Vancouver effect
Vancouver, where rapidly rising home prices were credited with skewing national house prices a couple of years ago, is now being blamed for casting a cloud over the national picture.
This shouldn’t be any surprise to astute observers; a dramatic increase easily becomes an equally dramatic drop, or at least a drop dramatic enough to have the same outsized impact as upward movements earlier in the market cycle.
The latest round of dour headlines began December 13 with the BC Real Estate Association (BCREA) noting that slower sales in Vancouver and the Fraser Valley in November dragged down the provincial average.
Generally, sale prices for November 2012 rose versus November 2011 in Kamloops and points north; prices in Vancouver, the Fraser Valley and Victoria, as well as the South Okanagan and Kootenays fell. Chilliwack was a bright spot, with rising sales, prices and overall dollar volumes. Then, on December 17, the Canadian Real Estate Association (CREA) weighed in, noting that a feeble 0.3% rise in the national average home price in 2012 (to $363,900) “largely reflects a decline in sales activity among more expensive housing markets compared to 2011, particularly in British Columbia.”
CREA forecasts average house prices in B.C. to end 2012 approximately 7.8% below 2011, and drop a further 0.3% in 2013, settling at $515,600 – still the highest of any market in Canada and more than three times the average price in bargain-basement PEI.
Robert Hogue, senior economist at RBC Economics, was more dour. He opined the same day that Vancouver was exhibiting an “ongoing market correc tion” that began in early 2011.
“The latest figures show that resales were 35% below their 10-year average,” Hogue said. “The few buyers there enjoyed the most choices since 2008.”
Such data gives Cameron Muir, BCREA’s chief economist, grounds to believe 2013 may be positive: “The broader slowdown may be a precursor to more elevated activity in 2013, resulting from pent-up demand.”
Surrey is central
Sunny skies are the order of the day in Surrey, which is riding a wave of enthusiasm.
The closing days of 2012 saw Coast Capital Savings Credit Union announce a new headquarters for the City Centre area, while Rize Alliance Properties Ltd. is seeing sales at its Wave project run counter to the regional trend.
Wave, a two-tower project at 104 Street and 33 Avenue that will have a total of 471 units, is currently marketing the first tower of 235 units. Of these, 181 units have sold since the project’s launch in June – just as the Metro Vancouver market entered a cooling phase.
Still, if sales have slowed since summer – just 40 sales have occurred since September 1 – buyers have hailed from around the globe. Buyers from China, including Hong Kong, have been active, and two investors from South Africa partnered to purchase four units. The mix reflects both the diversity of Surrey, host of B.C.’s largest multicultural celebration, as well as the municipality’s steady growth.
PCI Developments Corp. sees the municipality’s growth underpinning its redevelopment of a site adjacent to King George SkyTrain station. Coast Capital Savings Credit Union recently signed on as the first tenant in a 180,000-square-foot office tower that will kick off the four-phase project.
Coast Capital will occupy 70% of the nine-storey structure, slated for completion in 2015. Retail and day-care space will occupy the first floor, with the remainder of the office space available for lease. PCI hopes to add 300,000 square feet of retail and office space in a second phase, set to complete in 2016 (market conditions allowing).
“People want to live close to where they work,” said Dan Turner, senior vice-president with PCI, noting that 70% of Coast Capital’s staff live south of the Fraser River, and a new building in the same area, adjacent to transit, is appealing.
“I think that the Port Mann Bridge, long term, is going to make a difference to where people work,” he said, referring to the impact of tolls in compacting communities. “There’s obviously downtown Vancouver, and in the long term there’s downtown Surrey.” •
