Market Review

MLS® resale housing market records set in May CREA reports that the month of May has been a record setting one for MLS® residential sales activity, new listings, average prices and dollar volume in Canada’s major markets.

MLS® home sales activity in Canada’s major markets rose 11.6 per cent year-over-year to 42,039 units in May 2007. This is the first time sales activity in Canada’s major markets has surpassed the 40,000 unit threshold. Year-to-date transactions also set new records in most major markets in May. Transactions via Board and Association MLS® systems numbered 165,800 units in Canada’s major markets during the first five months of 2007, an increase of 8.5 per cent over the same period last year.

MLS® residential new listings also reached their highest level ever in May, rising 6.7 per cent year-over-year to 63,165 units, the first time the number of new listings on Board and Association MLS® systems in Canada’s major markets has surpassed 60,000 units in a month.

The major market MLS® residential average price rose 10.2 per cent year-over-year to set a new monthly record of $333,524 in May. Average price reached the highest monthly level on record in many of Canada’s major markets including Vancouver’s. CREA is forecasting that the annual national average price will rise by 9.5 per cent in 2007 and by 5.5 per cent in 2008.

Office Update

Office space rents soaring in Vancouver, with space at an all-time low, rents top $40 per square foot for the first time.

Michael Kane
Vancouver Sun
Friday, June 15, 2007

Available Vancouver office space is at an all-time low, forcing rents for top-of-the-line properties above $40 per sq. ft. for the first time.

The downtown vacancy rate dropped to 3.5 per cent in the second quarter, according to CB Richard Ellis, a major commercial realtor. The last time it was close to that level was at the height of the tech boom in late 2000, when it bottomed out at 3.9 per cent.

Space is even tighter along the Broadway corridor, where vacancies have fallen to a record low of 2.6 per cent.
Shrinking supply and steady demand have pushed up downtown rents for Class-A buildings by 17 per cent during the past 12 months, and nearly 30 per cent over the past two years.

While the average net rent downtown is $20 per square foot, according to CBRE survey results released Thursday, the average is $31.77 for AAA-Class buildings like the Bentall 5 tower on Burrard St. or the Terasen building on West Georgia.

"There are deals now being done in the mid-$40s for the elite, high-view spaces, and that's a first for this market," CBRE analyst Chris Clibbon said in an interview. "Two years ago that same class of space was averaging $25.20, and there were no deals being done over $30 at that time."

Rising rents are encouraging cost-cutting companies like Catalyst Paper to move to cheaper suburban office markets, which also experienced a strong second quarter. Catalyst is relocating its head office from a triple-A building on Howe St. to Lysander Lane in Richmond.

"This is a trend we expect to grow as rental rates continue to increase in the downtown market," Clibbon said. "Burnaby and Richmond are poised to do well, particularly Burnaby because of the SkyTrain. Both markets will grab some tenants from downtown."

There are currently three office developments under construction near SkyTrain stations in Burnaby, while Richmond has two developments under way. Vacancy rates decreased in all suburban markets in the second quarter, with the exception of Surrey, CBRE said.

Clibbon expects the downtown vacancy rate to remain tight for the rest of the year. While the second phase of Bentall 5 is nearing completion, the project is fully leased, and there are no other office projects announced to date that are expected to be complete before 2010.

Lack of new supply is the most notable feature of the current downtown market.

"In every office cycle where we have seen vacancy rates drop to new levels, we have always had this bank of new supply that would counter the vacancy drop. We just don't have it in this cycle, not yet."
However, there are hints that developers are poised to submit applications to the city for potential new towers.
"There is a little bit of a race right now to put a tower up," Clibbon said. "Rates are now approaching the level required to build an exclusive office tower and make a profit."

Meanwhile, the City of Vancouver has managed to stall further conversions of office buildings into condo towers, and forced two condo projects in the core the Hotel Georgia and the Bay Parkade to include a small proportion of office space, about 80,000 sq. ft. each. But neither project is due to be complete before the Winter Olympics.

Market Review

May benchmark average price for single family home breaks record.

Vancouver, B.C. June 4, 2007
The Real Estate Board of Greater Vancouver (REBGV) reports that total residential sales for detached, attached and apartment properties reached 4,331 units in May 2007, a slight increase when compared to the 4,297 units sold in May 2006. This figure also represents a decrease of 2.3 per cent when compared to the 4,434 sales in May 2005.

New listings for detached, attached and apartment properties increased by 6.2 per cent to 6,149 units compared to the 5,789 units listed in May 2006. The total number of active listings increased by 23.4 per cent to 11,749 units when compared to May 2006's 9,524 units.

"Traditionally May is one of the busiest periods in our market, and this past month was no exception," says REBGV president Brian Naphtali. "REALTORS® throughout the Greater Vancouver area are reporting brisk sales and the MLS® system is showing us that the average days a property spent on market dropped again for the fourth consecutive month to 37 days.

"The biggest story this month is the pricing and sales of single family detached homes. For the first time in our Board's history, the benchmark average price for a detached home passed the $700,000 mark. Greater Vancouver real estate is still a hot commodity and consumers are supporting that demand by investing in homes. This is supported by sales numbers as unit sales for detached homes also jumped significantly in a number of key reporting areas in May. These facts show us that despite continued price increases, appropriately priced properties are still finding the right buyers," explains Naphtali. "Anyone who is looking for guidance to help them make the best buying or selling decision should make an appointment with their local REALTOR®."

According to Multiple Listings Service® (MLS®) data, sales of apartment properties increased by 1.6 per cent to 1,789 sales in May 2007 compared to 1,760 sales in May 2006. The benchmark price of an apartment property in Greater Vancouver, calculated by the MLSLink® Housing Price Index, is $358,428, up 11.5 per cent from one year ago.

Sales of attached properties decreased by 4.5 per cent in May 2007 to 737 sales, compared to 772 sales in May 2006. The benchmark price of an attached unit is $439,317, up 10.8 per cent from a year ago.
Sales of detached properties increased by 2.3 per cent in May 2007 to 1,805 sales, compared to 1,765 sales in May 2006. The benchmark price of a detached unit is $711,245, up 11.8 per cent from last year.

Bright spots in Greater Vancouver in May 2007 compared to May 2006:

Detached:
Delta South: up 22.6% (76 units sold, up from 62)
Sunshine Coast: up 38.7% (104 units sold, up from 75)
Vancouver East: up 11.2% (277 units sold, up from 249)
Vancouver West: up 22.4% (246 units sold, up from 201)
West Vancouver/Howe Sound: up 30% (104 units sold, up from 80)

Attached:
Burnaby: up 30.3% (142 units sold, up from 109)
Port Moody/Belcarra: up 64% (41 units sold, up from 25)

Apartments:
Port Coquitlam: up 22.4% (60 units sold, up from 49)
Port Moody/Belcarra: up 65.5% (48 units sold, up from 29)
Squamish: up 128.6% (32 units sold, up from 14)

The Real Estate industry is a key economic driver in British Columbia. In 2006, dollar volume sales of homes in Greater Vancouver set a new record at more than $18.2 billion. Based on this figure, Greater Vancouver home sales in 2006 generated over $922 million in spin-offs. The Real Estate Board of Greater Vancouver is an association representing more than 8,900 REALTORS® The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR®.