Experts say this is no bubble, but sustainable growth driven by market confidence
Derrick Penner
Sun
Source:Statistics Canada, Royal LePage, RBC Financial Group VANCOUVER SUN © The Vancouver Sun 2005
Lower Mainland real estate sales reached new highs in May with the Real Estate Board of Greater Vancouver recording its highest volume of Multiple Listing Service sales of any month, and the Fraser Valley Real Estate board experiencing its best May on record.
The Real Estate Board of Greater Vancouver saw 4,434 units sold during the month, a 13.2-per-cent increase over May of last year, the most ever sold in one month, driven by high demand for condominiums.
Realtors in the Fraser Valley sold 2,067 units, a seven-per-cent increase compared with 1,973 in May of 2004 and just above the region’s next best May in 1991, which saw 2,064 units trade hands.
The average price of a single-family home in the Fraser Valley was also up nine per cent to $389,288 from a year ago.
“What has happened in the housing market in Greater Vancouver is we’ve made a rapid transition from a market driven by pent-up demand and low mortgage rates to a market that is driven by a really strong-performing economy, which is driving job growth and wage growth,” Cameron Muir, senior market analyst for the Canada Mortgage and Housing Corp., said in a telephone interview.
Gone, said Muir, are the days when the market was dominated solely by buyers enticed by low mortgage rates in an economic environment that still lacked confidence.
Muir said that market is being replaced by a period of strong market fundamentals: Population growth due to high immigration and interprovincial migration, and increasing numbers of new, well-paying jobs in the economy.
“The reason why we don’t have a housing bubble is that we do have strong fundamentals underlying the market,” he added.
Georges Pahud, president of the Greater Vancouver Real Estate Board, said the sales numbers were only “marginally surprising, [because] you’re always surprised when there’s a record.” Otherwise, realtors knew they were dealing with a strong market with “more and more people coming to open houses.”
“Consumers are demonstrating confidence in the economy, and investing in real estate,” Pahud said.
He added that the high number of apartment sales indicates that “buyers looking for a certain lifestyle are still in the market.”
MLS data shows that 1,974 apartment units were sold during May, an 11.8-per-cent increase from May a year ago. Apartment prices, however, were up 13 per cent.
Townhouse sales increased 17.3 per cent to 684 units in May, with prices also up 8.9 per cent. Sales of detached homes, at 1,776 units, were up 13.3 per cent while prices were up 8.7 per cent on the board’s housing price index.
Jake Siemens, president of the Fraser Valley Real Estate Board, said the strong prices in the valley — increases of nine per cent on detached homes and 15 per cent for townhouses — were the most surprising developments in his markets.
Strong sales, however, were not unexpected.
“There [has been] a little bit of fluctuation on interest rates, for sure, but nothing to the point where people are concerned about it,” Siemens said. “People are feeling very confident with what’s happening in B.C., market-wise and job-wise.”
The Fraser Valley saw 1,184 single-family homes sold during May, up 15 per cent from May of 2004, with an average price nine-per-cent higher than a year ago, at $389,288.
Townhouse sales were 343, a shade below the 348 units moved a year ago, but the $250,447 average price was 15.4 per cent higher.
Fraser Valley apartment sales, of 303 units, were also almost unchanged from the 304 sold in May of 2004, though their $148,401 was 4.1 per cent higher.
Muir added, half jokingly, that a fair-weather factor might have been at work in May as well.
“The weather was so nice, it was good house-hunting weather,” he said.
