This autumn, when a downtown Vancouver condominium was listed for $18.2 million, It caught the attention of The New York Times. In a feature on Vancouver real estate, Vancouver was described as an appealing multicultural city with a cosmopolitan feel, a vibrant urban lifestyle and a temperate climate, surrounded by mountains and water.With this level of international exposure, can we expect prices to go up?
In the Real Estate Board area, our market has been on an upswing since
2002. Annual growth in sales has run about 5.5 per cent and home prices
have increased about 14 per cent per year.
Will this market continue?
To find out, we asked BC Real Estate Association Chief Economist Cameron Muir.
Muir explains that the fundamentals are in place for the market to continue.“ The Lower Mainland’s economy is expanding at 3.5 per cent per year. There is a record low unemployment rate of 4.1 per cent and a tight labour
market (more jobs than employees) which puts upward pressure on wages and salaries.”
Muir notes that despite eroding affordability, there is a wide mix of home types available. A look at listings indicates that in October there were 250 condominiums in the Real Estate Board area priced less than $200,000.
If we go up to $250,000, there were 672 condominiums and 44 townhomes. If a potential buyer had $300,000 to spend they could have chosen from 1,250 condominiums and 147 townhomes Board-wide.
“By year end 2007, 60 per cent of home sales in the Greater Vancouver Area will be either attached units or apartments, and 77 per cent of housing starts are expected to be multi-family,” say Muir. “Vancouver will also continue to be at the forefront of high density residential development.”
Where is the market headed?
Muir forecasts that MLS® home sales in the Board area will increase five per cent to 38,100 units in 2007, from 35,507 units in 2006. A lack of affordability will continue to be a barrier for some home buyers and will have an impact on consumer demand in 2008, leading to a decline in homes sales of 36,100 units. Home prices will also climb less
rapidly.
If we build it, will they come?
Muir forecasts that housing starts will decrease about three per cent overall in 2007, to 18,100 from 18,705 in 2006, a reflection of the Vancouver civic strike which halted construction and inspection permits. Starts will again rise in 2008 to 18,300 units with multi-family construction leading the way.
Muir cautions that while affordability is deteriorating, market conditions continue to be favourable. “Population in the region is forecast to increase five per cent between now and 2010. Employment and salaries are on the rise. Mortgage rates will remain low.
This is all good news.
Cameron Muir, Chief Economist, BCREA
