Even with a decrease in sales in October, house prices continued to rise. Is an end in sight?
Bruce Constantineau
Sun
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The average price for a B.C. home soared to a high of $301,600 in October, even though selling activity continued to fall, the Canadian Real Estate Association reported Monday. CREA said the average Multiple Listing Service selling price in B.C. in October was $13,000 higher than the September average and $10,000 above the previous record set in April this year. But the number of MLS sales throughout B.C. in October fell by nearly 18 per cent from a year ago to 7,128. B.C. Real Estate Association president Gordon Maroney said house sales were down in the Lower Mainland and Victoria but up in the rest of the province. “By historical standards, there’s still a limited inventory [of homes for sale] so price increases are to be expected,” he said in an interview. The national MLS average house price also hit a high of $232,400 in October. Vancouver real-estate analyst Oswald Jurock said that despite the recent falloff in sales, October was still the second strongest October the B.C. market has seen in the past six years. He said the market is still far from oversupplied now because while the number of monthly MLS listings has climbed from about 8,500 to 12,000 in the past year, that’s still well below the 21,000 properties that were for sale during some months in 1998. “So it’s not like we’re suddenly being swamped with product,” he said. “It looks like we’re slowly going back to a normal market. “That’s a good thing because it’s not normal to wrestle each other to the ground in the vendor’s living room and emerge victoriously paying too much.” Multiple offers on properties and selling prices that exceeded asking prices were fairly common earlier this year, but that frantic activity has subsided in most markets. Jurock said the Greater Vancouver market is still not balanced because a balanced market would see homes being listed on the MLS for 60 to 90 days before selling instead of the current average of about 45 days. He said B.C. house prices will likely be “much higher” 10 years from now as inflation makes hard assets like real estate an attractive investment. But Jurock feels prices could fall back slightly in the next year, particularly in the condo market because 11,000 new units are expected to be completed in B.C. by next May. Re/Max Real Estate Services president David Andrews agrees prices may have peaked in the downtown Vancouver condo market but feels rising incomes, low interest rates and an improving B.C. economy will prop up most B.C. property prices for a long time. “That’s what happened after downtown condos peaked in 1989 — those prices went down but the house market kept going for years after that,” he said. Vancouver realtor Peter DeWitt said city house prices haven’t dropped but buyers are taking more time now to decide on purchases because there are more homes for sale. “There was a listings shortage earlier this year and people were making offers with no conditions attached whatsoever,” he said. “But now they’re being a lot more conservative and making offers conditional on inspections and other things.” Maroney said rising house prices in B.C. have clearly caused affordability concerns but feels price increases next year will moderate at around two to four per cent, compared with the 15-per-cent and 20-per-cent increases experienced in some markets. A Royal Bank report this month said Vancouver house prices are the least affordable in Canada and the least affordable they have been in more than five years. It said it takes nearly one-half of the average family’s pre-tax income to cover the costs of owning a Vancouver bungalow. The report said the deterioration in housing affordability will slow the pace of first-time home buying, but an improving B.C. economy will continue to boost new home construction.
Source: Canadian Real Estate Association VANCOUVER SUN B.C. home sales lower, but prices rise © The Vancouver Sun 2004 |
