Condos in Greater Vancouver take the biggest hit as rising prices become unaffordable for more buyers
Derrick Penner
Sun
Greater Vancouver’s high-flying real estate market saw a 4.1-per-cent decline in sales volume in February compared with the same month a year ago, the first year-over-year decline since last March.
Market analyst Cameron Muir with Canada Mortgage and Housing Corp. said a single month’s results don’t form a trend, but a drop is in keeping with his forecast that the region will see fewer sales as rising prices become unaffordable for more buyers.
The Real Estate Board of Greater Vancouver on Thursday reported 2,941 Multiple-Listing-Service-recorded sales in February, compared with 3,068 a year ago. The average price for all properties hit $490,000.
“By the time we get to the end of [2006], we’ll see affordability measures rise to a point that a lot of the impact that low mortgage rates has had will be supplanted by higher prices,” Muir said.
Although interest rates have been low, which allowed new buyers to get into the market with relatively low mortgage payments, Muir said prices are “starting to climb to the point that it’s going to begin to impact some consumers’ ability to purchase a home.”
Muir added that while sales are still strong, he does not expect that they will eclipse 2005’s record number of transactions across the region.
“The economy is in the midst of an upswing, and a strong economy typically supports robust housing,” he said.
In Greater Vancouver, condominium sales showed the biggest drop, falling 8.7 per cent to 1,212 units compared with last February. Sales of single-family homes declined 3.2 per cent to 1,177 compared with February of 2005.
Georges Pahud, president of Greater Vancouver’s real estate board, said “any [results] that are a little bit down but close [to last year are] not surprising,” following the record 2005.
“Nothing has changed in the economy that makes the market what it is,” Pahud added.
However, the Fraser Valley Real Estate Board saw a 14-per-cent increase in MLS sales to 1,464 during February compared with the same month a year ago, which also may have a lot to do with affordability.
David Rishel, the board’s new president, said the biggest sales gains were in condominiums and townhomes, which increased 50 per cent and 20 per cent, respectively compared with last February.
“It may be pointing to the affordability issue,” Rishel said. “Abbotsford is increasingly a fundamental part of our market. People are looking that way and are finding affordable, nice communities to live in.”
Muir agreed it is likely that “many young buyers are headed to the valley in order to find an affordable home to buy.”
Muir added that in strong market cycles, prices tend to get bid up in urban core areas, causing “a ripple effect into suburban markets. That’s what we’re experiencing today.”
