at CMHC said. “It is significant enough for us to take notice.

“The purpose-built rental stock itself has been pretty much the same number for years. The only additions to units to come on are on the informal side.”

He added that the vacancy rate is being kept low because new arrivals to the province are renting before buying because of limited housing supply in the tight housing market.

Also, many buyers who purchased condominiums in pre-sales are still waiting for their homes to be completed and continue to take up rentals.

Muir said the addition of basement suites and investor-owned condominiums to the informal market, which CMHC does not measure, is “taking up some of the slack in terms of supply out there.”

Some who operate in that market estimate that investor-owned condominiums, particularly in Vancouver, boost the real rental vacancy rate to five per cent or as high as eight per cent.

Howie Charters, director of commercial realtor Colliers International’s consulting evaluation department, has heard reports that between 30 per cent and 60 per cent of condominiums being built downtown are being purchased by investors who intend to rent.

He added that many of the buyers who plan to move into their new condos will soon move out of rental suites freeing up the accommodation for others.

“It is a bit of a renters’ market out there,” Charters said.

Alan Moody, president of the relocations division at Trillium Real Estate Corp., guessed that the vacancy rate among all properties being rented could be as high as eight per cent based on the amount of time it takes him to rent suites and some slight rent reductions he has seen offered.

However, he said that his company is busy and confirmed that one of CMHC’s explanations for the declining vacancy rate — in-migration of people — is accurate.

“I’m seeing more out-of-towners because we’re seeing more people being hired by the companies, and they’re bringing them in from everywhere,” Moody said.

Mark Wilton, a 28-year-old marketing manager with Creo, is one of those newcomers, having moved to Vancouver from Sydney, Australia in September.

He is splitting the less-than-$1,000 rent on a ground-floor suite in North Burnaby with a colleague at work and said he had little difficulty finding it.

Wilton said he had specific requirements as far as location and parking were concerned, and there were “quite a number of properties in that range back in October. Enough to be choosy.”

However, the picture is not as rosy for people in the bottom social strata who depend on dedicated rentals.

Kris Anderson, a staff member at the Tenants Rights Action Coalition said Vancouver‘s rental vacancy has historically been notoriously low, something his agency hoped was changing.

Anderson said low vacancy rates mean people looking to get out of bad rentals have less choice. He added that rents have also increased every year while social services have been cut and incomes don’t seem to be rising as quickly.

“For low-income people, seniors and people with disabilities, certainly for them [the rental situation] is a crisis, but it’s a crisis for all those combined factors that are making it more expensive to live here,” Anderson said.

British Columbia had the tightest metropolitan rental market in the country. The Victoria vacancy rate fell by 0.5 a percentage point to 0.6 per cent.

In the Lower Mainland, would-be renters would have had an easier time finding a place in Surrey, which had a 5.1-per-cent vacancy rate and average one-bedroom rent of $618 a month.

Delta, with a 4.1-per-cent vacancy and $656-per-month rent on a one-bedroom suite, was next.

New Westminster‘s vacancy rate dropped to 2.4 per cent from 2.8 per cent in 2003 and the average one-bedroom suite rented for $652 per month.

Burnaby saw its vacancy rate drop one-tenth of one per cent to 1.4 per cent with a $709 average one-bedroom rent.

Among other Canadian cities, Edmonton saw its vacancy rate climb to 5.3 per cent from 3.4 per cent. Calgary‘s dipped slightly to 4.3 per cent from 4.4 per cent. Toronto‘s vacancy rate jumped to 4.3 per cent from 3.8 per cent and Halifax‘s vacancy edged up to 2.9 per cent from 2.3 per cent.

© The Vancouver Sun 2004

First the good news.

Greater Vancouver homes will only see a modest three-per-cent price increase next year, less than the national average of 4.5 per cent, as the hot housing market catches a bit of a chill.

The bad news is that even this increase will ensure we continue holding the dubious title of the most expensive housing market in the country, Royal LePage Real Estate Services said yesterday in its 2005 market survey.

The average price of a Vancouver home will rise to $399,000 next year, up from this year’s $387,500, putting us well ahead of Toronto at $323,000 and Ottawa at $243,000.

The hottest cities in the country next year will be Edmonton and Calgary where prices are expected to jump by seven and 6.2 per cent to $191,851 and $239,000 respectively.

