“Builders and developers are focusing their efforts on meeting the demand of the homebuyers in Vancouver ’’ Scarpelli said. “We know that we have a housing supply problem and until the industry can somewhat alleviate that problem, housing prices will continue to soar, thus limiting the affordability of housing. Our members care about the community and unfortunately, they’re working to overcome many barriers that impact affordability; rising building material costs, new energy code standards, shortage of skilled tradespeople, and limited availability of land supply.”
Not surprising? What if I told you this was from Clark County Today, about Vancouver, Washington. A small town of approximately 160,000 people (in its 2010 census). Why is there a real estate boom in Vancouver, Washington? Why did the real estate in Perth, Ontario, a town of 6,000 jump up almost 50% in price over a year? This is to point out that the rise in home prices in Vancouver is not a local phenomenon. In fact, it is global phenomenon. I went over my theories in last month’s newsletter and nothing has changed.
Vancouver real estate remains red hot, but it has slowed as compared to March. However, be aware that April 2020 was a particularly bad month for real estate sales so the year over year comparisons are going to look startling high.
The April 2021 sales were 342.6% over last year. It was also 56.2% above the 10-year April average and the highest April sales on record.
There was a record number of new listing, breaking the previous April record. This boosted the total number of homes listed by 9.1% when compared to last April and 12% increase when compared to last month. Nevertheless, it is still 11.2% below the 10-year April average.
This increase in listings, dropped the sales-to-active listings ratio but they are still very high. For detached homes it is 37.4%. For townhomes it is 70% and for apartments it is 51.5%. Whenever the ratios are above 20% for extended periods, upward price pressure is expected.
So, it is no surprise that price appreciation is strong. Detached home benchmark price was up 3.2% last month and 20.9% over the last year. If your house was worth 1M last year, you just made $200,000! The price of apartments was up 1.9% last month and 5.9% over the last year. For attached homes, the benchmark price was up 3.3% last month and 13.9% year over year. Is the government going to do anything substantial to cool down the housing market? Right now, it doesn’t seem so. Most likely they will go ahead and increase the stress test rate from 4.79% to 5.25%. This will reduce the purchasing power by about 5%. I don’t think it will move the needle. The real estate market has become so large in Canada that I think it is too late to rein it in. Any substantial drop in prices may create economic havoc. Maybe this explains the expansion of the First Time Home Buyer’s Incentive that was recently announced.
