The average selling price in Greater Vancouver was $490,004 in February
Derrick Penner
Sun
Vancouver and Calgary lead gains in housing prices across Canada during the past year, the Canadian Real Estate Association reported Thursday.
The association, using Multiple Listing Service data, said the average resale house price in Greater Vancouver hit $490,004 in February, up 26.5 per cent since February of 2005.
In Calgary’s energy-sector-fuelled market, resale prices were up 26.2 per cent to $304,560. Toronto’s average price was higher than Calgary at $353,928, but that represented only a 5.9-per-cent gain from a year earlier.
Cameron Muir, a market analyst for Canada Mortgage and Housing Corp., said prices are being carried upward by a combination of strong demand in B.C.’s hot economy. He added that prices are heading toward a ceiling.
“Affordability, or lack of affordability, is going to begin to impact housing demand as we go forward,” Muir said. “Prices can only go so high before consumers simply can’t qualify to buy a home.”
Muir added that by the end of the year, the combination of rising prices and slightly higher mortgage interest rates will combine to crimp housing demand.
However, Muir said “there is no crash in sight, [but] we expect prices will start to level off in 2007.”
Muir added that the current market has been fuelled by high levels of consumer confidence and demand driven by economic growth.
“We’re also seeing wages increase at levels we haven’t seen in many years,” he said.
Gregory Klump, the Canadian Real Estate Association’s chief economist, said a shortage of homes and strong demand have resulted in the price increases.
Oil-rich Alberta currently has the hottest economy in the country, with unemployment at 3.1 per cent as of February, compared with the countrywide rate of 6.4 per cent.
Kevin Clark, president of the Calgary Real Estate Board, said city inventories have been limited for months, resulting in bidding wars in some cases.
Clark added that price escalation is making it harder “now more than ever” for new home buyers to crack into the market, which is forcing some house hunters to explore new options, such as combining forces with other buyers to share properties.
Clark said rising prices may force buyers to lower their expectations, said Clark.
Clark also warned home buyers not to let the market pressure them into buying a house too quickly.
“I think that there’s a heightened risk of being caught up in the marketplace and making a poor decision.”
© The Vancouver Sun 2006
