Condominium sales drive August activity

Competition for condominiums and townhomes pushed Metro Vancouver* home sales above typical levels in August.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 3,043 in August 2017, a 22.3 per cent increase from the 2,489 sales recorded in August 2016, and a 2.8 per cent increase compared to July 2017 when 2,960 homes sold.

Last month’s sales were 19.6 per cent above the 10-year August sales average.

“First-time home buyers have led a surge this summer in demand in our condominium and townhome markets,” Jill Oudil, REBGV president said. “Homes priced between $350,000 and $750,000 have been subject to intense competition and multiple offers across the region.”

There were 4,245 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2017. This represents a 1.1 per cent decrease compared to the 4,293 homes listed in August 2016 and a 19.2 per cent decrease compared to July 2017 when 5,256 homes were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 8,807, a 3.5 per cent increase compared to August 2016 (8,506) and a 4.2 per cent decrease compared to July 2017 (9,194).

For all property types, the sales-to-active listings ratio for August 2017 is 34.6 per cent. By property type, the ratio is 16.3 per cent for detached homes, 44.8 per cent for townhomes, and 76.3 per cent for condominiums.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“Conditions in our detached home market are distinct today from the dynamic in our condominium and townhome markets," Oudil said. "Detached homes have entered a balanced market. This means there's less upward pressure on prices and that buyers have more selection to choose from and more time to make their decisions."

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,029,700. This represents a 9.4 per cent increase over August 2016 and a one per cent increase compared to July 2017.

Sales of detached properties in August 2017 reached 901, a 26 per cent increase from the 715 detached sales recorded in August 2016. The benchmark price for detached properties is $1,615,100. This represents a 2.2 per cent increase from August 2016 and a 0.2 per cent increase compared to July 2017.

Sales of apartment properties reached 1,613 in August 2017, a 20.1 per cent increase compared to the 1,343 sales in August 2016. The benchmark price of an apartment property is $626,800. This represents a 19.4 per cent increase from August 2016 and a 1.7 per cent increase compared to July 2017.

Attached property sales in August 2017 totalled 529, a 22.7 per cent increase compared to the 431 sales in August 2016. The benchmark price of an attached unit is $778,300. This represents a 12.8 per cent increase from August 2016 and a 1.9 per cent increase compared to July 2017.

House prices in Vancouver have continued to rise a year after the British Columbia government imposed a foreign-homebuyer tax on the metropolitan area – and this has a lot to do with the insufficient supply of housing, according to Toronto-Dominion (TD) Bank.

“We don’t anticipate a significant drop in home prices in any way. Interest rates are going up but they’re going up very gradually, and really what matters is the supply-demand balance,” Diana Petramala, economist at TD Bank, told BuzzBuzzNews.

In July, Vancouver saw a 14% drop in new listings year-to-date. This was the greatest drop in the number of homes for sale in any city across Canada, according to the Canadian Real Estate Association (CREA).

With the benchmark price of a Greater Vancouver home, including condominiums, cracking the $1m mark in July, a supply shortage appears to be behind the price surges.

“The market is still fairly tight, by most measures, which is why prices have rebounded and are still continuing to grow,” Petramala said.

Moderating price growth is in the cards for Vancouver, according to TD Bank’s latest Canadian Regional Housing Outlook, which was published towards the end of August.

In the report, Petramala and Beata Caranci, chief economist of TD Bank, highlighted the key factors impacting market activity in Vancouver and other real estate markets. For Greater Vancouver, policymakers played a significant role in cooling the formerly sizzling real estate market, even though home prices remain elevated there.

The region saw a dramatic decline in housing demand after the BC government announced measures to track foreign investment in February 2016. By the time the tax came into effect in August of last year, three-quarters of the downturn in sales had already occurred, the report said.

Within six to 12 months, markets typically rebound to some extent following government policy modifications, and this was the case in Vancouver.

“We had a bit of a Trump bump in interest rates between November and early 2017, and then that quickly reversed course by March which held for a little bit of a recovery. But sales are still structurally lower because of the amount of government policy that was implemented over 2016,” Petramala said.
 

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