Keeping it affordable
July is typically a slow month for the Vancouver residential market. Over the past decade, the benchmark price for properties within the Real Estate Board of Greater Vancouver's (REBGV) area has typically declined or shown weaker-than-average growth.
This year was no exception, with prices appreciating a mere 0.1% versus the previous month, landing at $628,600 – though that's still a respectable 4% above where prices sat a year ago.
A curious remark in the release accompanying the numbers tipped readers to dig deeper, however. Across the region, “incremental gains in home values” depended “on the area and property type.”
This is fairly well a truism, but in the case of the July numbers the most notable price gains were seen in single-family homes on Bowen Island (1.7%) and Whistler (up 1.8%), both destinations that might be considered popular recreational spots.
However, the category with the single biggest price variation was apartments: the value of apartments in East Vancouver posted a drop of 2%, while those in West Vancouver appreciated 3%.
“The real estate market has become hyper-local,” observed Darcy McLeod, REBGV president-elect, noting that variation in market conditions across the region requires buyers to do greater research to determine where the best value lies.
Similarly, Royal LePage expects Vancouver housing prices to rise 7.1% overall by the end of 2014, but with single-family homes driving the increase rather than condos. The variation is especially notable given that strong sales volumes have characterized the regional market. REBGV figures indicate July was the fourth consecutive month with sales of 3,000-plus units – the strongest performance since 2011.
Royal LePage's report explained the lacklustre appreciation of condos as a consequence of increasing supply, and hence choice, in the marketplace. While a diminishing supply of single-family homes and land assemblies for strata projects contributed to higher prices for single-family homes, prices for condos – traditionally the cheapest form of housing – were held in check as former single-family home sites were built out.
Greater Vancouver condo prices are now running at $491,984, according to Royal LePage, while the REBGV benchmark pegs the regional price at $376,500 and the East Vancouver benchmark at $314,700. RBC Economics notes the affordability of condos improved in the first quarter of the year (the latest period it has tracked), offering a counterpoint to reduced affordability of the city's disappearing single-family homes.
Mortgage sidelight
One of the reasons universally acknowledged for the recent strong volumes of housing sales is cheap financing. Buyers can tap into low mortgage rates, and, according to the latest review of the market from the Canadian Association of Accredited Mortgage Professionals (CAAMP), “this has created an attractive landscape for new homeowners” and is buoying optimism about the market over the next 12 months.
But it's not just access to cheap debt that should be lifting spirits.
According to the Canadian Bankers Association, the proportion of mortgages in arrears in B.C. – a good indicator of the incidence of foreclosures – is at its lowest since February 2009, when it reached a post-recession peak of 0.49%. Statistics for May 2014 indicate that the rate is now 0.41%.
CAAMP expects slower economic times ahead, however, pointing to decreased housing starts as an indicator of decreasing buyer activity. However, in Vancouver, housing starts for the first half of the year totalled 9,110 – consistent with the Canada Mortgage and Housing Corp.'s expectations of 18,400 starts in sum for 2014.
Looking abroad
While homebuyers spend at home, the most recent report from brokerage firm JLL indicates that Canada was the world's ninth-biggest market for investment transactions in the first half of 2014, with deals happening inside and outside the country.
Indeed, it's part of more than US$18 billion in business done among the Americas and the world so far this year.
The most significant chunk of business – US$12.6 billion – was with Europe, a fact underscored by Colliers International in its own review of global markets.
The federal Public Sector Pension Investment Board in particular has been active in Europe, while Oxford Properties Group – no stranger to Vancouver, with its MNP Tower at 1121 West Hastings Street – is reportedly finalizing a 250-million-euro deal in Paris. •
