New home prices dropping faster than in the rest of Canada
Derrick Penner
Sun
Metro Vancouver home hunters are seeing relief on two fronts, with rental-apartment vacancy rates rising and new-home prices falling, according to new statistics released Wednesday.
Vacancy rates for two-bedroom apartments rose to 2.1 per cent in Metro Vancouver in April, a substantial jump from 1.5 per cent a year ago, Canada Mortgage and Housing Corp. reported Wednesday.
Across British Columbia in April, the vacancy rate for two-bedroom apartments varied from one per cent in Victoria to five per cent in Abbotsford.
The higher vacancy rates in Metro means advertisements for apartments are drawing two or three applications instead of 15 to 20, as was the case a couple of years ago when the vacancy rate hovered near zero, said David Goodman, a realtor who specializes in apartment buildings.
“It makes for a somewhat healthier market that there is a bit of equilibrium,” said Goodman, who is with Macdonald Commercial Real Estate Services Ltd.
“There hasn’t been much of that over the past three to six years,” he said.
One reason for rising vacancy rates is the movement of first-time home buyers leaving their rental suites and taking possession of newly built homes, Robyn Adamache, a Canada Mortgage and Housing analyst said in an interview.
Adamache said the slow economy and steep job losses over the fall and winter have meant there are fewer people coming behind to rent the apartments new homeowners leave behind.
And with large numbers of condominiums under construction around the city, Adamache said there is potential for the city’s vacancy rate to climb higher.
Goodman added that due to the recession, “we’re seeing more individuals move back with their parents, doubling up, scaling down, and that has created a mild increase in vacancies.”
Despite the increase, Metro’s vacancy rate is still low.
Adamache noted that since 1988, it has hit two per cent or higher on three occasions: in the fall of 1991, when it was 2.2 per cent; in the fall of 1998, when it climbed to 2.7 per cent; and in the fall of 2003, when it was two per cent.
Adamache cautioned that it is difficult to compare its spring survey with the fall one because post-secondary students take up a lot of apartments in the fall, but tend to depart by spring.
And while vacancy rates may be rising, prices aren’t. The average monthly rent on a two-bedroom climbed 2.7 per cent from the same month a year ago to $1,154.
Abbotsford was the least expensive market, with an average rent of $778 per month.
New-home buyers, however, saw some relief in Metro Vancouver prices, which fell 1.2 per cent in April from March.
Prices were down nine per cent from the same month a year ago, according to Statistics Canada’s new housing price index, which was also released Wednesday.
That was the steepest decline in new-home prices across Canada for that month.
However, that picture might be changing.
Neil Chrystal, president of Vancouver-based developer Polygon Homes Ltd., said his firm sold more new homes this May than it did in the same month a year ago.
“What we’ve seen in the last few months is prices have moved up a little bit,” since last fall, Chrystal said.
“Not a lot, but there was a big fluctuation that happened last fall in average prices.”
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