While the average anticipated national increase of 4.5 per cent represents a significant change from this year’s 9.2-per-cent rise, it nevertheless is still virtually double the expected rise in the cost of living next year.

Sales will also catch a bit of a sniffle next year as well, falling by one per one per cent to 457,325 units.

Vancouver sales will drop by 1.6 per cent to 37,000 units from this year’s 37,600.

“If 2004 represents a record pace in terms of volume and price increases, 2005 will represent a market in equilibrium where both buyers and sellers will equally share the benefits,” said Royal president Phil Soper.

“Relative to the breakneck pace of 2004, the Canadian housing market will experience a deceleration of the frenetic sales activity that has characterized the market in the past several years,” he said.

“Sound market fundamentals will support a robust 2005 housing market, but what will emerge is more normalized, sustainable housing market activity,” Soper said.

Buyers will continue to benefit from historically low interest rates as the low cost of borrowing money extends home ownership to a majority of Canadians, Royal said.

Interest-rate increases are likely to be moderate, particularly in view of the strengthening dollar.

“Despite little change on the manufacturing side, overall job growth should continue, driven in large part by construction jobs thanks to the housing boom,” it said.

Job growth and low unemployment will help buoy consumer confidence and spending, it said, despite the fact consumer debt is at an all-time high relative to incomes.

Royal warns that house construction could slow due to rising costs and some increase in mortgage rates.

It also agrees there is a risk the Canadian economy may not do as well because of escalating energy prices, further appreciation of the loon and the possibility of a weaker U.S. economy.

© The Vancouver Province 2004

OTTAWA — The three most expensive cities in which to buy a home next year will be Vancouver, Toronto, and Ottawa while the three most affordable will be Regina, Winnipeg, and Halifax.

Those are among the year-end predictions of a major real estate firm, which is also forecasting that housing prices will continue to easily outpace inflation in 2005, rising on average by 4.5 per cent.

While that’s less than half the projected 9.2 per cent increase in prices this year, it’s still roughly double the expected increase in the cost of living over the coming year.

Sales will cool next year, declining by one per cent to 457,325 but the average house price in Canada will rise to $236,588 from $226,400, Royal LePage said in its year-end forecast Monday.

“If 2004 represents a record pace in terms of volume and price increases, 2005 will represent a market in equilibrium where both buyers and sellers will equally share the benefits,” it predicted.

The increase in prices over the past year will cool sales activity while the relatively large number of homes on the market will keep a lid on prices, said Royal LePage president Phil Soper.

“We currently have the highest levels of listing inventory available in the past four years, and this will clearly have a mitigating effect on price increases,” Soper said. “Sound market fundamentals will support a robust 2005 housing market, but what will emerge is more normalized, sustainable housing market activity.”

Buyers will continue to benefit from historically low interest rates as the low cost of borrowing money extends homeownership to a majority of Canadians, it said. Interest rate increases are likely to be moderate, particularly in view of the strengthening Canadian dollar, and gradual increases will work to temper the current torrid pace of market activity.

The increase in prices for the nine cities included in the forecast survey are: Edmonton 7.0 per cent to $179,300, Calgary 6.2 per cent to $239,000, Winnipeg six per cent to $127,718, Montreal five per cent to $197,000, Regina five per cent to $118,125, Ottawa 4.5 per cent to $243,590, Vancouver three per cent to $399,000, Toronto 2.5 per cent to $323,000 and Halifax 1.7 per cent to $179,000.

The sound economic fundamentals that will support the housing market are an economy that should grow at close to its long-term pace of three per cent, low inflation, federal budget and trade surpluses, job growth, and strong consumer spending and business investment.

“Despite little change on the manufacturing side, overall job growth should continue, driven in large part by construction jobs thanks to the housing boom,” it said. “This translates into increasing personal disposable income and strengthens housing demand.”

The job growth and low unemployment in turn will buoy consumer confidence and spending, it said. Although consumer debt is at an all-time high relative to incomes, the forecast said that debt is manageable.

Population growth, thanks to immigration which will compensate for the relatively low birth rate, will continue to support housing markets.

“This growth is fundamental to our housing markets,” it noted.

The pace of housing construction could slow due to rising costs and and some increase in mortgage rates but the decline should be slight and not be enough to hurt strong employment in the construction sector.

© The Vancouver Sun 2004