Market update for Greater Vancouver - Marco Pontillo Real Estate Advisor

By
Real Estate Agent with Sutton West Coast Realty

MARKET REPORT : MARCO PONTILLO SUTTON WEST COAST REALTY

 

The British Columbia Real Estate Market or more specifically, Vancouver has recently garnered headlines across the global stage for double digit sales and price increases in 2011.

News of Vancouver area bidding wars and homes selling for $500,000 and even $700,000 or more over asking price have captivated people's attention and led industry experts, economists and pundits to offer a conclusion that Chinese buyers are responsible for a red-hot real estate market frenzy in BC.

Assertions have even been made that Vancouver home prices are now more expensive than New York or London. Talk of unprecedented demand, homes selling within hours, prices rising by the week and planeloads of tourists arriving on vacation to buy Vancouver real estate are both numerous and sensational.

Is this what is really happening? Marco Pontillo Sutton West Coast

The short and quick answer is - Yes it is. But ONLY in a very small segment of the market and in very defined areas. These areas are North and West Vancouver, West Side of Vancouver and Richmond.

There have been abundant multiple offer scenarios and bidding wars in certain segments of the Vancouver real estate market since the early part of 2011 with this type of activity noticeably picking up in February.

It is not very hard to find examples of this situation.

Listing Details

Date Sold

February 26, 2011

Days on Market

5 Days

Lot Size

52.01 x 119.77

Approx. Year Home Built

1956

Home Age

55 years

Listing Price

$1,998,000

Sold For

$2,719,000 ($721,000 over asking price)

If you look at the sales figures from the Real Estate Board of Greater Vancouver (REBGV) you will see that there was a massive 70.26% MLS sales increase in February and a further 31.7% sales increase in March over previous month's sales.

Canadian Standard Two-Storey Home Prices - First Quarter 2011-2010:

Two-Storey

First Quarter 2011

First Quarter 2010

$ Increase

% Increase

Vancouver

$1,083,750

$987,500

$96,250

9.7%

Winnipeg

$297,125

$277,375

$19,750

7.1%

Halifax

$298,000

$278,267

$19,733

7.1%

Ottawa

$365,500

$346,833

$18,677

5.4%

Regina

$273,000

$259,000

$14,000

5.4%

St. John's

$327,627

$313,775

$13,852

4.4%

Montreal

$392,469

$377,781

$14,688

3.9%

Toronto

$589,929

$575,476

$14,453

2.5%

Victoria

$480,000

$475,000

$5,000

1.1%

Fredericton

$206,500

$205,000

$1,500

0.7%

Charlottetown

$195,000

$195,000

0

0.0%

Moncton

$131,000

$131,000

0

0.0%

Edmonton

$343,143

$343,571

-$428

-0.1%

Saint John

$295,500

$299,900

-$4,900

-1.6%

Saskatoon

$360,000

$366,250

-$6,250

-1.7%

Calgary

$423,121

$432,178

-$9,057

-2.1%

 

 

 

 

 

Canada - National Average

$379,388

$366,494

$12,894

3.5%

Vancouver home prices in the first quarter of 2011 rose by the highest level in all of Canada with a standard two-storey home increasing by 9.7% in price on a year over year basis to $1,083,750 from the first quarter of 2010. Vancouver easily took the crown as the best performing real estate market in Canada during the first quarter of 2011.

Home prices in Vancouver during the first quarter of 2011 rose to unprecedented levels, making a home in Vancouver appear as if it were double that of Toronto and almost triple that of the Canadian national average.

 "However, while the average home price in Vancouver and the province has the appearance of climbing out of sight, evidence on the ground suggests otherwise," added Muir.

Real estate is very local in nature, what is happening in one market segment does not define the entire market. The Vancouver real estate market is comprised of many regional housing markets that have ranged in sales demand and price appreciation performance over recent years.

The brisk demand and high priced sales activity that is currently being played out in the hot-spots of Richmond, Vancouver Westside, and more recently North Vancouver and  Luxury West Vancouver housing markets, belies the fact that other areas of Vancouver and the province of British Columbia remain relatively unaffected by it.

  Now if we look at the overall sales graph and figures for the province of British Columbia, we can see that the pattern has repeated itself, provincial sales in February and March 2011 have basically mirrored that of Greater Vancouver and the Fraser Valley.

A quick review of the above graphs and figures could lead you to the conclusion that the entire province of British Columbia's real estate market has experienced a wave of spectacular demand.

However, appearances can be deceiving. Marco Pontillo

While total residential home sales in British Columbia have seen noticeable improvement since last summer, this conceals the fact that outside the lower mainland, consumer demand has actually been quite tepid.

According to the British Columbia Real Estate Association (BCREA) MLS home sales climbed by 70% in the combined Greater Vancouver (REBGV) and Fraser Valley (FVREB) board areas between July 2010 and March 2011, but only increased by 12% over the same period across the rest of the province.

In fact, the total BC residential MLS home sales figure of 8,600 units sold in March 2011 was substantially supported by sales in the Greater Vancouver and Fraser Valley real estate markets.

In addition, the overall composition of sales in Greater Vancouver has also shifted toward detached homes, which tend to be more expensive. This not only creates a local skewing of the combined home type average price, but also exacerbates the upward bias in provincial home selling price numbers as well.

During the first quarter of 2011, detached home sales in Vancouver climbed by 32% compared to the same period last year, whereas the gain was only 13% for attached and only 10% for apartment homes. That shift alone would skew average price statistics higher. Then you have to add the fact that the largest sales gains also occurred in Vancouver's priciest real estate markets.

West Vancouver detached home sales increased by 84% while the gain on Vancouver's Westside for detached homes was 49% and Richmond detached home sales rose by 38%. This is in stark contrast to the fact that detached home sales on Vancouver's Eastside increased by 14% and Coquitlam detached home sales increased by 18%, while detached home sales in Ridge/Meadows increased by only 8% over the same period.

"It's no wonder that the average residential price in Vancouver has been skewed out of proportion with market conditions in recent months and that the provincial number is following suit. The Benchmark home price, the price of a typical home, has increased a mere fraction compared to the average sales price in Vancouver. While the average residential sales price in Vancouver has increased nearly 14% over the past year, the benchmark home price climbed a mere 5%," said Cameron Muir, BCREA Chief Economist.

Unsurprisingly, Richmond, North Vancouver, West Vancouver and Vancouver Westside also happen to be the areas where you will find the bulk of the so-called bidding wars and over-asking price sales activity that has recently characterized all of Vancouver as a hot real estate market.

Muir said, "Average sales price statistics for Vancouver and the province have become increasingly problematic, with large year-over-year average price gains being interpreted by many organizations as a sign of an over-heated market with an inevitable and painful correction on the horizon."

"However, while the average home price in Vancouver and the province has the appearance of climbing out of sight, evidence on the ground suggests otherwise," added Muir.

Real estate is very local in nature, what is happening in one market segment does not define the entire market. The Vancouver real estate market is comprised of many regional housing markets that have ranged in sales demand and price appreciation performance over recent years.

The brisk demand and high priced sales activity that is currently being played out in the hot-spots of Richmond, Vancouver Westside and more recently, Luxury West Vancouver housing markets, belies the fact that other areas of Vancouver and the province of British Columbia remain relatively unaffected by it.

Call me to discuss any real estate interests in Greater Vancouver : Marco Pontillo Sutton West Coast Realty 604 5518986

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